Growth has been slowing down since 2011, and \u201cerratic politics\u201d is not helping the situation. Instead it undermines business and public confidence and perpetuates uncertainty, said Deputy Finance Minister, Mcebisi Jonas.<\/p>\n
Jonas was speaking at the Association of Black Securities and Investment Professionals (Absip) Financial Services Conference, held in Sandton on Tuesday.\u00a0 He explained that South Africa needs \u201cexceptional leadership\u201d within government and business to achieve inclusive growth and transformation.<\/p>\n
\u201cWe need exceptional management in government, business and labour throughout all of society,\u201d he said. In 1994, the exceptional leadership was at the heart of decision making which steered the country forward. This leadership managed to reduce poverty levels, improve access to basic services and created and grew the black middle class, he explained.<\/p>\n
\u201cTo mobilise citizens behind projects, we need exceptional leadership,\u201d said Jonas.<\/p>\n
Boosting growth<\/strong><\/p>\n Fragile economies such as Brazil, Turkey and South Africa compare poorly to resilient economies such as South Korea and China, explained Jonas. These emerging economies are too dependent on unreliable sources\u201d of foreign investment to finance development and are vulnerable to external shocks. \u201cDue to the structure of these economies, they fail to implement economic reforms where needed.\u201d<\/p>\n South Africa is struggling with low growth and the outlook for 2016 and 2017 is subdued. South Africa has low levels of gross domestic savings as a percentage of GDP at 16%, compared to saving levels in South Korea at 44%.<\/p>\n \u201cGovernment is highly indebted. Debt servicing is the fastest growing budget item of government and households,\u201d he said. The value of debt servicing could finance the budget of two provinces or fund tertiary education for the next five years, said Jonas.<\/p>\n Compared to resilient economies which have higher levels of fixed capital investment, South Africa\u2019s investment stands at 19%. Whereas China’s capex is at 47% and South Korea\u2019s at 53%.<\/p>\n “We must increase private sector and public sector investment in fixed capital to grow the economy,\u201d said Jonas.<\/p>\n Resilient economies also differ in that they have diversified and higher levels of manufacturing and value added.<\/p>\n The country is in the habit of increasing social expenditure in low growth situations, but this does not solve the problem, said Jonas. \u201cUnemployment continues to rise.\u201d<\/p>\n He said that a new national consensus is needed. This includes renewed growth and vigour. \u201cThe growth narrative is weak in the country. We are even weaker when it comes to programmes.\u201d He added that it was necessary to construct a government that is \u201cstronger, capable and less corrupt\u201d.<\/p>\n We should also focus on education and skills development. The access to education should be improved and must be targeted and aligned with the labour market and the economy requirements.<\/p>\n \u201cExceptional leadership in government and business is non-negotiable,\u201d he reiterated.<\/p>\n