South Africa's economy is in crisis - Motlanthe

Finance Minister Malusi Gigaba delivered his inaugural mid-term budget policy speech in Parliament earlier this week.

FILE: Kgalema Motlanthe. Picture: Christa Eybers/EWN.

CAPE TOWN - Former President Kgalema Motlanthe says South Africa's economy is “weak” and “brittle”.

Finance Minister Malusi Gigaba delivered his inaugural mid-term budget policy speech in Parliament earlier this week.

Gigaba's speech reflected a poor performing economy, a growing budget deficit and a projected dip in tax revenue.

Motlanthe, who spoke at a Stellenbosch University Business School event on Friday night, says the economy is in crisis due to a lack of growth.

“When the economy is not growing at the rate at which young people join the labour market each year when they leave school or college, then you end up with unemployment levels that are not sustainable.”

Motlanthe says parastatals failure to meet its financial obligations also has a detrimental effect on the economy.

“When parastates borrow public funds, Treasury stands as surety. If anyone of them fails to meet their obligations, there’s a domino effect. This make our economy very, very weak.”

He adds foreign investors take their cue from local business.

“The national narrative reflects low trust between the corporate sector and government. This makes it difficult because foreign investors take their cue from local investors. If local investors don’t invest in the economy, that rubs off on international investors.”

(Edited by Shimoney Regter)