Pledging that government would continue to encourage private sector investment in the economy, the 2016 medium-term budget policy statement (MTBPS) on Wednesday pointed to fruits of past efforts – from the construction of Africa’s biggest computer in the Karoo to exports of humble but sweet and tasty South African apples to China.
The MTBPS, delivered to Parliament by South Africa’s Finance Minister Pravin Gordhan, noted that increased investment by the private sector would improve capacity and expand the economy.
Tackling corruption was listed here as a key intervention that “would discourage rent-seeking, lower transaction costs, reduce uncertainty and prevent the wastage of both public and private resources”.
Another evergreen option, easing the regulatory burden and making it easier to invest, was already in effect, according to the statement, with InvestSA having set up a one-stop shop to help investors to start up and run a business.
Ditto for the business owner’s dream of spending less time on compliance and paperwork. Here, the MTBPS referred to increased automation at the Companies and Intellectual Property Commission, which meant “it now takes less than a day to register a firm”.
Other interventions that were designed to boost private sector investment included the strengthening of competition law in South Africa, which “should reduce prices and increase market access”.
The statement noted that government’s approach had already begun to yield greater private investment in several areas, including the IPP (Independent Power Producers) programme and the automotive sector. In the latter, assembly firms had pledged investments of R15.4 billion, which would create an estimated 4,675 jobs.
Another success listed was the construction of the 64-dish Meerkat radio telescope array in the Karoo, due to be completed by the end of 2017, which will be Africas biggest computer.
Investment totalling R17 billion had been targeted towards “oceans economy” initiatives over the past two years, creating about 5,000 jobs, the statement added. Complementary efforts supported both commercial agriculture and emerging farmers. Efforts to diversify markets, for example, had boosted apple exports to China by 77 per cent.
The MTBPS noted that government was aware that funding remained an obstacle to business development and was committed to working with the financial sector and development financial institutions to reduce funding constraints.
A review of incentive programmes flagged areas where government provided support to businesses in certain sectors, such as the Clothing and Textiles Competitiveness Programme, which had helped to stabilise the sector.
Also, the Manufacturing Competitiveness Enhancement Programme had approved projects worth about R28 billion, supporting an estimated 200,000 jobs, and the Automotive Production and Development Programme had contributed to increased exports.
These incentives, including direct transfers, tax and tariff rebates and concessional financing were being reviewed in order to assess performance, determine value for money and analyse how the system as a whole supports the economy and job creation.
The review is expected to be completed by October 2017.
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