Minister of Economic Development Ebrahim Patel said South Africa must achieve a more inclusive economy as it is very critical to our country’s success.
Patel was addressing business leaders at the Progressive Business Forum breakfast briefing, on the sidelines of the 54th ANC national conference in Nasrec, Johannesburg.
“We’ve got to increase the rate of growth; the economy is not growing fast enough and even though we’ve avoided a deep and damaging recession this year our growth rate continues to be below that of population growth,” said Patel.
“We need to at least achieve a growth rate higher than population growth so that every South African can grow more prosperous and better off each year as the economy grows in a more inclusive way.”
During his presentation, the minister reflected on the global economy, its growth and the impact it has in South Africa.
“Global growth has picked up slightly over the last period. For this year global growth is projected to be about 3.5 percent and for next year its projected at 3.7 percent. It’s what the international monetary fund chief economist calls a firming recovery,” said Patel.
“If you recall growth rates before the economic crisis they were significantly higher than 3.5 percent. The global crisis essentially brought down possibly the structural rate of global growth. And it matters to our economy because we particularly trade exposed.”
He also outlined the economic situation in the country as well as the challenges of low growth and high levels of youth unemployment, among other things.
“We’ve had the modest economic growth, earlier this year the economy went into a technical recession and it emerged from that recession but whilst growth has recovered somewhat in the last quarter we’ve seen two percent growth per quarter principally off the back of much agricultural performance,” said Patel.
“Our growth rate remains below the level that South Africa needs to be able to create more jobs and ensure greater economic inclusion and we have high levels on unemployment even though we’ve grown the number of jobs, sometimes quite robustly.
Patel said this calls for an increased growth of employment levels at a much higher rate than most countries in the world.
“Since the global economic crisis, the economy has added 2.5 million additional jobs but at the same time, the number of young people looking for work has increased. That means that we need to grow our employment levels at a much higher rate than most countries in the world,” said Patel.
He said despite the huge progress our country has made, South Africa also faces huge challenges.
“We have a lot going for us, we have a lot of challenges, and that’s the complexity of the modern South Africa. Huge progress and big challenges,” he said.
Patel said that there are four things our economy needs to do, to drive further progress.
“We need to have a credible growth story that identifies the sectors of the economy where we can grow fast and where we can create jobs on scale, and do this in a very practical way,” he said.
“We need to transform the economy and by transformation, it means bringing young people, the energy of any nation, into the economy in larger numbers. Ensuring that black South Africans are part of the economy, not only for equity purposes but also because there is a compelling, economic advantage to expanding the talent pool of the economy to cover every South African.
“It means addressing the governance challenge that we have in state-owned companies and in the private sector. Dealing with corruption and state capture, we must talk openly about these things and deal with issues of corporate collusion.
“The challenge I think is impressed so starkly that we sit today with a storyline that we can change. A storyline on the one hand points to state institutions that are currently under investigation for probity issues, for whether they have ensured integrity in tender processes and how they deal with the private sector. Issues of state capture are important.
“And then finally, the issue of partnerships, getting South Africans, business, labour and government to work together to achieve higher levels of growth.”