Karen Harverson
South Africa will not accept foreign aid unless it can=20 afford to finance the follow-through infrastructure or=20 it will end up like the rest of Africa — full of half- built hospitals and unfinished roads, said Finance=20 Minister Chris Liebenberg.=20
Speaking at a recent business breakfast, Liebenberg=20 said South Africa had a reputation for being difficult=20 when it came to accepting foreign aid. “Donors often=20 insist that aid is used to build something like a=20 hospital or township but forget that the government is=20 left to put in the infrastucture and maintenance which=20 puts a tremendous strain on the Budget which is=20 struggling to meet basic needs.”
He said the government will spend six times more on=20 interest payments this year than it will on the=20 Reconstruction and Development Programme (RDP).
“Ninety-one percent of government income is spent on=20 salaries, paying interest and welfare payments with a=20 mere nine percent left for everything else.”
Besides meeting the demand for basic needs within=20 fiscal constraints, South Africa needs to increase its=20 growth levels, improve its savings rate, become more=20 investor friendly and improve its competitiveness.
He called on business to stop waiting for the economic=20 miracle to happen and work with the government to=20 maintain fiscal discipline and encourage growth.
“We need a savings rate of 22 percent for the economy=20 to grow 3,5 percent but while private sector savings=20 are already at this rate, government dissaves by 4,5=20 percent leaving a dismal rate of 17,5 percent.”
Liebenberg said that although the quickest way to=20 increase the savings rate was to contain government=20 spending — positive savings from the government would=20 only be a reality by the year 2000.
“In the meantime, we could use other people’s savings=20 to improve the growth rate to five percent which is why=20 we must become investor friendly.”
He said South Africa had to identify its pockets of=20 competitiveness and create opportunities and put in=20 infrastructure to grow these further.
“Our lack of competitiveness is due to structural,=20 environmental, skills and attitude factors. Something=20 is drastically wrong when it costs a company exporting=20 to Tokyo more to rail goods from Johannesburg to Durban=20 than the sea freight there.”