SA committed to sustainable fiscal framework

Thursday, December 14, 2017

While South Africa has experienced a turbulent 2017, government remains committed to maintaining a sustainable fiscal framework going into the future.

In a statement on Thursday on progress made in moving the country forward, the Presidency said South Africa, like many other countries, is facing severe headwinds and is facing challenging economic conditions.

“This has, however, not stopped government from doing all it can to reignite economic growth,” said the Presidency, noting that the South African economy has managed to emerge out of a recession.

The country’s gross domestic product (GDP) rebounded by 2.5% in the second quarter of 2017 and subsequently to 2% in the third quarter of 2017.

The Presidency said both these figures reflect improvement, compared with the 0.7% decline in the first quarter of 2017. In the third quarter, the country’s agricultural output expanded by 44.2%, while the mining and quarrying industry increased by 6.6% and the manufacturing industry increased by 4.3%.

Concerns raised by government include the unemployment rate that remained unchanged at 27.7% for most of 2017, as well as depressed levels of business and consumer confidence.

President Jacob Zuma has directed Finance Minister Malusi Gigaba, working with the Presidential Fiscal Committee, to identify concrete measures to urgently address the challenges identified in the Medium Term Budget Policy Statement (MTBPS).

“We remain committed to maintaining a sustainable fiscal framework and to ensuring that a solution is found to address the roughly R40 billion gap that has been identified through a combination of expenditure reductions and revenue-enhancing measures,” the Presidency said.

These interventions include:

- Identifying and finalising proposals for about R25 billion cuts in expenditure in areas that will not negatively affect economic growth prospects and job creation.

- Identifying and finalising proposals for revenue-enhancing measures amounting to about R15 billion including, where appropriate, tax measures.

- Developing a phased implementation plan to enable the proposals for fee-free higher education for students from poor and working class backgrounds to be implemented in a fiscally sustainable manner.

- Identifying the package of economic stimulus measures that will be implemented to enable the economy to grow at a faster rate.

The Presidency said the continued collaboration between business, labour and government remains key to growing the economy and creating jobs.

“By working together, we can build an inclusive economy which benefits all South Africans. Government has laid the framework for this through progressive economic and social policies.”

Reigniting growth through better trade support

When coming to the Nine-Point Plan that was first announced in the 2015 State of the Nation Address (SONA), the Presidency said the impact of the plan is being felt in key strategic sectors such the energy, manufacturing and the oceans economy.

“While the plan draws to a conclusion in 2019, it would have set in motion a number of levers to boost the economy’s future growth,” the Presidency said.

As part of improving the ease of doing business, government launched InvestSA One-Stop Shops in KwaZulu-Natal, Gauteng and the Western Cape.

The One-Stop Shop concept creates a conducive environment by providing a focal point of contact for investors to obtain all services to fast-track projects and reduce government red-tape when establishing a business.

The One-Stop Shops provide services offered by key departments such as Home Affairs, Labour, Environmental Affairs, as well as agencies such as the South African Revenue Service (SARS).

In 2017, South Africa made further gains as a preferred investment destination for many of the world’s top companies. 

The country has proven itself to be a popular investment destination, which consistently attracts some of the world’s top businesses to its shores.

In 2017, Ford invested R3 billion at its Pretoria assembly plant in order to increase production for its Ford Ranger model.

“This builds on the country’s reputation as a preferred investment destination and affirms government’s Automotive Production and Development Programme in attracting global automotive producers,” said the Presidency.

On the transport front, upgraded and new roads have made travelling easier and more accessible.  Investments in transport have seen the launch of new trains, as well as the expansion of Bus Rapid Transit (BRT) systems in various cities. 

Government has embarked on one of the world’s biggest rail transport projects to overhaul the country’s passenger trains worth more than R50 billion.

Bringing the marginalised into mainstream economy

The country is also moving to ensure the meaningful participation of black South Africans in the productive sectors of the economy.

“Government has created a hive of economic activity in our rural areas through the revitalisation of agriculture that opens opportunities to South Africans who need it the most,” said the high office.

This includes a programme of equity sharing on farms that is benefiting 921 households on 90 191 hectares to the tune of R631 million. Similarly, the One Household One Hectare programme to increase tenure, food security and develop farmers operating on a small scale has benefited 6 000 households.

Poorer communities in outlying areas are being drawn into the mainstream economy through six new industrial parks and 11 agricultural parks, special economic zones and the rollout of broadband services in rural districts.

This includes the creation of 1 770 jobs in marginalised coastal communities through aquaculture projects that have attracted R444 million in private and public sector investment.

Government launched the Black Industrialists Programme to kick start greater participation of black South Africans in the industrial sector. To date, 46 projects have been supported by government and have attracted R3.7 billion of private sector investment and created 19 859 jobs.

To support localisation, 21 products and sectors have been designated for local production.

Safer festive season

As South Africans get into the swing of the festive season, the Presidency wished everyone a safe and prosperous time, while also urging citizens to be responsible.

“We wish everybody a safe and prosperous time, whether they remain at home or decide to travel to friends and family or on vacation. Government calls on South Africans to have a relaxing festive season but to do it responsibly.”

Government will, for its part, do all it can to ensure a safe festive season for all. Traffic officers will be out in force during the festive season, and there will be zero tolerance for road users who drive recklessly, are negligent and drive at excessive speed.

“It is also important that we behave responsibly at all times. Those who choose to consume alcohol are advised to do so in moderation, and to never drink and drive.”-

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