If South Africa is to achieve 6% growth, extraordinary bold decisions that change the economy must be made.
This is according to Malusi Gigaba, South African Finance Minister.
“If we must rebound from a low growth trajectory into which we currently are in; if we must grow our economy at 6% on a sustainable basis; we must take extraordinarily bold decisions that change the structure of production and the sectoral composition of the economy and at the same time change the patterns of ownership over the long haul,” says Gigaba.
Speaking at the Thomson Reuters economist of the year award ceremony at the Johannesburg Stock Exchange in Sandton, Johannesburg, Gigaba says lower than expected growth is likely this year.
Heading towards the tabling of the Medium Term Budget Policy Statement (MTBPS), in October, will require that tough decisions be made.
Speaking to economists gathered at the award ceremony, the Minister says the South African economy which recently entered into a technical recession following years of slow growth means that the country is far from achieving the 5-6% growth target.
“We are far from achieving the 5 to 6% growth target we need in order to begin to dramatically reduce poverty, unemployment and inequality,” he says.
The Minister called on all sectors of the economy including government, business, labour and civil society to do its part to grow the economy while making it more inclusive and fair.
This as the National Development Plan (NDP) “commits us to pursuing growth and economic transformation, we need to do both because one without the other would be inadequate.”
Minister Gigaba says the term Radical Economic Transformation has been criticised as either being undefined or a smokescreen for a plot to capture the state.
“It has been falsely pitted against inclusive growth or even radical social economic transformation. The crux of the debate is that unless we have an economic discourse that generally seeks to confront the status quo, we will continue to speak past one another.”
In order to protect the economy that already exists, several things need to be done including the need to transform the sectoral composition of the economy to reflect a post-apartheid industrial economy, as well as to end the apartheid colonial dual economy by developing a productive economy in the townships and rural economies and creating an enabling environment.
“These elements are far more radical than the incremental changes we have pursued thus far. Incrementalism and short-termism are the enemy of such radicalism,” he says.
Role played by economists
In addition, government is cognisant of the role played by economists. Economists, he said, have invaluable knowledge.
“We need more proposals on solutions. We are interested in your perspectives and ideas on how best to grow and transform the economy,” he said, adding that government is committed to listening to a variety of views.
Minister Gigaba said that despite the setback of the recession, there are positives on which the country can draw on.
“A recovery in domestic GPD growth is achievable due to a number of favourable factors including stronger global growth and global commodity prices, improved availability of electricity supply and more favourable climate conditions and improved labour relations,” he says.