South Africa’s economic transformation and inclusive growth would not result from a single intervention but rather a range of mutually supporting initiatives, Deputy President Cyril Ramaphosa said at the recent South African Reserve Bank leadership conference, adding that, in many cases, this did not require new strategies, but rather better implementation of existing ones.
He noted that the key challenges to eco-nomic growth in South Africa were domestic, with the economy having contracted by 0.6% in the first quarter of the year and barely having grown in the second quarter, as mining and manufacturing production fell sharply and growth in other sectors remained modest.
“Government is acutely aware of the chal-lenges in our economy,” Ramaphosa said, pointing out that government sought to develop an economy that grew at no less than 5% a year.
He said, therefore, government would accelerate the implementation of the National Development Plan (NDP) to deal with both the immediate challenges and the long-term structural problems that constrained the country’s development.
“We recognise that a major reason for the low level of investment is weak business confidence. This is driven, at least in part, by perceptions of policy uncertainty. There should be no grounds for such uncertainty,” Ramaphosa stated, highlighting that the current administration had entered office with a clear mandate to implement the NDP.
“The key elements of that plan are captured in the Medium-Term Strategic Framework (MTSF) and all institutions of the State have gone to work to achieve its objectives,” he explained.
Ramaphosa added that government would increase its engagement with business to ensure that business better understood the policies and programmes of this administration.
Meanwhile, he said, government would continue to pursue a countercyclical fiscal policy where govern-ment saved during good times and spent to stabilise the economy during downturns.
“We seek a fiscal policy that gradually shifts spending from consumption towards investment [and] we see a greater role for development finance institutions in supporting investment in infrastructure, agriculture, small business development, black economic empowerment and industrialisation,” Ramaphosa said.
He stated that banks would be encouraged to broaden access to financial services to enable people to build up their assets and help small businesses emerge and grow.
Measures would also be introduced to address poor lending practices and excessive charges in some parts of the financial sector, and to make the sector more inclusive and accessible, Ramaphosa said.
“Government will continue to strengthen the regulation of financial institutions to ensure that savings are protected and customers are treated fairly. Postbank will play an expanded role in banking services.
“We look forward to a discussion with the South African Reserve Bank on how best [to] achieve our objective of financial inclusion while maintaining a sound and sustainable financial sector free of abusive lending practices,” he commented.