President Cyril Ramaphosa says both government and the private sector have a pivotal role to play, if the economy is to grow and employment is to be created.

The President was addressing the nation through his weekly newsletter.

“[There] is much debate about the relative roles of the state and business in pursuing these goals. Some people have suggested that we must make a choice between, on the one hand, a developmental state that plays a vital role in economic and social transformation, and, on the other, a vibrant, expanding private sector that drives growth and employment.

“The reality is that we need both. We need a capable developmental state and a dynamic and agile private sector. We need them to work together and complement each other,” the President said.

President Ramaphosa highlighted that because the private sector accounts for at least 75% of South Africa’s employed workforce, the majority of investment in the country and also contributes to spend on research and development, it needs a “capable and developmental state” alongside.

“The private sector employs some three quarters of South Africa’s workers and accounts for over two-thirds of investment and research and development expenditure. Alongside a capable and developmental state, our country therefore needs a thriving private sector that is investing in productive capacity.

“As private sector employment expands, more livelihoods are supported and sustained. Goods and services are delivered at a greater scale and the democratic state is able to collect more revenue for social development.

“Such a mixed economy, it said, would foster a new and constructive relationship between the people, the state, the trade union movement, the private sector and the markets,” he said.

The President said this relationship between all sectors will forge the way forward for and contribute towards a fresh step in a new direction.

“After a decade of low growth and rising unemployment, this is the way to revive our economy – creating a dynamic, competitive, fast-growing economy that is able to compete with the best in the world.

“We will not achieve such an economy without both a strong and capable developmental state and an inclusive, fast-growing private sector. We should not be asked to choose one or the other. We need both,” he said.

Government’s contribution

The President pointed out that government is striving to play its role in fostering growth by creating jobs through various beyond the public service, supporting Small, Medium and Micro Enterprises (SMMEs) recommitting to strengthening State Owned Enterprises (SOEs).

According to the President, the Presidential Employment Stimulus has supported at least 850 000 work opportunities, millions of people have been employed through the Expanded Public Works Programme (EPWP) and large scale government led infrastructure programmes are contributing to employment.

State Owned Enterprises

Turning to SOEs, President Ramaphosa said the wide range of services offered by these entities make them the main switch of the economy.

“[State Owned Enterprises]…generate electricity, manage the ports, build the roads and supply the water that the economy needs to function. Since the advent of democracy, these SOEs have significantly expanded access to basic services for the poor.

“That is why a critical part of our programme is to strengthen state-owned enterprises, restoring them to financial health, improving their operational performance and enabling them to play a more prominent and beneficial role in the economy,” he said.

Added to the strengthening of SOEs, President Ramaphosa said SMMEs, Cooperatives and the informal sector will also be given “special focus” during this year.

“Through the redesign of the loan guarantee scheme that we introduced in the early months of the COVID-19 pandemic, we are making ‘bounce back’ finance more accessible for small businesses. We are expanding the employment tax incentive and looking at various other regulatory changes to make it easier for small businesses to employ more people,” he said.

Source: South African Government News Agency