LIVE: Ramaphosa answers questions on VAT, land and social poverty
CAPE TOWN - President Cyril Ramaphosa responded to questions on the high unemployment figures recently released by StatsSA, as well as government’s plans on the review of the list of zero-rated items to mitigate the impact of the increase in VAT from 14 to 15% earlier this year.
Ramaphosa said will also speak on government’s signing of the Independent Power Producers agreements as well as how SA, as a BRICS member state, intends to build a fairer global trade regime to forge strong, sustainable & inclusive growth.
The president began by stating that "the urban spatial patterns that we inherited from apartheid, and which persist to this day, contribute to the reproduction of poverty and inequality – and must be fundamentally changed."
Ramaphosa said: It is unacceptable that the working class and poor, who are overwhelmingly black, are located far from work opportunities and amenities. Among other things, this places enormous pressure on family life. Working parents leave home early and return well after young children are, or should be, asleep. These long commuting times impact disproportionately on the household income of the poor.
According to StatsSA, more than two-thirds of households in the lowest income quintile spend more than 20% of their monthly household income per capita on public transport.
In response to this Ramaphosa said "but the progressive transformation of our urban spaces is not just about radically addressing social poverty and racial inequities. We must make our cities generators of wealth and reservoirs of productivity."
"We need to eradicate the economic inefficiencies of transporting a workforce from dormitory townships into centres. The radical transformation of our urban spaces is, therefore, both a social and economic imperative."
Ramaphosa went on to add that government was focused on developing integrated human settlements located close to work and amenities, rather than just meeting housing targets. "At the same, through a significant investment in the township economy, we are working to bring economic activity to where most of our people live," the president added.
The president said that in order to accelerate spatial transformation, Cabinet resolved at its recent lekgotla on the rapid release of well-located, but under-utilised land to develop affordable, mixed-income human settlement.
"Much of this land is owned publicly by national departments, provincial governments, municipalities and state-owned companies. Some of this land is privately held for purely speculative purposes. We need to use every inch of underutilised land for our people to live on and to farm. We have a responsibility – imposed on us by the Constitution – to ensure that all South Africans have security of tenure. This should form part of the broader social compact envisaged in the National Development Plan, and which, in many different ways and on many different fronts, we are working to build. "
"Through such a compact, through the transformation of our urban spaces, by strengthening property rights for all, we can ensure that the poor and working class live in decent communities located near to economic opportunities."
The president went on to say that he is totally opposed to the eviction and mass movement of people from areas where they have lived.
"My family was forcibly removed in 1962. Those wounds remain deep in our memory. Seeing that happening today is against what we should stand for as a nation. We encourage local government entities to look at the places where hostels are located and transform them into more decent and better accommodation. Creating employment, particularly for young people, is the most urgent & critical priority for our country at this moment in our history. The most recent unemployment figures are a clear signal that we cannot continue at the current pace of economic growth."
President #Ramaphosa: We must treat unemployment as a burning platform – a challenge that requires extraordinary measures and exceptional efforts to address. To succeed, it is essential that we understand the causes of the massive unemployment in our country. #RamaphosaQandA pic.twitter.com/ExN5Zf3pZ7— PresidencyZA (@PresidencyZA) August 22, 2018
President Ramaphosa also added that the historical reliance on raw commodity exports and the deliberate underdevelopment and economic marginalisation of the majority of our people resulted in structural unemployment that has been a prominent feature of our economy since the early 1980s.
"Following the dawn of democracy, we were able to create jobs on a scale not before seen in this country. In 1994, 8.8 million South Africans were employed. The latest employment data show that 16.3 million people are in employment. In other words, employment has doubled between 1994 & 2018. Despite an absolute increase in the number of people employed, South Africa’s unemployment rate has remained stubbornly high, as the population has grown and more people have entered the workforce."
The president said: "Put simply, we have not been creating enough jobs to meet the growing need for work. That is why this government is working together with its social partners to address both the immediate economic challenges and, through far-reaching reforms, place the economy on a new path of inclusive growth and job creation."
The president said that "we have prioritised the task of significantly raising levels of investment in the economy, since that is essential for growth and job creation".
There has been an enthusiastic response from South African businesses and international investors to our plans for an Investment Conference, which will be held in Johannesburg from the 25th to 27th October, Ramaphosa said.
