Things may be looking better for South Africa’s economy as Cabinet Minister says we are in for a turnaround after years of slow growth. However, new data showing an increasing rate of unemployment highlighted the challenges that plagues one of Africa’s biggest economies.
Jeff Radebe, planning minister and government spokesman spoke at a Johannesburg meeting hosted by the Foreign Correspondents’ Association.
He highlighted that “Assessments by Moody’s Investors Service and the International Monetary Fund show the South African economy “is on the right track and that our turning point is near”.
The International Monetary Fund (IMF) has forecast that South Africa’s economy will grow by 0.6 per cent this year, less than the rate of population growth. Africa’s two biggest economies, mineral-rich South Africa and oil-rich Nigeria, have become a severe drag on the continent as commodities slump. Without the burden of those two countries, sub-Saharan Africa would be growing at 4.4 per cent this year, instead of its projected 3 per cent growth, the IMF said.
“Risks to this outlook are tilted to the downside and include further shocks from China, heightened global financial volatility, and sovereign debt credit rating downgrades,” Laura Papi, the IMF’s mission chief for South Africa, said last week.
She said South Africa had taken “appropriate steps” to counter rising government debt and inflation, and noted progress in curbing electricity power cuts, a drag on productivity.
Also last week, Moody’s decided to not downgrade South Africa’s credit rating as some South Africans had feared, though the agency cited a “negative outlook” because of risks. Moody’s expects growth to increase to 1.5 percent in 2017.
South Africa is awaiting investment ratings from two other agencies, S&P and Fitch which by the looks of things, may be positive assessments.
South Africa’s unemployment rate has soared to record levels, confirming the growing fears of stagnation in Africa’s most industrialized economy.
Unemployment rose to 26.7 per cent in the first quarter of this year, a sharp escalation from 24.5 per cent in the previous quarter, as South Africa lost more than 350,000 jobs in factories, retail trade, construction and other sectors, according to a report by the official statistics agency on Monday.
The new jobless rate is the highest ever recorded in South Africa since the labour-force survey began in 2008, it said.
President Jacob Zuma has also been the target of corruption allegations, raising concerns about clean governance. Moody’s, however, said a Constitutional Court ruling against Zuma in a scandal over millions of dollars in state spending on his private home indicated the strength of South African institutions.
But South Africans are opportunists by nature and tend to thrive in the most difficult of circumstance. Now is the time to pick up our proverbial socks and work together to create jobs, and make a positive impact on the economy.
As the news broke yesterday, so did the announcement of the private sector fund who have set aside R1.5bn to assist small medium enterprises to survive the tough economic climate.
The announcement was made CEO of Discovery Adrian Gore during a briefing at the Union Buildings where government, labour and business shared the progress made by the work streams established by President Jacob Zuma to assist the country to avoid a credit downgrade.
“The fund is a private sector initiative but we are hoping that government contributes but we are focusing on what business can provide. We have injected R1.5bn into the fund but ultimately we are hoping to raise R3bn,” Gore told reporters.
There has been a strong overwhelming intend to support this and it bodes well for the future.