Economic Sectors and Employment Cluster
The rural development and land reform department intends releasing a green paper on land reform at the end of May 2010. The economic sectors and employment cluster outlined structural constraints that were holding back economic growth and concomitant job creation at a media briefing in Cape Town.
Included in the list are high unemployment, inequality and poverty, insufficient levels of fixed investment, an uncompetitive and volatile exchange rate, low savings rate, skills shortages and anti-competitive practices.
A number of crucial responses had been identified that held the potential to stimulate growth and engender employment creation.
The science and technology minister, Naledi Pandor, indicated that phase two of the framework response to the international economic crisis would be implemented. Included in this are the training layoff scheme, Industrial Development Corporation (IDC) funds to distressed companies with additional conditions and an intensive campaign against illegal imports. The training layoff scheme has so far provided assistance to 2700 workers.
Conditions to be attached to IDC loans include the need for job creation, a restraint on executive pay, promotion of local suppliers and a partnership between business and labour. R1 billion would be disbursed to distressed companies. The cluster would place closer attention on the impact of the loans.
A revitalised industrial policy with more intensive interventions would be introduced. The trade and industry minister, Rob Davies, recently unveiled the latest version of the industrial policy action plan. Implementation would commence on 1 April 2010.
More attention will be focused on research and development within the scientific and technology fields. Ms Naledi Pandor declared that government would “accelerate long-term research and development led industrial development opportunities in biotechnology, ICT and electronics, biocomposite materials, renewable energy, titanium beneficiation, high-value chemicals, advanced batteries, agro-processing, and high-value agricultural products.”
South Africa’s green economy will be expanded. “Green jobs will grow both directly and indirectly in the transport, energy, building, manufacturing, agriculture and forestry sectors.” A “green economy” plan will be presented to Cabinet in July.
The comprehensive rural development programme will be intensified to include 150 wards. So far, eight pilot projects had been implemented. Farms in distress that were acquired by means of land restitution and redistribution would be assisted by new “resuscitation plans”.
“The plans will include on-off farm infrastructure, mechanisation, skills training and extension support and other much needed operational inputs, through various strategies such as mentoring, co-management and share equity.” Government wanted to see vibrant rural communities.
Black farmers indebted to the Land Bank will receive support so that their farms can be retained. R254 million would be made available for farm re-capitalisation on 200 farms. The cluster emphasised that not enough money was available for land redistribution targets to be reached based on the willing buyer-willing seller principle.
The rural development and land reform minister, Gugile Nkwinti, also noted that foreigners were buying productive land at three times the rate of government. A new target for land redistribution had not been set at this stage. In contrast, government would concentrate on making farms in black hands more productive. 90% of farms redistributed to emerging farmers were dysfunctional.
The “use it or lose it” policy would still apply to redistributed farms. Thus far, 5.9 million hectares had been redistributed. A green paper outlining the overhaul of the land reform and land tenure policy and legislation would be released at the end of May.
In terms of enterprise development, attention will continue to be placed on small business development. The cluster was considering a direct funding model involving Khula. Up to now, Khula had concentrated on reducing risks around small business so that private sector financing could flow into the sector. An announcement on the direct funding model would be made soon.
The tourism sector will also continue to receive priority attention. New tourism opportunities within the rural areas will be developed by 2014. Last year, despite the economic downturn, South Africa still managed to attain single digit growth in the sector. The tourism minister, Marthinus van Schalkwyk, expected 10 million visitors to South Africa in 2010. A concerted effort will be made to increase the number of “business tourists” and sports-related activities going forward.
In a nutshell, government wants to restructure the economy and set it on an “employment and growth generating path”. Cabinet will consider other opportunities within the economic sector that hold potential to meet government’s objectives at its mid-year Lekgotla.
Sabinet Cape Town Office