"We have been approached by business leaders across the economy insisting that they will play their part, working together with government, to grow the economy and create jobs."
Ramaphosa said that in the coming days, Cabinet will announce the details of a stimulus package to reignite growth and to establish the foundation for a sustained economic recovery.
This package reprioritises funds towards initiatives that are labour intensive, addresses infrastructual needs and boosts local economies. Government will vigourously implemement confidence-building measures to unlock private sector resources.
"We are addressing chief constraints to greater investment & growth. Government is making progress on addressing policy & regulatory issues like visa requirements for skilled individuals, finalisation of the Mining Charter & the draft Integrated Resource Plan. We will also soon be making announcements on the allocation of broadband spectrum, the Electronic Communications Amendment Bill and the single transport economic regulator. We are improving governance across the public sector and have moved with speed to tackle state capture and corruption. We are also taking measures to improve the efficiency and effectiveness of government at all levels."
The president then addressed companies in SA.
"With many companies contemplating retrenchments, we need to work together as social partners - in much the same way as we did in response to the 2008 financial crisis – to mitigate the effects of the current economic climate on jobs. Beyond these measures, we must undertake a fundamental re-engineering of the economy. We are working to build human capabilities through access to high quality early childhood development, access to higher education to produce skills needed for the future, youth employment interventions and improving outcomes in education and health."
The president further added that government is working on reducing barriers to entry, especially for emerging black businesses. "We are doing this through stronger competition regulation, revitalising key state-owned entities, promoting agrarian reform, better spatial planning, improved public transport systems, development finance and industrial incentives," he said.
The president said that government is developing the productive base of the economy, by enhancing current industrial policy measures, leveraging local procurement, sharpening the Industrial Policy Action Plan, promoting export competitiveness & taking advantage of regional opportunities.
Promoting the growth of labour intensive sectors like agriculture, services and tourism is key for the president.
"As social partners, as a country, we must respond to the current economic difficulties with the same determination that we have confronted the seemingly intractable problems of our past. Working together, we must fight for every job and for every cent of investment. Now is the moment to unite and work together. If work experience was a requirement for many of us here to get into job positions, many of us wouldn’t have been able to access the opportunities that we have. Young people must be given opportunities regardless of lack of work experience."
Ramaphosa called for SA to give young people a chance.
"We shouldn’t hold back and be afraid to give young people a chance. I call on companies to open up opportunities for young people to get to work."
When it came to wasteful expenditure and corruption, the president said government is becoming more aware of how they can tighten up the processes to ensure that when money is allocated it is used for the purposes it was earmarked for. Government is going to curb wastage and corruption as assisted by the Auditor-General.
"We are well aware that private sector actors set up various systems to defraud money from the public sector. We are going to stop these. We are cleaning up government."
In terms of Brics, the president said the partnership offers South Africa significant opportunities to expand and diversify our trade, to attract investment and to develop our economic infrastructure.
Against the backdrop of unilateral measures taken by some developed countries to protect their domestic industries, Brics countries are forging ahead with initiatives to expand intra-Brics trade and investment, according to Ramaphosa.
"Brics countries have reaffirmed their commitment to work together to shape a multilateral trading system that supports industrialisation and economic diversification. The Brics countries constitute an important global voice in support of a rules based, transparent and inclusive multilateral trading system that promotes a predictable trade environment and the centrality of the WTO. Brics countries are in agreement that development must remain integral to the WTO’s work and that developing countries should secure a share in the growth of world trade that matches their needs for economic development."
Trade between South Africa and its Brics partners has grown from $28 billion to $35 billion over the last decade. Combined, the Brics countries account for 15% of South Africa’s exports, and 25% of the country’s imports.
With a combined GDP of approximately $15 trillion, Brics countries account for around 20% of gross global product, over 40% of the world population, & have collectively contributed more than half of world economic growth during the last 10 years.
Ramaposa said that Individual Brics countries are important and influential globally, but it is when these countries stand together in the alliance formed through Brics that we are in a better position to advance a fairer global trade agenda.
"We always act to promote our country’s interest in everything we do. When we deal with various countries, it is to protect our national interest. China has not displayed imperialist tendencies. We are wide awake and we know an imperialist when we see one."
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