Economy growing too slowly, ANC warned

Cape Town-151106. Trade and Industry Minister Rob Davies and senior trade official and special envoy on Agoa Faizel Ismail addressed a news conference at Parliament on Friday(today), saying it was in the interest of both the United States and South Africa to renew the Agoa deal.Reporter: Craig Dodds.Photo: jason boud

Cape Town-151106. Trade and Industry Minister Rob Davies and senior trade official and special envoy on Agoa Faizel Ismail addressed a news conference at Parliament on Friday(today), saying it was in the interest of both the United States and South Africa to renew the Agoa deal.Reporter: Craig Dodds.Photo: jason boud

Published Jan 31, 2016

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Johannesburg - The ANC has received a warning from one of its cabinet ministers that the country was well off the level of growth needed to achieve its “radical economic transformation”.

The party has also been urged to speed up the transition from an economy dominated by the production and exports of gold, diamonds and other primary commodities.

The mining sector was unlikely to create more jobs in the near future but would in all likelihood shed more of them.

While government remained the biggest employer, the public sector was also unlikely to provide more prospects of further employment.

The warning was delivered by Minister of Trade and Industry Rob Davies at the party’s NEC lekgotla in Pretoria, when he tabled a report on the economic outlook for the country in the current tough conditions.

Davies painted a picture of a country that would struggle to create jobs in the future if it continued to rely heavily on the exports of primary commodities.

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While he said the economy was still creating jobs with substantial gains in the agriculture, construction and financial services sectors, there were still significant job losses in the mining sector.

“Notwithstanding global and domestic headwinds, the South African economy continues to grow. But we are well off the five percent inclusive growth needed for radical economic transformation,” said Davies.

The fall of commodity prices also had a knock-on effect in manufacturing, construction and services.

Agriculture was seen as still having “potentially among the fastest job creation potential”, but was being negatively affected by the drought.

“Above all, the crisis underscores the need for South Africa and Africa to accelerate transition from an economy dominated by production and exports of primary commodities,” said Davis.

“We must move up the value chain, industrialise and promote developmental integration.”

Davies’ report was one of two critical reports presented to the lekgotla on the economy, the other being delivered by Finance Minister Pravin Gordhan.

Attended by cabinet ministers, deputy ministers and various ANC structures and alliance partners, the lekgotla concluded there was a need for urgent steps to ensure the country does not fall into a recession.

The party emphasised that it would continue investing in infrastructure development and not cut down on social spending.

“It is the right time to invest heavily in infrastructure, which is not a cost – it is an investment. It becomes a problem if you increase consumer spending when there is a downturn,” said ANC secretary-general Gwede Mantashe.

Further investment in infrastructure appears to be a certainty, and is likely to form a significant part of this year’s budget. It is referred to by the ANC as a counter-cyclical measure.

According to Davies’ report, government was the main driver in infrastructure development and its programmes had created more than 400 000 jobs (period unspecified).

The outcomes of the lekgotla are expected to give directives to the cabinet lekgotla, which will take place before President Jacob Zuma delivers the State of the Nation address in three weeks.

The Sunday Independent

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