Here’s what the Treasury says its new economic plan can do for South Africa – including R6 billion in new agricultural exports
- The new National Treasury paper "Economic transformation, inclusive growth, and competitiveness: towards an economic strategy for South Africa" recommends some big economic reforms.
- If implemented, those can add a million jobs in SA eventually, the paper says.
- But for some sectors the upticks could be bigger – and faster. Here are the industries the government team thinks could benefit most.
- For more stories go to www.BusinessInsider.co.za.
On Tuesday night the National Treasury unexpectedly published a major discussion document on South Africa's economic future, outlining a range of things the government can do to boost GDP and help create a million new jobs.
The 75-page document, "Economic transformation, inclusive growth, and competitiveness: towards an economic strategy for South Africa", is open for public comment until mid-September.
See also: Government just released a plan to create 1 million jobs and save the economy – here’s what you need to know
Although it deals in broad strokes with high-level policy, the document zooms in on particular sectors and industries in calculating what the impact of various proposals would be.
Here is how different sectors of the economy will benefit from proposed reforms and interventions, according the National Treasury's new discussion document on economic policy.
Foreign tourism: 8% to 10% initially, settling down to 5.5%.
Providing accommodation, catering, and transport in the "export" tourism market should see a quick bump of around 10% above what it would be without intervention, the document suggests, though that should settle down to around 5.5% eventually.
"Domestic demand for tourism is also expected to be positively affected," it says – but by only around 4% more than without any intervention at first, and 1.5% in the longer run.
The proposals include:
- Giving more money to promotion agencies such as SA Tourism, and protecting such budgets from a depreciating rand.
- Help tourism operators navigate all the regulations they have to comply with, possibly by way of a one-stop-shop system.
- Creating "a better balance between security concerns and the growth of the tourism sector" in South Africa's approach to visas.
- Better policing of tourism hotspots.
Agriculture : R6 billion extra in exports.
The proposed policy interventions hope to both increase productivity in South African agriculture, and to gradually increase the demand for what South Africa grows in foreign markets.
In changes are made on water and trade policy in particular, the National Treasury says, that should add R6 billion in agricultural exports that would otherwise not happen by the end of its 10-year simulation period.
Some of the proposals include:
- Better credit products for farmers, and more affordable insurance against catastrophes.
- Help small farmers move towards higher-value crops.
- Manage water better so irrigation areas can be expanded.
Transport: 17% cheaper.
As part of its modelling the National Treasury assumes that the price of freight transport in South Africa can be reduced by 17% over the course of a decade, while faster transit also makes sectors such as manufacturing and wholesale at least slightly more efficient.
Meanwhile, making taxis and trains more efficient should add 0.6 percentage points extra to the informal economy, the discussion document says, simply by making the flow of unskilled labour faster and easier.
- Give third parties access to railway tracks.
- Introducing competition between port terminal operators.
- Devolving public transport by rail and bus to metros.
Insurance: 7% cheaper.
After 10 years, the Treasury says, efforts to reduce red tape for providers, lowering the barriers to new entrants – and making it cheaper to switch between companies – could reduce the cost of insurance and financial intermediation by around 7%.
Telecommunications: 25% cheaper soon – and another 25% cheaper eventually.
The policy document recommends a range of changes in telecommunications, from strengthening regulator Icasa to making radio frequency spectrum available to cellphone operators.
Between these, Treasury says, the cost of telecommunications could be reduced by a quarter within three years. In the six years after that it believes there could be a further, gradual decline in prices that reach 25%.
If that happens, consumers will, within a decade, be paying R56.25 for every R100 currently spent on airtime.
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