Lerato Mbhiza
Finance Minister Enoch Godongwana was speaking to economists in Cape Town on Thursday morning, a day after delivering the final budget of this political term and he said South Africa’s near-term growth remained hamstrung by lower commodity prices and structural constraints.
He revised the GDP growth forecast to 0.6% from the 0.8% predicted during the 2023 Medium Term Budget Policy Statement (MTBPS).
Godongwana said this was his modest way of telling South Africans that the economy has been almost stagnant for 10 years.
“We didn’t tell you that on average, for a decade, the economy has been almost stagnant, growing at about 0.8% with a population during the same period at about 1.4 million.
“What does that tell you? Per capita, we are becoming poorer and poorer; we didn’t want to tell you everything about ourselves,” Godongwana told the business sector.
The Minister said the situation had been exacerbated by the continuous power cuts.
“The World Bank has done a study which suggests that if it were not for electricity, our economy would be far better in shape and size.”
He said Transnet and logistics have become a new headache for his office and that the Treasury is trying to avoid the mistakes made with Eskom.
“One of the things we shouldn’t do in dealing with the Transnet issue. We shouldn’t repeat the Eskom template. It is a bad template.
“What we did with Eskom was put money into Eskom right through, hoping that fixing Eskom would fix the electricity problem instead of saying, let’s fix the electricity problem at the same time as we fix Eskom.
“It took us time to deregulate the generation sector and make sure that we can have electricity from other providers because the Eskom problem is bigger than we think,” said Godongwana.
In his budget speech, Godongwana announced that third parties will soon be able to access Transnet’s embattled rail network.
Transnet’s struggles on its rail network and ports have been highlighted by many industries, ranging from retailers who can’t access their stock to mining companies who can’t export their goods.
These transport issues saw South Africa record a historically low coal and iron-ore exports in 2023, with consultancy research group GAIN saying that the problems in Transnet Freight Rail (TFR) led to a projected loss of R353 billion (4.9% of GDP) in 2023.
In the 2024 Budget Speech, Godongwana said that the Cabinet approved the Freight Logistics Roadmap in December 2023 to address the nation’s increasingly unreliable logistics system.
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