National Treasury calls on private sector to help tackle unemployment and boost economy
JOHANNESBURG - THE NATIONAL Treasury has called on the private sector to increase its infrastructure investment to help the government tackle rising unemployment and boost the struggling economy following the tabling of a balanced national budget.
Treasury director-general Dondo Mogajane on Friday said infrastructure spend in South Africa was skewed unfavourably in terms of gross domestic product (GDP).
Speaking at Absa’s “Beyond the Budget Dialogue” event, Mogajane said capital investments must increase for infrastructure by both the private and the public sectors.
“If you look at our infrastructure spend in the last decade, private capital investment was around 12.8 percent of GDP [while] public sector capital investment was around 6.7 percent of GDP,” Mogajane said.
“We want to increase that. We want to divert much needed resources to programmes that will boost productive sectors of the economy.”
On Wedesday Finance Misiter Tito Mbowwni said in his Budget Speech that government had committed to a R791.2bn infrastructure investment drive in the medium term.
Mboweni said the government was already partnering with the private sector to rollout infrastructure through initiatives such as the blended finance Infrastructure Fund.
Mogajane said the success of this infrastructure investment drive mainly depended on the increase in public-private partnerships (PPPs).
“Of the R791bn, PPPs account for only R17.9bn. We need to increase that and ensure that the quantum of the total amount allocated for infrastructure increases,” he said.
Mogajane also lamented underspending on infrastructure by some government departments.
He said State-owned companies represented only around R294bn of the R791bn in terms of investments.
“Underspending in government departments should be a thing of the past and partnering with the expertise that is there in the private sector is going to be quite critical moving forward.”
Infrastructure has been placed at the centre of the country’s economic reconstruction and recovery plan as unemployment continues to rise at a rapid pace.
The latest data showed that the unemployment rate has increased by 1.7 percentage points to an unprecedented 32.5 percent, with more than 7 million people, mostly youth, out of jobs.
Last year the government gazetted about 50 projects in water and sanitation, energy, transport and logistics, digital infrastructure, agriculture and agro processing, and human settlements totalling about R340 billion.
The government has also set aside R11bn for the Presidential Youth Employment Initiative, taking the total funding for employment creation to nearly R100bn in response to the job creation targets for young people.
“Not only are we putting aside money for creation of jobs, but we want to boost productive sectors of the economy,” Mogajane said.
“Not only do we have enough with the R791bn that we put aside, but we also want the private sector, development finance institutions to also partner with us in ensuring that we achieve that.”