JOHANNESBURG - The government is planning to crack the whip in the slow pace of implementing structural reforms to unlock economic growth.
Finance Minister Nhlanhla Nene said the country was not short of facts of the challenges facing the economy, but execution of plans was lacking.
“The government has identified one of the biggest constraints to growth as the inability to execute some of the plans we have. We now have to hold each other accountable for implementation of our plans,” Nene said.
He also flagged the below-par development of the secondary sectors of the economy as one of the big impediments to growth.
The minister was speaking at the World Economic Forum round table meeting with the South African government.
This was meant to engage how global business can make the most meaningful contribution to the government as it seeks to build a consensus on its strategy to raise $100billion (R1.37trillion) in investments in the next five years.
President Cyril Ramaphosa’s multi-billion dollar investment drive this week saw Mercedes-Benz plough 600million (R9.54bn) into the expansion of the East London plant.
Citadel portfolio manager Yolanda Naudé said both fiscal and monetary policies are cyclical tools, which can’t deal with structural impediments in an economy.
“Without courageous leadership and dramatic changes to our economic and educational framework, the country will drift along a low growth path, with poverty likely to rise,” Naudé said.
A delegation of 24 ministers descended on Johannesburg and broke into task teams to deliberate with the WEF on how to grow South Africa’s economy. Among the issues to be thrashed out was how the country can take advantage of regional development and co-operation, infrastructure and jobs and entrepreneurship.
WEF member of the executive committee and head of regional agenda Africa Elsie Kanza said the country needs to ready itself to yield results from the fourth industrial revolution.
“Boosting manufacturing in South Africa is as much about robotics and big data as it is about low wages and access to global value chains. Turning this challenge into an opportunity must rank as a high priority for the government,” Kanza said.
The World Bank in April said decisive structural reforms could shift the forecast growth trajectory, bringing potential growth to above 2percent in the medium term.
However, the term structural reform has become a clichéd line in South Africa’s economic discourse, with little done over the years to address the structural bottlenecks. NWU School of Business economist Raymond Parsons said economic recovery and structural reform must remain top priorities for South Africa.
“It is now widely agreed that to get out of this ‘low growth trap’ requires structural reforms which will put the economy on a much higher growth trajectory and reduce unemployment.”