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No quick fix for Gauteng as SA economy falters

Jun 23 2017 10:27
Yolandi Groenewald

Johannesburg - For the past few months Lebogang Maile has been checking the horizon regularly.

What the Gauteng MEC for Economic Development, Agriculture, Environment and Rural Development sees has him deeply worried ahead of his province’s budget presentation next week.

“The economy is not doing well,” Maile told journalists this week during a pre-budget roundtable. “We have just been downgraded. We are in a technical recession. Things are not looking great. The question is: what can we do in Gauteng to navigate through the trying times? Can we escape the national challenges?”

Gauteng is South Africa largest economic hub, contributing 35% of the country’s GDP. But storm clouds are gathering for the province’s economy as more and more young people are unable to cash in on the riches its economy offers.

Despite its sound economic policies, Gauteng still has to deal with the huge albatross around its neck - the sluggish SA economy.

Maile said in the last two years R66bn of foreign direct investment (FDI) flowed into the province, but the recession has closed the tap.

“We now only expect R2.5bn from FDI this year.”

'Atrocious' unemployment figures

The largest shadow looming over the province is unemployment. Maile indicated that 2.7 million young people in Gauteng couldn’t find a job. Another 3 million still attend school or university.

“Six million youths not working signals a huge crisis. Our biggest concern is dealing with unemployment.”

He said he has been racking his brain on how to make a dent in the atrocious figures. “Yes, we want the economy to grow. That will create more jobs. But we are dealing with obstacles on national level that we can’t ignore.”

Maile warned the cost of doing business in South Africa at the moment is excessive. A shortage of water and the constant sword hanging over South Africa’s energy future also make his job that much more difficult.

“The economy is highly dependent on commodities and the rand jumps at the slightest provocation, such as the Public Protector’s reports. This complicates our province’s growth path.”

Rapid urbanisation a drain

Gauteng’s rapid urbanisation puts further pressure on the province resources.

“Every year we receive 200 000 people, moving to Gauteng. They use our hospitals and go to our schools. We can’t keep up. Our health budget is seriously constrained. We also have a huge housing backlog and more and more people are arriving.”

The answer, he says, is systematic interventions, focused on first saving and then creating jobs.

“We need 600 000 new jobs by 2019 to keep up. At this point we don’t know if we’ll get there, but we try our hardest,” he said. 

“Through our own infrastructure plans of R42bn by 2019, we have to consider what the value of any investment we make is, and how many jobs it will create.”

Maile said the established Gauteng Economic Development Plan is still the backbone of any economic recovery plan for the province, with its focus on productivity. Apart from defining development in the province, the plan also probes how to fix bottlenecks in the manufacturing and service sectors.

Maile said the two sectors could perform much better.

Drawing in the township economy

The MEC believed any plans to move the province’s economy forward can't be achieved without mainstreaming the township economy - estimated to be worth around R1bn. His department will also work with the Competition Commission to deal with uncompetitive behaviour in townships, where new malls and large retailers are closing down township entrepreneurs. 

He said any fines issued by the commission should be paid directly to a fund to empower township entrepreneurs.

Maile singled out corruption for halting progress. “Unless we stop rhetoric statements and act, we won’t be able to deal with this scourge.”

He added that the province would soon be piloting several electronic systems to deal with bureaucratic processes, lessening human interaction and the potential for corruption.

“You can’t bribe a computer,” he said.

Maile is set to deliver his budget vote on Monday.

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