2005-10-14,+Cabinet+approves+blueprint+for+6+per+cent+growth+by+2010,+B+Day


 * Business Day, Joahannesburg, front page splash, 13 October 2005**

= Cabinet approves blueprint for 6% growth by 2010 =

Vukani Mde and Linda Ensor

SA’s economy is on course to achieve government’s target of 6% economic growth by 2010. The economy grew at a robust 5% in the second quarter of this year and the treasury projects an overall gross domestic product (GDP) growth rate of more than 4,3% for the current year.

This rate could still be revised upwards when Finance Minister Trevor Manuel delivers his medium-term budget next month.

Cabinet yesterday approved a report from Deputy President Phumzile Mlambo-Ngcuka’s economic growth task team, appointed by President Thabo Mbeki earlier this year following a cabinet lekgotla.

Mbeki tasked Mlambo-Ngcuka and her team, made up of senior economic portfolio ministers, to come up with a battle plan for accelerated growth.

Though it was short on detail, their report yesterday forecast a GDP growth rate of 4,5% in the immediate term, projected to rise to 6% between 2010 and 2014.

This would help government keep its promise to halve unemployment and dent SA’s chronic poverty, said government spokesman Joel Netshitenzhe at a post-cabinet briefing.

The Reserve Bank and independent economists have said a 4,5% GDP growth rate was feasible in the short term, as it was only slightly above their consensus figure of 4,25% projected for the next couple of years.

Bank governor Tito Mboweni last month told a labour gathering that SA’s economy had already achieved 5% growth in the last quarter, which had resulted in improved per capita income.

“This (growth) is driven by strong increases in value-added manufacturing, strong consumer demand and a more competitive exchange rate,” Mboweni said.

But Netshitenzhe, echoing earlier comments from government, cautioned that 6% would only be achieved in the medium to long term. The country still needed to face down a number of challenges before the higher growth levels could be sustained.

Netshitenzhe said these included “infrastructure development, sector investment strategies, education and skills development, second economy interventions and improving the capacity of the state to provide economic services”.

Government’s new plan would need buy-in from the private sector and labour, said Netshitenzhe. He said government would over the next few weeks lobby business and labour to endorse its strategy.

The private sector would be expected to intensify investment in job-creating sectors. This was in line with targets agreed to at the growth and development summit two years ago.

Government would also try to secure significant concessions from its labour allies around labour market reforms.

Cabinet also approved long-awaited codes of good practice on broad-based black economic empowerment and promised to publish these within a month.

A second set of codes would soon be released for public comment, Netshitenzhe promised.

Government is under pressure to have the process concluded speedily.

Companies have complained that delays in the drafting of the codes were stalling significant BEE initiatives. Commentators say the development of the codes had been delayed by the considerable detail included to regulate empowerment ownership and control.

But Netshitenzhe said yesterday that the process was now nearing completion.

“The development of this first phase of the codes has included wide consultations and the initial draft was amended after more than 300 public submissions were received,” he said.

“The codes will be published and gazetted within a month, after further processing; and the draft of the second phase of the codes will be released soon for public comment,” Netshitenzhe said.

In a move likely to be welcomed as a step towards achieving higher growth, cabinet also agreed to phase out import parity pricing and to introduce nondiscriminatory pricing in some sectors.

Government has identified high input costs as one of SA’s growth inhibitors, and Netshitenzhe said “further work” would be done to lower the costs of doing business.

This would be achieved without the introduction of price controls, Netshitenzhe said.

Another pillar of government’s new growth strategy received a boost when Cabinet resolved to direct government procurement of goods and services to small businesses, in line with its plans to grow the small, micro and medium-sized enterprise sector.

From: http://www.businessday.co.za/articles/topstories.aspx?ID=BD4A101741