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Treasury strategy document to steer South Africa growth
August 30, 2019, 5:44 pm

The public have until September 15 to comment

The National Treasury building in Pretoria [PREUSS]

The National Treasury’s growth strategy entitled ‘Economic Transformation, Inclusive Growth and Competitiveness Plan’ should encourage policy debate, but implementation is key according to economists.

Intellidex’s head of capital markets research Peter Attard Montalto said the plan had already caused quite a stir amongst political and policy circles.

“The buzz comes from the fact this is a very tightly argued, heavily referenced, evidence based policy paper written by the Economic Policy team within Treasury, but with full direction and authorisation from the Minister. It is the culmination of a workstream since the Minister came into office at the end of last year, through Mboweni’s roundtables in December and January and more recently a detailed series of interactions with academics and others on key issues,” he said.

Investec’s chief economist Annabel Bishop reflected the view of many economists when she focused on the implementation.

“It is a clear, fairly detailed plan with perceived tangible outcomes if implemented. It proposes to change South Africa’s trajectory to one of falling unemployment and accelerating economic growth, bringing SA into line with a number of successful economies globally,” she wrote in her reaction piece.

She said the plan focuses on key themes to boost private sector led economic growth in a current environment of near stagnant economic activity and rising unemployment.

The themes included modernizing the network industries to promote competitiveness and inclusive growth; lowering barriers to entry and addressing distorted patterns of ownership through increased competition and small business growth; prioritizing labour-intensive growth in agriculture and services; implementing focused and flexible industrial and trade policy to promote competitiveness and facilitate long-run growth, promoting export competitiveness and harnessing regional growth opportunities and quantifying the impact of proposed growth reforms.

“The plan will only be successful however, if red tape is substantially reduced, likely by around 25%, if economic growth reforms supporting the private sector are put in place and government follows through on its plans of providing the necessary support to the business environment. Key therefore is continual examination of the proposed reforms to ascertain whether they are likely to promote private sector economic activity,” she concluded.

Professor Raymond Parsons from the North West University Business School also emphasised implementation in his response.

“The National Treasury’s 77-page growth plan now published for comment offers wide ranging, constructive and fruitful ways for South AFrica to make sense of its current economic malaise and in proposing several sensible policies and projects urgently needed to turn the economy around,” he wrote.

Drawing on the National Development Plan the Treasury’s growth plan reiterates the extent to which South Africa’s weak economic performance is largely the outcome of domestic constraints and structural rigidities which have weakened the willingness of business to invest. To successfully get the necessary investment and economic growth South Africa requires, the growth plan recognizes the need to reduce policy uncertainty and create an overall supportive business environment, especially for small businesses,” he added.

“The success of any growth plan will therefore again hinge on its consistent and effective implementation, in collaboration with key stakeholders. South Africa therefore needs to urgently build a national economic purpose. At a practical level the confidence-building potential of the Treasury’s growth plan thus requires early evidence of commitment, consistency and steady implementation of its key strategies, such as in the forthcoming Medium-Term Budget Policy Statement in October and at the Presidential investment ‘summit’ in November,” he concluded.

Agricultural industry body Agri SA welcomed the plan in principle as it addresses several policy challenges and structural issues, giving specific solutions that are otherwise absent in many policy proposals. In their view, Agri SA is well-positioned to give effect to the proposal of making the agriculture sector the driving force of job creation.

“The scope and the level of detail is refreshing, as well as the honest reflection on the current flaws in the economic policy framework. We congratulate the Minister of Finance, Tito Mboweni on this initiative, but of course the success ultimately depends on the degree of implementation,” Omri van Zyl, Agri SA Executive Director said.

Agri SA said that in order to create an enabling environment for investment for agriculture, we need several policy outcomes. These include innovative financing solutions, affordable agriculture insurance, improved extension services, enhanced trade promotion, market access, access to water for irrigated agriculture and investment to establish innovative market linkages for smallholders.

By Helmo Preuss for The BRICS Post