Johannesburg - Government has noted the Organisation for Economic Co-operation and Development (OECD) report on South Africa, saying that the report is broadly supportive of the country’s macroeconomic stance even as it notes risks to the economic outlook.
“The report is indeed an analysis of our macroeconomic framework which is broadly supportive of our macroeconomic stance,” Finance Minister Nhlanhla Nene said on Friday at the release of the economic survey on South Africa.
The focus on 1.9 % growth is consistent with the country’s focus for growth in 2015, he said.
The report, among other things, pointed to the electricity constraint challenge. It said the power cuts dented an already slow economic recovery.
In his response Minister Nene said government was doing all it can to address the energy constraints.
“We acknowledge that the energy challenges that we are confronting has a negative impact on the economy and have prioritised the restoration of energy security in South Africa. Government’s approach has focused on stabilising Eskom and facilitating participation of the private sector,” explained the Minister.
The report also noted that the country should increase taxes on wealthier individuals in order to boost revenue for South Africa’s growing demands.
According to the report, released at media briefing hosted by the Minister and the secretary general of the OECD Ángel Gurría, South Africa’s tax base is narrow and revenues are too small to meet future spending needs.
Taxes on middle- and high-income earners were raised in the budget delivered in February.
“On taxation issues we’ve identified the need for reviewing our taxation framework. The work of the Davis Tax Committee is expected to make proposals that can enhance the contribution of tax policy to growth, employment and fiscal sustainability,” said the Minister on Friday.
Gurría said although the country had achieved a lot since 1994, inequality was still very high with a low employment rate among the black population.
He also pointed out infrastructure bottlenecks saying that more infrastructure was needed including housing and telecommunication.
The report also highlighted the protracted labour strikes. The OECD recommended a public employment service should be stablished as a one-stop-shop for job seekers to lower the cost of job searches and hiring costs for employers which would improve the matching of workers to jobs.
The OECD also recommended that there be increased mediation and arbitration to make wage negotiations less confrontational.
The report noted that the barriers to entrepreneurship were high with Small, Medium and Micro-sized Enterprises (SMMEs) experiencing high regulatory barriers.
Minister Nene said the establishment of the Department of Small Business Development is aimed at addressing challenges faced by SMMEs.
“Government policy is also focusing on reducing barriers to SMMEs, recognising that they can be an important job creation driver,” said the Minister.
Minister Nene further added that government will study the recommendations of the report.-SAnews.gov.za
