South African households had to scale down unsustainable levels of debt, Finance Minister Trevor Manuel said on Tuesday.
Speaking at a the Mail & Guardian‘s Critical Thinking Forum in Johannesburg on the country’s economic future, Manuel said: ”There is something wrong. We have to make choices as a nation as we cannot live in debt and not save for tomorrow.”
Household debt has climbed to 78,2% of disposable income.
Manuel said the country needed to pay more attention to microeconomics and deal with growth.
He said South Africa should focus on issues such as the labour force and job creation and that too much emphasis was placed on macroeconomics and inflation.
Dr Stephen Gelb, executive director of the Edge Institute, said the xenophobic attacks in May reflected the ”extreme inequality” in South Africa’s society.
”Our future will be characterised by inequality and we need to address this issue. We have done a good job in addressing poverty but not inequality.”
He said a substantial amount of money had been spent on improving people’s lives through grants and water allowances but this had not addressed inequality.
Manuel said the country’s performance in education was ”abysmal”, despite spending 5,4% of GDP, or R120-billion.
”It is not a money problem. As a nation we must take responsibility to get schools to operate properly. We need to get school inspectors back in order to ensure we get systems back in place,” he said.
Absa’s group chief executive Steve Booysen said there was a need for South Africa to retain and attract skills to boost the economy.
He said it was necessary to create an environment which would retain skills in the country.
Referring to black economic empowerment, Gelb said there was a need for a deadline to be set.
”There has to be an end date on BEE … five to eight years from now,” he said. – Sapa