Challenging economic environment an obstacle to implementing NDP
South Africa requires consistent investment of between 20% and 25% of the GDP to achieve the goals of the National Development Plan on growth and employment, said Jeff Radebe, minister in the presidency for the department of planning monitoring and evaluation.
High unemployment levels and continued declines in investor confidence have been flagged as major challenges to achieving the goals of the NDP.
Speaking at the final Progressive Business Forum breakfast on Wednesday morning, Radebe said the total investment into South Africa is down from 23.5% of GDP in 2008 to 20% currently.
This year South Africa was lifted out of a technical recession after the economy grew by 2.5% in the second quarter followed by further 2% growth in the third quarter.
However, Radebe said the economic recovery in the past two consecutive quarters is far from the optimal level of growth needed to reverse the increasing levels of poverty and unemployment.
“The economic environment remains challenging,” said Radebe.
“As an emerging economy we have not increased the participation of small and medium businesses in the mainstream of economic activity,” said Radebe. “We must therefore work collectively in expanding the procurement from local suppliers especially black industrialists so that we can counter the economic slowdown and promote job creation and deepen industrialisation,” said Radebe.
In 2016, purchases of goods by government departments totalled around 3% of the GDP.
Radebe’s department has been tasked with assessing the purchases of capital and consumable goods and services by state departments and agencies, to determine the level of local procurement versus imports.
The assessment will include recommendations on promoting local procurement across the state.
Radebe said government had already committed to reserve 30% of their procurement projects for small and medium businesses as well as dealing with legislative barriers and reducing the red tape at all levels of government that adversely affect small enterprises.