SA economy’s contraction a wake-up call for state – Nene

THAT South Africa’s economy contracted by 2.2% in the first quarter was a wake-up call for government, said the finance minister.

Nhlanhla Nene made the comment at a business breakfast in Pietermaritzburg yesterday, organised by accountants and auditing firm, Morar Incorporated, and themed “A new dawn for the South African Economy”.

“One of the wake-up calls has been the GDP numbers that were released this week. Just when you think you are sailing then something comes up. This comes after the economy surprised us and showed a 3.1% increase. This current contraction of 2.2% means we need to take a microscopic view on where exactly we lost it in the first half of the year.”

Nene said losing the status as the continent’s economic powerhouse was not due to a lack of plans, but as a result of not implementing those plans.

“It is for that reason we should take advantage of the new dawn in government and stimulate the economy, create employment and deal with poverty and inequality.”

Challenges preventing the country from achieving its economic potential were the lack of skills, he said.

Speaking on youth unemployment, Nene said access to places of work and spatial situation with costs of travelling between the place of work were causing many youth to give up on seeking jobs.

He said despite the contraction, the new dawn – led by Ramaphosa – brought confidence both in businesses and consumers.

“This confidence increase is a sign of hope and if it is to be translated into investment and jobs by the private sector, government needs to deliver on the identified reforms. A lot of work has been done both by government and the private sector to fix South Africa during this new dawn,” he said.

Morar Incorporated managing director Roshan Morar said it had embraced the “new dawn”.