SA must stimulate its own growth‚ says Cabinet

Rob Davies (Image: GCIS)

This was the conclusion of the recent Cabinet lekgotla‚ which resolved that decisions needed to be taken within the term of the current administration - that is‚ before elections in 2014 - on a range of issues in order to lift constraints on growth.

Addressing a media conference on Thursday (22 August) on the outcome of the Cabinet lekgotla‚ Trade and Industry Minister Rob Davies said ministers involved in work to boost growth and job creation would finalise an action plan to give effect to the decisions by the end of September.

Cabinet ministers agreed the government had to start the process of building a third coal-fired power station - in addition to Medupi and Kusile - as well as working with stakeholders to speed up co-generation.

The process of authorising shale-gas exploration in the Karoo should be finalised and steps taken to encourage regional hydropower capacity‚ particularly the Inga project.

Regulatory environment

Davies said it was decided the regulatory environment needed to be improved by streamlining licence approvals for water‚ mining and environmental impact assessments with the view of shortening the current approval times.

The lekgotla also decided the government's industrial programmes should be strengthened‚ including mineral beneficiation projects in the platinum‚ titanium‚ and iron and steel sectors.

Infrastructure programmes in the fields of education‚ health‚ transport‚ public works and human settlements should be accelerated‚ and agriculture and agro-processing should be stimulated.

Youth and public employment schemes should be stimulated through a new phase of the extended public works programme and the expansion of the community work programme.

Moreover, the mining sector needed to be stabilised and support to small businesses improved.

Cabinet ministers were briefed on the state of the global economy‚ including the positive developments in the US‚ the slight glimpses of growth in the eurozone and the recent slowdown of growth in emerging economies such as China and India.

"These developments will have a negative impact on global growth but also impact on middle-sized economies like SA‚" Davies said. He acknowledged that the slower than anticipated growth in SA would affect tax revenue and constrict the fiscal space available to the government to act in a counter-cyclical manner.

"The Cabinet noted that growth in the first quarter was lower than expected and levels of investment and employment were below desired levels. The tight electricity demand and supply balance is a constraint to growth that requires immediate attention."

The lekgotla said some infrastructure projects that were lagging behind schedule should be brought back on track.