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Economist: Focus on infrastructure will pay off

Feb 10 2012 16:53 Sapa

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Cape Town - President Jacob Zuma's strong focus on infrastructure in his state of the nation speech will pay off for South Africa with a sharp reduction in poverty, inequality and unemployment if the programme is correctly implemented, an economist said on Friday.

Investec economist Annabel Bishop said Zuma had "very correctly" identified the solution for the country as "higher growth and job creation to reduce and ultimately eradicate poverty and inequality".

"This is in line with our belief that only with private sector involvement can GDP be lifted to the point where full employment can be achieved," she said.

"The strong focus on infrastructure, if correctly implemented, will pay off for South Africa in a sharp reduction in poverty, inequality and unemployment, provided the necessary provision of skills occurs alongside."

Zuma announced a massive infrastructure project during his speech on Thursday night, including a R300 billion project for Transnet over the next seven years.

Bishop said triple challenges could be eradicated within 30 years provided other outstanding issues were also addressed.

She said labour market inflexibility had to be urgently reduced, not escalated, which would encourage youth employment, while uncertainty over property rights needed to be resolved and the proliferation of wastage and inefficiency in service and infrastructure provision addressed.

"Enabling the business environment will enable job creation and raise government revenue.

"This has the potential to become a virtuous cycle, doubling GDP and lifting living standards for all if effectively and consistently implemented over the next ten years, as corruption is eradicated along with other wastages of state resources."

Higher education leaders meanwhile commended Zuma, saying his focus on FET colleges finally points to the pragmatic urgency needed if the re–industrialisation of South Africa was to take place.

The group also welcomed Zuma's promise to build two new universities in the Northern Cape and Mpumalanga.

"That these provinces need universities is not contested and that they will be built using state funds and existing academic expertise is to be commended," the group said.

The Transvaal Agricultural Union, however, was "extremely disappointed" with Zuma's speech, especially regarding agricultural issues.

TAU did not have very high expectations in this regard because "Mr Zuma has had little, if any, interaction with organised agriculture since he became president of the country,” TAU president Louis Meintjes said.

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