Zuma announces a focus on small business to revive SA’s ailing economy
President Jacob Zuma has announced short-term interventions to boost economic growth and confidence.
JOHANNESBURG - President Jacob Zuma has announced short-term interventions to boost economic growth and confidence in government's abilities as well as reduce policy uncertainty.
Zuma has met with Cabinet members and senior business leaders at the Union Buildings in Pretoria, to hash out plans to create jobs and transform the economy.
The interventions have been announced just days after rating's agency Moody's announced that it has maintained South Africa's negative outlook.
Zuma says building investor confidence is of paramount importance.
"To accelerate inclusive growth we must expand investments. In this regard, the model we used for renewable independent power producers offers valuable lessons."
As part of a plan to implement South Africa's economic transformation agenda, government and business will set up a joint fund to support small businesses.
The team, led by Finance Minister Pravin Gordhan, has been appointed to address South Africa's slow economic growth.
Zuma says the joint fund, led by the public sector, will provide funding and other forms of support for entrepreneurs.
"The focus is to provide venture capital-type funding and monitoring to these target groups - especially black entrepreneurs."
At the moment, the private sector says it's raised approximately R1 billion towards the initiative.
Government is expected to make a contribution roughly equal to that made by business.
The ultimate goal is to see the fund expanded to a budget of R10 billion.
BUSINESS MUST COME TO PARTY
Gordhan said while credit ratings agency Moody's did not further downgrade the country, both government and businesses must work together to build investor confidence in order to ensure that South Africa's economy is more competitive.
Moody's reaffirmed the country's credit rating two notches above sub-investment level with the outlook at negative.
Two other rating agencies now have to make their decision known in the next few weeks.
Gordhan said while there are good things that are happening in the country, there are warning signs as well.
"We have to work harder at ensuring, as the report says, medium-term growth. We need to continue to give attention to debt and the deficit but that becomes easier if you grow the economy."
In the latest sign of an economy under stress, the Stats SA agency said unemployment rose to 26.7 percent of the labour force in the first quarter of this year, the highest since it started a survey of households in 2008.
"We need to find new and innovative ways to search for new engines of growth, to find new ways of igniting growth and creating the jobs that our people desperately require," Gordhan said.
The government has publicly cheered the Moody's decision, and Cabinet minister Jeff Radebe said on Monday he was confident South Africa would retain its investment grade status with Fitch and S&P.
Gordhan was however more cautious.
"We can't be positive. All we can do is work as hard as we can to convince people out there that we are a country that is capable of solving its problems," he said.