Low growth, public debt are major obstacles to inclusive economy - Masondo
JOHANNESBURG - Low economic expansion and growing public debt mainly driven by expenditure on the public wage bill, state owned enterprises and debt-service costs are among the key obstacles to an inclusive economy in South Africa, deputy finance minister David Masondo said on Monday.
Masondo told a conference hosted by financial services company JP Morgan that it would take a close working partnership between the government, investors, companies and labour unions to find and implement solutions to these challenges.
"Our economic growth continues to be too low to tackle the high levels of unemployment and poverty," Masondo said, noting the gross domestic product was virtually flat in the first two quarters of 2019.
He said the cost of doing business in South Africa was still relatively high, especially in the ports, rail and telecoms sectors, and that the recently released Economic Strategy for South Africa policy document was therefore focused not only on reducing the cost of living; but also improving the competitiveness of network industries.
Masondo noted that commuters spent around 50 percent of their income on transport, testimony that the taxi industry-led public transport system in South Africa was not sustainable.
"There must be a serious mass transit system very soon. The goods transport system led by the trucking industry is also not sustainable," he said.
"To correct these structural bottlenecks in our network industries such as the transport industry, will require us to work together through private-public partnerships."
He stressed the need to move away from the recent trend of the national budget increasingly becoming a bailout fund for state-owned enterprises (SOEs) and called for private-sector participation in making them more viable.
Masondo singled out struggling power utility Eskom, whose liquidity challenges he said needed to be resolved urgently to improve its performance.
"Let us be clear: debt in Eskom is a symptom of a deeper problem related to Eskom’s cost structure, its business model, as well as revenue generation and collection," he said of the company, which is owed R25 billion by municipalities.
- African News Agency (ANA)