Our expectation at this stage is that GDP growth will increase from 0.5 per cent last year to 1.3 per cent in 2017, and will continue to improve moderately over the medium term.
| • | The services sector was the main contributor to growth in 2016, bringing nearly 120 000 new work opportunities. |
| • | Mining continued to underperform while manufacturing output was supported by buoyant sales in petrochemicals, food and beverages and motor vehicles. Mining and manufacturing employment declined by 80 000 jobs in 2016. |
| • | Weak business confidence and low levels of profitability weighed on investment across all sectors. |
| • | Though the policy interest rate has increased by 2 percentage points since 2014, inflation ended the year above the target, with food prices continuing to reflect the impact on agriculture of poor rainfall. |
| • | Lower growth in our trading partners in Africa and elsewhere has contributed to sluggish export earnings. |
We expect somewhat higher growth in the coming year on the strength of a number of favourable trends:
| • | Commodity prices have rebounded |
| • | The exchange rate has recovered from its rapid depreciation last year, which bodes well for capital flows, inflation and business and consumer confidence |
| • | Drought conditions have abated in most of the country |
| • | Production stoppages associated with industrial disputes have been comparatively low |
| • | Electricity supply has improved, allowing new connections and industrial demand to be accommodated. |
But the projected rate of growth is not sufficient to reduce unemployment or impact significantly on poverty and inequality. It falls well short of our NDP goals.
Madam Speaker, we know what to do to get ourselves out of the present low growth trap. “Ditau ge di shumishana di ka bolaya nare.” (If lions work as a team they will bring down even a buffalo.)
In order to boost investment in the short term, there are several specific imperatives:
| • | Finalising legislation relating to mining development and land redistribution. |
| • | Implementing the transition from analogue to digital television, which will release spectrum for broadband services. |
| • | Continuing our independent power producer programme, both in renewables and to take advantage of gas investment opportunities. |
| • | Further strengthening of economic regulatory functions and streamlining investment approval processes. |
| • | Production-friendly industrial relations and prompt resolution of disputes. |
| • | An enabling environment for small enterprises and support through leveraging both public and private sector procurement budgets. |
| • | Focused support on labour-intensive sectors, including agriculture, agro-processing and tourism-related services. |
| • | Strengthening regional ties and trade links. |
| • | Safeguarding South Africa’s investment-grade credit rating. |
The 2017 budget allocates funds over the MTEF period to support economic growth in various programmes:
| • | R3.9 billion for small, medium and micro enterprises and cooperatives. |
| • | R4.2 billion for industrial infrastructure in special economic zones and industrial parks. |
| • | R1.9 billion for broadband implementation. |
| • | R3.9 billion for the Council for Scientific and Industrial Research. |
| • | An additional R494 million for tourism promotion. |
| • | An additional R266m to support the aquaculture sector and realise the goals of the Oceans Economy Phakisa Operation. |
| • | Spending on agriculture, rural development and land reform amounting to nearly R30 billion by 2019/20. |
Effective implementation of these and other programmes and initiatives will set us on a higher growth trajectory than currently projected. Progress in engagements between government, the business sector and social stakeholders is imperative.
