There are binding constraints, including policy uncertainty, a regulatory environment that is not conducive to investment, and no sustained long-term partnerships between government and industry, currently limiting South Africa’s growth, says National Planning Commission (NPC) secretariat head Tshediso Matona.
Speaking at the fourth edition of the Vision 2030 Summit, in Johannesburg, on Wednesday, he said that, while South Africa has “lost ground because of an economy that has slowed down”, the country has significant potential to become globally competitive, sophisticated and diversified.
Notwithstanding current constraints, the country is expected to achieve growth of 1.5% this year.
That is insufficient, however, to make a meaningful dent in unemployment, poverty and inequality and South Africa will need to attract investment of between 20% and 25% of gross domestic product to sustain its growth.
Matona noted that the NPC has tried to simplify the process of investing in order to encourage investment, which will ultimately progress the National Development Plan’s implementation.
These initiatives included the Department of Trade and Industry’s launch of Invest SA in 2016 to address the ease and cost of doing business in South Africa.
The Employment Tax Incentive has also been extended to February 2019.
Additionally, Matona pointed out that various initiatives are currently under way to forge partnerships between government, business and labour to rebuild confidence, while improving prospects for more inclusive growth.
However, Matona warned that these initiatives must be strengthened and formalised into social compacts, as envisaged in the NDP.
Beyond short-term initiatives, he stated that there should be a focus on transforming the underlying structure of the economy.
“If the broad-based inclusion of black people in the economy is to be achieved, we need bold and innovative approaches to implementing the existing policies such as broad-based black economic empowerment, employment equity and skills development”.
To be successful, Matona suggested fresh engagement is needed, with businesses required to take an active interest in where government policies and programmes are coming from, as well as what these seek to achieve.
This, in turn, will lead to government appreciating the vision business holds, he said, while the common ground for partnerships and collaboration is expanded.
“If we are able to arrive at a vision of growth, we will make headway as a country. But to make this headway, something has to give. We need practical and effective partnerships to create partnerships that will take South Africa forward”.