SA’s four big growth issues

NO QUICK FIX TO TURNING ECONOMY AROUND Former deputy finance minister says South Africa needs to address four matters if it is to realise its true growth potential.

Jonas said South Africa’s fixed-capital investment as a percentage of GDP was around 18%, while China's was 47% and South Korea’s 30%.

Yet many large South African firms invest more in other developing countries than at home, he said.

Policy uncertainty, especially in mining, had to be addressed.

The cost of electricity and logistics, broadband and inflation-plus labour were also of concern. Jonas said high conditions of asset inequality retard growth, due to factors including reduced aggregate demand and heightened social and political instability.

Unfortunately there was no quick fix; simple asset redistribution was a blunt instrument, he said.

South Africa should rather focus on creating new wealth and assets in which the previously disadvantaged had a growing share.

While BEE policies had created some wealthy black business people, real inequality had increased across all race groups.

Jonas said the focus should shift to more black entrepreneurs through incubation programmes and venture capital funds as well as jobs for the low skilled. Jonas said the lack of policy focus, insufficient technical capability and capture by narrow political business interests were hindering state action.

The Public Protector’s State Capture Report and the Gupta leaks demonstrated government was constrained by corruption and capture.

State-owned companies had to focus on driving the economy, offer cheap and secure electricity supply and cheap port handling costs, but corruption within SOCs resulted in costly electricity and a whole range of other issues, he said.