Private sector ‘needs more policy certainty’ to spur investment
GAUTENG finance MEC Mandla Nkomfe says it is not correct that the government has led in growing the South African economy since 1994, while the private sector seems reluctant to play its part.
However, more predictability and transparency in economic policy were needed to draw more private sector investment, Mr Nkomfe said on Tuesday in an interview with Business Day, following his presentation of the Gauteng provincial economic review outlook.
"Had the public sector not come in, our country would have been somewhere else," he said.
"But if we do not resolve policy issues, that leaves the private sector unsure : they will not know whether or not to come in and invest."
The provincial economic review outlook was intended to look at systematic shifts in the province’s economy over the past year, and revealed that the financial and business services sector, as well as the government, social and personal services, topped manufacturing as the biggest contributors to economic growth in Gauteng.
In March this year, the Reserve Bank bulletin for the fourth quarter of last year showed private companies were sitting on cash deposits of R1.2trn, which were not being reinvested in the economy.
Mr Nkomfe says the government’s aggressive infrastructure roll-out programme this year is meant to stimulate private-sector participation in growing the economy.
In his presentation of the provincial economic review outlook, Mr Nkomfe notes that a focus on infrastructure is seen as a catalyst for the sustainable economic growth of Gauteng. The province is South Africa’s economic powerhouse, contributing 35.6% of the country’s gross domestic product last year, which amounted to R675bn.
"An improved infrastructure could position the province to remain a key asset and economic driver for the country," says the finance MEC.
In this year’s state of the nation address in February, President Jacob Zuma said a focus on infrastructure programmes for this year and beyond will continue to be essential as it forms the backbone of any economic development.
The total nominal value of infrastructure contracts awarded in South Africa between April last year and March this year amounted to R77.7bn, and Gauteng received the largest share of these contracts (22%) at R17,3bn.
KwaZulu-Natal and the Western Cape accounted for the second-and third-highest shares, at R13.3bn and 13.1bn respectively. However, critics — among them African National Congress stalwart and MP Ben Turok — argue that infrastructure roll-out is too slow to become the key driver of job creation in the country.
Mr Turok said in a radio interview on Tuesday that the government’s economic policy lacked the necessary boldness to drive the required levels of job creation, while levels of unemployment were on the rise.
He said the government seemed more concerned with meeting the standards of the International Monetary Fund and the ratings agencies than coming up with decisive policies to create jobs for the poor.
Mr Nkomfe concedes that the government may have been too cautious in its early economic policy frameworks post-democracy. However, he says, this is starting to change.
"We have long moved away from that envelope of caution and we are now taking a very expansionary approach," Mr Nkomfe said. "The problem is that sometimes we tend to get too ‘welfarish’. People should not depend on welfare ," he said.
Mr Nkomfe says the capacity of the government infrastructure programme to create jobs could improve if the speed at which the government made decisions was quicker.
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