The rise in the oil price, change in sentiment towards emerging markets and deteriorating international trade relations have been among the contributing factors.
The government has heard the plight of South Africans in these difficult conditions and has introduced a stimulus package and recovery plan to reignite the economy. At the heart of the plan is redirecting our government spending towards activities that will make the greatest impact on economic growth, domestic demand and job creation.
Releasing the package of stimulus measures, President Cyril Ramaphosa said it consisted of a range of measures, both financial and non-financial, to address “urgent challenges that affect the conditions faced by vulnerable groups among our people”.
In this regard we have ensured that the package of recovery measures gives particular emphasis to township and rural economies, women and youth who often bear the brunt of these harsh economic realities.
It will inject R50billion into key sectors such as agriculture, public infrastructure, township and rural economies. We are confident that a revival in these sectors will give the necessary impetus to jolt economic activity and create meaningful jobs.
These bold measures will be immediately implemented and demonstrate decisive leadership on the part of the government to bolster our economy. We have also taken the important decision to act within the limited fiscal space of our current expenditure framework.
Budget deficit targets
On the ground it means that we will re-prioritise available resources to those areas that will have the biggest impact on jobs and economic growth. The reallocation allows us to boost the economy while remaining within our budget deficit targets.
This prudent management of finances affirms our economic standing, safeguards the country's investment grade status, builds investor confidence in our country and upholds our reputation of many years of strong fiscal discipline.
Among the sectors that will substantially benefit from the stimulus package is agriculture, which has the potential to create a million jobs by 2030. International experience shows that the sector is a large employer with 5.5million employed in Turkey and 2.5million in the US.
In supporting the growth potential of the agricultural sector the Land Bank is concluding transactions that will create employment opportunities over the next three to five years with a significant portion of the funding going towards export-oriented crops that are highly labour intensive. The sector's contributions will be further boosted as the government finalises the signing of 30-year leases with farmers that will enable them to access funding for agricultural development or expansion.
Our stimulus plan will reinvigorate investment in infrastructure which has been on a decline.
Work in this critical area will be overseen by a dedicated Infrastructure execution team in the Presidency and funded through a new infrastructure fund of more than R400billion over the medium-term expenditure framework. We believe infrastructure expansion has the potential to create jobs on a large scale and begin a cycle of economic activity that draws more investment into our economy.
An important aspect of the recovery plan is the acceleration of key economic reforms to secure confidence in sectors affected by regulatory uncertainty and unlock greater investment in growth sectors.
We can expect better performance in tourism with changes in our visa regulations that make it easier for visitors to come to the country, and the lifting of visa barriers that hamper the country in attracting scarce skills.
The mining sector will also be boosted through the finalisation and implementation of the sector's reforms such as the Mining Sector Charter. Reforms in the ICT sector will focus on the reduction of data and communication costs as well as the allocation of high-demand spectrum.
The Public Procurement Bill will be fast-tracked to increase public sector purchasing from co-ops and small businesses. We will protect businesses within the poultry and other sensitive sectors through trade measures within the World Trade Organisation.
In building on the stimulus package, the country will host two important summits over the next two months that will further strengthen the economy and deal with the pressing challenge of job creation.
In the beginning of October the country will host a Jobs Summit that brings together government, business, labour and community organisations to engage in unlocking the bottlenecks to job creation.
Our confidence in the economy is also lifted by the International Investment Summit in November to profile the country as an investment destination. We will use this platform to reclaim our investment credibility and mobilise R1.2trillion in new investments over the next five years.
South Africans are encouraged to work with the government to implement the package of stimulus measures so that we move our economy on to a new growth path. Every person has an important role to play if we are to realise our full economic potential.
Nomvula Mokonyane is the Minister of Communications.
The views expressed here are not necessarily those of Independent Media.