Admin l Wednesday, September 05, 2018
JOHANNESBURG, South Africa – The African National Congress(ANC) has called on the South African government to activate stimulus package as economy falls into recession. In a statement, Chair of the Subcommittee on Economic Transformation, Comrade Enoch Godongwana said the latest growth figures released from the office of statistics shows that the South African economy moved back into a technical recession with a negative growth rate of (-0.7%) during the second quarter of 2018.
According to him, except for the mining sector, all other productive sectors experienced a contraction and attributed the technical recession to a prolonged trend of slowdown in economic growth.
“These developments happen in the context of the economy that continues to experience low and declining growth in fixed capital investment, a persistent current account deficit, declining household consumption expenditure and a significant slowdown in government spending. These are reinforced by the decline in household consumption expenditure, which is the largest component of aggregate demand, which explains the poor performance of the wholesale and retail trade sector.
“This further raises our concern about the employment implications of weak growth. We have an aggregate demand problem. The capacity of the economy to create employment faster than the growth rate of the labour force has been slow. The slow growth challenges require a coherent and a multifaceted response to ensure that our economy is strengthened to provide decent work.
“The ANC reiterates the call it made at the Lekgotla in July that the ANC-led government must take immediate, concrete and bold steps to lift the rate of growth and its inclusivity by activating macro-economic policy tools, institutional efficiencies and specific sector interventions as central instruments to mitigate the effects of a contraction in economic activity. This requires that there be a significant difference in the aggressiveness and approach through which recovery measures are implemented by government”, the ANC said adding that the “stimulus package” must be activated immediately.
The ANC suggested that macroeconomic policies must act in concert in the interest of the overarching goal of economic growth and development.
“More than ever, we will have to closely coordinate fiscal and monetary policy so as to foster sustainable growth. Develop and support those industries that would rapidly absorb employment (domestic and Africa focussed growth) and this may including tax credits for those companies that invest in sustainable job creation.
“Utilise government’s procurement muscle to localise industries, transfer knowledge and skills to ensure that the industry could provide the required products into the future, thereby reducing imports in due course; reduce the regulatory red-tape and delays that could encourage the establishment of new manufacturers and other economic activities which would increase competition, growth and employment creation in the South African economy
“Expand the value chains to serve a larger and growing African market by improving the channels of trade with other African Countries. Drive the establishment of a strong co-ordinating mechanism between cluster departments to oversee the alignment between procurement patterns, innovation, our industrial development strategy and support for small and medium sized business participation.
“Step up maintenance of existing infrastructure and partnerships with communities. Government to upscale investing in economic and social infrastructure that include work on public buildings, courthouses, schools, transportation infrastructure, government hospitals, public safety facilities and equipment, water and sewer projects, environmental projects, energy projects, government housing projects and public utilities.
” Investing in projects that include road repairs and resurfacing, bridge repairs and maintenance, safety improvements, and road widening because they have the added benefit of generally high employment impacts and they can be implemented quickly since they are focused on construction and maintenance, rather than on planning and design. Investment and infrastructure are essential for development. They are important for expanding the capacity of the economy to produce, distribute and drive development.
” Agricultural support packages that will boost economic growth and food security, together with properly-designed and executed land reform boosting skills development measures directed at supporting young people to find work opportunities developing and implementing a support package for township and rural enterprises to broaden the base of economic participation. Government policies and measures committed to and the 14 confidence boosting measures, must be implemented.
“Reprioritise the budget to boost Extended Public works programmes”, he said. On broadband rollout, he said urgent steps must be taken to bring down the costs of data and speeding up spectrum release to expand the ICT industries. In so doing, measures must be taken to ensure that, this release does not lead to further increase in market concentration.
The ANC adviced government to develop South African skills and knowledge while preparing to manufacture products based on the evolving technologies.
