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Gigaba: SA's govt has decided to intervene directly in economy

Speaking at the Ekurhuleni investment conference on Monday, Gigaba says the role of government in the economy is a deliberate and political choice.

FILE: Finance Minister Malusi Gigaba. Picture: GCIS.

JOHANNESBURG - Finance Minister Malusi Gigaba says the economic history of the Asian economies which grew strongly after the second World War exposed the myth that governments are only incidental to economic development.

He says South Africa's government has decided to intervene directly in the economy because experience shows that otherwise market failures will be an impediment to growth and that inequality of access will remain daunting.

Speaking at the Ekurhuleni investment conference on Monday, Gigaba says the role of government in the economy is a deliberate and political choice.

He says government is the only agent that has a vested interest in ensuring there are vast, affordable and accessible networks for electricity, railways, roads and communications that won't just help the economy - but also ensure transformation.

The finance minister says that for the economy to grow and transformation, South Africa needs massive industrialisation in the secondary sectors to create jobs and wealth on a sustainable basis in pursuit of radical economic transformation and inclusive growth.

Gigaba also says cities are the engines of the economy and the economies of the eight metros have grown more than twice as fast as the economies of the rest of the country.

He says South Africa's cities have been allowed to develop for too long on a system where people have a 40-square meter house, 40 kilometres from work and have to spend 40% of their income on commuting.

He says that this pattern was entrenched by apartheid and makes no economic or environmental sense.

Gigaba says too much carbon is pushed into the air by people who have to travel far distances every day while road, water, and electricity networks have to cover much bigger areas than necessary.

He also says that cities are supposed to be meeting places for people ideas and opportunities but that this geography is stopping them from playing this role properly.

The minister adds Africa’s cities need to be made more compact and that current economic development path is simply unsustainable.