Unemployment and poverty can't be tackled without economic growth – Godongwana
Finance Minister Enoch Godongwana has sounded the alarm about South Africa's economic growth problem, which has been plaguing the country for over a decade.
Speaking at the RMB-Sunday Times post-budget dialogue on Thursday, Godongwana emphasised that without significant growth, it's impossible to tackle the triple threats of unemployment, debt, and poverty.
His comments followed critiques of his recent Medium Term Budget Policy Statement, where economists and experts argued it lacked sufficient support for low-income communities.
In response, Godongwana defended his approach, underlining that growth is essential.
“Some people say I haven’t addressed unemployment or poverty,” he said.
“But my message is this: South Africa has a growth problem. A growing economy will resolve the issues of debt, unemployment, and poverty. Without growth, we can’t tackle these challenges.”
On Wednesday, he downgraded the growth forecast for 2024 to 1.1% from 1.3% in February.
Godongwana elaborated on the Treasury’s four-pillar strategy to drive growth.
The first pillar emphasises creating a stable and transparent macroeconomic framework that fosters a predictable environment for saving, spending, and investment.
Treasury oversees this macroeconomic policy framework, while the Reserve Bank anchors inflation expectations.
He noted that continued refinement of these policies is essential for economic stability.
The second pillar centers on structural reforms through Operation Vulindlela, designed to make South Africa’s economy more productive and globally competitive.
Godongwana highlighted the success of its initial phase in easing economic bottlenecks, which he said demonstrates the potential for government-business collaboration.
"It also demonstrates that the government can collaborate effectively with business for the collective good," adds Godongwana.
The third pillar addresses ongoing power issues through restructuring the electricity supply industry.
Godongwana said the government plans to establish a competitive electricity generation market and alleviate constraints on transmission infrastructure to improve reliability.
In the fourth pillar, the Minister outlined further measures to enhance critical sectors such as transportation, water, and local governance.
This includes opening the freight rail network to private operators, creating an independent regulatory framework for water services, and strengthening urban infrastructure to support efficient, sustainable city development.
He defended the reforms being introduced to turn around the performance of key parastatals like Eskom and Transnet.
"No, I'm not privatising, I'm doing a simple thing - I'm introducing competition into the sector [rather] than having a monopoly in the logistics sector."
Combined, Godongwana explained, these efforts are crucial to creating a growth-driven economy that will address South Africa’s most pressing social and economic challenges.
"In water, the focus is on creating independent economic regulation and strengthening the local water services regulatory environment.
The second phase will also introduce new focus areas that seek to strengthen local government, harness digital infrastructure, and integrate urban environments to make cities more efficient," he added.
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