SA economy weathers the storm

Monday, February 6, 2017

Pretoria - When President Jacob Zuma tabled the 2016 State of the Nation Address (SONA) in Parliament, he began by indicating that the country was in a tough economic position. The rand was weak and employment was low.

While not much has changed globally, the good news is that the South African economy ended 2016 on a stronger footing. Come SONA 2017 on Thursday, the President will address the nation knowing that the economy remains resilient, given the tough climate.

Figures released by Statistics South Africa in December indicate that things are improving for the country’s economy following a period of sluggish growth.

Gross Domestic Product (GDP) estimates for the third quarter of 2016 showed a growth rate of 0.2%. This follows the contraction of 1.2% recorded in the January-March quarter.

The main contributors to the GDP growth rate were the mining and quarrying industry, finance, business services, and general government services.

Government says there is a clear demonstration that consolidated efforts by government, business and labour in implementing the National Development Plan (NDP) are beginning to have an impact. However, there remains a need to intensify these efforts and to fast-track the implementation of South Africa’s developmental blueprint in order to get the country to the desired position of eliminating poverty and reducing inequality by 2030.

Given the fact that the South African economy is not out of the woods yet, the Presidency has emphasised that, going forward, efforts to reignite economic growth will have to continue. It said government will achieve this by working with other social partners, taking forward the achievements of the past year and advancing growth in a difficult economic environment.

In most instances where government has made interventions, whether within the policy space or facilitating swift authorisations and approvals or providing some incentives, it has unlocked private sector investment.

Investment grows

The work of the Inter-Ministerial Committee on Investment is starting to bear fruit. During the quarter under review, Invest SA facilitated an investment pipeline amounting to R18.2 billion mostly in large scale gas to power projects.

Economic diplomacy initiatives undertaken yielded increased sales of manufactured value-added exports by R1.191 billion, which brings the cumulative total for the year to R3.808 billion.

At least 94 economic diplomacy and image building activities were undertaken during this period.

Foreign Direct Investment (FDI) inflows confirm that South Africa remains a preferred investment destination.

For example, Coega Development Corporation signed a deal with the Beijing Automobile International Corporation for a new automotive investment worth R11 billion in the Eastern Cape. The plant – once constructed – will have the capacity to produce about 50 000 cars, trucks and sport utility vehicles.

Growing local business

As part of facilitating access to finance for small and medium businesses, including co-operatives, the Department of Small Business Development supported 149 enterprises in the quarter under review. In addition, 104 cooperatives were supported through the Co-operative Incentive Scheme. These interventions are unlocking the potential of SMMEs, cooperatives, township and rural enterprises.

In the agricultural sector - 172 new agricultural enterprises and 23 non-agricultural enterprises were supported through various initiatives. An additional 337 existing SMMEs were identified and will be supported with training and market access. A total of 240 cooperatives were supported through the scheme.

In total, 11 554 people were employed through various initiatives that were implemented in the rural space. In addition, 218 989 work opportunities and 43 971 full-time equivalent jobs were created through the Expanded Public Works Programme.

Meanwhile, Operation Phakisa for Agriculture, Land Reform and Rural Development is underway with the primary objective of formulating interventions geared towards reigniting growth and inclusion in the sector. – SAnews.gov.za

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