Deputy President Mashatile says SA economy can grow by 3% in 3 years

South African Deputy President Paul Mashatile.

Deputy President Paul Mashatile is confident that South Africa’s economy, which is predicted to improve by 2% in 2025, has a potential of growing by 3% in the next three years.

It's clear that he's passionate about exploring ways to boost the country's economy and is engaging with various stakeholders to discuss ideas and strategies.

Mashatile: "With all these other plans, we want to push beyond 3%, which will be very good because then we can have enough revenue for the National Treasury to be able to fund this medium-term development plan, without necessarily increasing taxes."

Mashatile was speaking at the inaugural Ahmed Kathrada Foundation business breakfast in Illovo earlier this week.

Deputy President Paul Mashatile's ambition for South Africa's economy to grow by 3% is a challenging but necessary goal. Currently, the country's economic growth is not at its optimum level, with a growth rate of 0.7% in 2023. To achieve the desired growth rate, Mashatile emphasizes the need for stakeholders to execute plans and work together to address key challenges.

Some of the challenges hindering South Africa's economic growth include:

- High Unemployment: The unemployment rate stands at 32.1%, with a need for creating decent employment opportunities.

- Income Inequality: The country faces significant income inequality, requiring policy interventions to improve the quality of life for workers.

- Infrastructure Development: Upgrading transportation and logistics infrastructure is crucial to enhance economic efficiency.

To achieve the 3% growth rate, Mashatile suggests:

- Investment Promotion: Encouraging investments in key sectors, such as green energy and sustainability, infrastructure, and manufacturing.

- Economic Reforms: Implementing policies to support small and medium-sized enterprises and promote entrepreneurship.

- Collaborative Efforts: Fostering a culture of innovation, resilience, and shared prosperity through collective action between government, labor, and business.

Overall, achieving a 3% economic growth rate will require sustained efforts from all stakeholders to address the country's structural challenges and promote inclusive economic growth.

Government 7th administration said that phase two of Operation Vulindlela could help push the country over the magic number of 3% despite that the South African Reserve Bank recently lowered its expectations to 1.7% while the likes of PwC believe the downside scenario could be around 0.5% while the upside scenario could be 1.3%.

South Africa's economic growth has been sluggish, with a 0.7% average GDP increase over the past decade. To achieve a 3% growth rate, significant structural reforms and investments are necessary. Some potential areas for improvement include:

- Infrastructure Development: Upgrading transportation and logistics infrastructure to enhance export capacity and economic efficiency.

- Energy Sector Reforms: Continuing to improve electricity supply and promoting private investment in renewable energy.

- Business Environment: Enhancing competition, streamlining regulations, and supporting small and medium-sized enterprises.

- Human Capital: Investing in education, skills development, and labor market programs to address high unemployment and inequality.

The World Bank and other international organizations are working with the South African government to address these challenges through initiatives like:

- Just Energy Transition: Supporting the country's transition to a low-carbon economy and improving energy efficiency.

- Financial Sector Development: Promoting financial inclusion, reviewing regulatory frameworks, and supporting key sector reforms.

While there are challenges to overcome, a combination of structural reforms, strategic investments, and effective partnerships could potentially help South Africa achieve a higher economic growth rate.