Johannesburg - The burden of driving economic growth should be taken up by the private sector while the state played a facilitating role, Finance Minister Pravin Gordhan suggested on Friday.
Speaking at an FNB post-Budget breakfast, the minister said that in most economies, the private sector was the dominant sector.
“In South Africa, about 70 percent of gross domestic product (GDP) is (derived from the private sector) and 70 percent of the GDP means mechanically that 70 percent of the growth should come from that area, 70 percent of employment should come from that area and 70 percent of the investment must come from that area as well,” he said.
“The question now is… when does the handover happen? When does the private sector come to the party again and that’s the debate.”
The state is expecting the small and medium enterprise sector to contribute to growth ambitions and for these companies to become exporters.
“If you’re worried about the current account balance then one of the things we need to do in South Africa is use our creativity, government support and the support of financial institutions. I think the banks need to play a far more important role in providing finance to small businesses as well,” Gordhan said.
Black participation in the sector had to be increased, he added. “If we can get the export industry right in South Africa for at least the next 10 years or so, that can become a new and important leg that enables us to shift from precious metals and minerals as key exports.”
In his Budget tabled on Wednesday, Gordhan allocated R6.5 billion over three years to support small and medium enterprises, and said the turnover tax regime would be amended to further reduce the tax burden on micro enterprises.
The National Treasury would also consider replacing the graduated tax structure for small business entities with a refundable tax compliance credit. In addition, the state would amend the venture capital company tax regime and relax the rules that governed access to foreign capital to support entrepreneurial development, he said.
“What the world, let alone South Africa, is looking to, is this handover from the public sector to the private sector…” Gordhan stressed.