While addressing the American Chamber of Commerce, Nene said the country’s economic performance had weakened since the beginning of the year.
“We have therefore revised downwards our growth projection to 1.4 per cent this year, which is down from 3.6 per cent in 2011,” said Nene.
The economic pressure also coincided with global growth which has slowed, whilst the room for fiscal expansion has reduced.
Nene also said the challenges in the country’s power sector were affecting Investor confidence.
“Electricity constraints have reduced the incentive for firms to invest whilst strike activity has weighed heavily on growth and confidence,” noted Nene.
“This has put greater pressure on employment and growth, and has made our longer term challenges all the more prominent and more difficult.”
Nene said among others the country was grappling with challenges such as high levels of unemployment, dismal education outcomes, poorly located and inadequate infrastructure, high levels of social inequality and a strong reliance on resource intensive growth.
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“Against the backdrop of an uneven global recovery, South Africa needs to work swiftly to lift the binding constraints on growth in order to achieve rapid and inclusive growth.”
Nene also urged the government to play its role in ensuring success of businesses.
“Business needs the support of a capable and effective state that creates an enabling environment whilst furthering social equality,” said Nene.
“The government must ensure efficient network industries (such as roads, rail, telecommunication and ports). It has to lay the foundations for the supply of skilled labour and deliver a supportive and predictable regulatory environment.”
Nene said the next phase of growth will be about the dynamism and agility of the private sector, and the synergies between the private sector and government.
Defending what the government has done, Nene said “first and foremost, we have to put public finances on a sustainable footing.”
“The 2014 Medium Term Budget Policy Statement outlined a package of measures. First, we have to slow down the growth of government debt. To do otherwise would be to place our achievements over the past 20 years at the mercy of fickle global markets.”
“Second, we have to improve the quality of government services. Despite the huge increase in government spending over the last ten years, the quality of government services has remained a challenge.”