Tough times ahead

The economic outlook
for South Africa is in the
doldrums and tough times
lie ahead, with the Minister
of Finance, Nhlanhla Nene,
announcing a lowered
growth forecast for the year to
just 1.5% in his medium-term
budget speech in parliament
last week. The forecast is
0.5% down from his 2%
forecast in his February
budget speech.
But Nene assured South
Africans that a better future
could be forged within
an affordable budget
framework, provided it was a
collective effort. “When times
are tough, as they are now, it
is that much more important
that we strengthen the
partnerships that signal our
commitment to decent work,
that open up participation
in our economy and that
broaden access to land, skills,
finance and development
opportunities,” he said.
Mini budget recognises logistics
Finance minister Nhlanhla
Nene paid more attention to
logistics and transport in his
2015 medium term budget
(MTEF) than has been given
in previous budgets for the past
few years at least.
“The revised MTEF shifts
about R9 billion from within
existing baselines to priority
programmes,” said Nene in his
presentation to parliament.
“About R4.8 billion is
reprioritised for upgrades and
maintenance of the national
and provincial road networks,
R1.4 billion has been identified
to support provincial public
transport, and about R1 billion
will be shifted for the rollout of
broadband infrastructure and
broadcast digital migration,”
he said.
The transport budget
allocation has been increased
from R53 357 million to
R53 615 million – a large
portion of which will go
towards commuter transport.
Nene is confident that the
country will see a return for
the investment in logistics and
other infrastructure.
“Easing electricity, transport
and telecommunications
infrastructure constraints,
alongside improved confidence
and higher demand from major
trading partners, are expected
to boost GDP growth to 2.8%
in 2018,” he said.
“Rail capacity continues
to expand, alongside road,
water and telecommunications
networks.
“Increased investment
in broadband was one of
the main reasons for South
Africa’s improved ranking in
the Global Competitiveness
Report to 49th place out of 140
countries,” he added.
Regional initiatives
that will help improve the
competitiveness of South
Africa and its neighbours
include plans for a “major rail
project to link Zambia, Angola
and the DRC”.
The Government is also
looking for public private
partnerships, he said.
“Government continues
to encourage private sector
participation in infrastructure
projects such as renewable
energy and transport.
“These investments will
contribute to a more efficient
enabling environment that
can support higher long-term
growth when the economic
cycle turns,” he said.
Nene’s budget is based on a
projected 1.5% growth in the
economy in 2015, rising to 1.7%
in 2016.
“This is considerably
lower than at the time of the
February budget, when we
envisaged 2% this year and
2.4% in 2016,” he warned.
CAPTION
Minister of Finance, Nhlanhla Nene.
INSERT 
Government continues
to encourage private
sector participation in
infrastructure projects
such as renewable
energy and transport.
– Nhlanhla Nene