By: Morafe Tabane
JOHANNESBURG, March 4– South Africa’s current economic model has reached a ceiling and needs a revamp, Minister of Finance Pravin Gordhan says, repeating the call for a structural transformation of the local economy which he made when delivering the 2014 Budget in Parliament last week.
Engaging businesses here Monday on the importance of changing the economic direction to boost growth,
Gordhan reiterated that the country needed extraordinary and creative ways to change the make-up of the economy.
It was only after such a breakthrough that growth can reach 6.0 per cent, instead of muddling through at around 2.0 per cent, he said, adding that would require dynamic and bold leadership from Government, business and labour.
“If we are going to break through this two per cent, three per cent we have and fulfill the ambitions we have set for ourselves as a society and not just as Government, then we are going to require bold leadership from both sectors, and if we don’t get that then we leave for the future generation a very modest economy to inherit,” said Gordhan.
Business people, mostly from the financial services industry, heard how this sector needed to transform and support the economy. This included reducing the cost of savings products for households.
The government also wants to take steps to secure more income for retired people and this could mean a re-look at some of the charges into retirement savings products.
Gordhan added: “On the reform side, our ambition is that possibly over the next five to 10 years we need to move towards mandatory savings in South Africa. We need what we call optimal preservation because we are learning that the South African economy has its own idiosyncrasies in terms of access to retirement and so on but we need to manage it in a way in which you give access on one hand but promote optimal preservation on the other hand.”
For its part, the Treasury says it will focus its attention on better quality of outcomes and better value for money from the 1.1 trillion Rand (about 101.8 billion US dollars) Budget expenditure outlined last week.