JOHANNESBURG – Finance Minister Nhlanhla Nene says good governance at state-owned entities is crucial for economic growth.
Nene was speaking to business leaders at the fourth Directors Event in Sandton on Friday.
He said South Africa still faces stumbling blocks before growth takes off, despite great strides made since December.
Nene said the latest GDP numbers, for the first quarter of this year, were influenced by the biggest risk.
“There is no room for complacency. The disappointing contraction in the first quarter of 2.2 percent reminds us that the risks do remain high. The contraction in the first quarter means that upward revisions to our growth forecasts by many public and private economists, and multilateral institutions such as the IMF, will have to be revisited. Indeed, we have structural challenges that we need to address. Youth unemployment remains too high at 55%.”
The drop in GDP between January and the end of March reflect poor results in the mining, manufacturing and agriculture sectors.
Nene said in order for South Africa to grow at its optimum rate, increased confidence in the country’s economy is needed.
“Confidence is indeed a step in the right direction‚ but not just confidence. Government also needs to deliver on reforms if we hope to allow that confidence to translate into jobs and investments for the private sector.”
Nene said both government and the private sector need to leverage technology and the country’s youth if they hope to meet the growth targets set out in the National Development Plan.
He said the government has taken note of some limitations to growth.
“Government recognises that strengthening good governance and acting against corruption is crucial in building sustainability and trust in state-owned entities that can not only lower fiscal but can also contribute to faster growth. Government keenly aware of some of the key constraints to growth and that is redoubling its efforts to enact reform that unlock productivity, increase competition and lower the costs of doing business.”
The National Treasury estimates that should the global environment remain supportive, agriculture, tourism, and telecoms could add up to 2 percent to real GDP over the next decade.