Advertise Here
Icon

Directory

IconAlternative Investments
IconAsset Managers
IconAssociations and Institutes
IconBBBEE Consulting and Verification Agencies
IconConsumer Protection
IconCorporate Governance
IconCredit Bureaus
IconFinancial Planners
IconInvestment Consulting
IconLinked Investment Service Providers
IconListed Equities
IconOmbud
IconOnline Share Trading
IconParticipation Bond Managers
IconProperty Unit Trusts
IconPublications
IconRegulatory Authorities
IconStock Exchange
IconUnit Trust Fund Managers
IconWellness Programs
Advertise Here
  Subscribe To »

Dependency on social grants threatens government’s infrastructural spending plan

Published

2012

Thu

23

Feb

While yesterday’s budget by Finance Minister gave the overriding sense that government is now starting to show a real commitment to infrastructural spending, after more than two years of policy paralysis, increasing spending on social grants threatens this ambition.   

 

This is according to independent economist Sandra Gordon, who was the guest speaker at a budget briefing this morning held by global audit, tax and advisory firm Mazars in Cape Town.

 

“The country’s transition in 1994 was political rather than economic with the result that the subsequent robust growth rates have not generated enough employment. The current youth unemployment rate, which stands at about 50%, means that most young people - who should be contributing to our economy - are lying outside of the economic system.”

 

As last year was called ‘the year of job creation’, Gordon contended that the announcement during the State of the Nation Address of a drop in the country’s unemployment rate from 25% to 23.9% overstated the progress made as it did not include job-seekers who had stopped looking for a job, as those are no longer regarded as job hunters. “The rate may easily rise up to 35% if discouraged workers - those who are no longer employed and had stopped looking - were included,” she said.

 

With the economy generating few employment opportunities, many South African citizens are increasingly reliant on government social spending – which is budgeted to rise to 58% of government spending.

 

“With almost a third of the country’s population receiving social grants and with the public sector wage bill rising rapidly, government has limited scope to increase spending on infrastructure.

 

However, it is estimated that infrastructure development funds of R4.5 trillion are available over the next three years within government, state-owned enterprises and development finance institutions. Gordon said this will achieve two main objectives – to lower the costs of doing business in the country and help create employment opportunities, especially for semi-skilled and unskilled labour.

 

With growth in the world economy likely to remain subdued for the foreseeable future, it is hoped that government’s planned infrastructure drive will provide the necessary impetus to lift the local economy onto a higher growth path.

 
Source: Claire Densham Communications
 
« Back to previous page Print this page » |
 

Breaking News »

Coface announces plan to increase agility and evolve to more efficient capital model

Coface, the international trade credit insurer, has announced plans to become the most agile global trade credit partner in the industry and to enhance its capital-efficient business model. Xavier Durand, ...
Read More »

  

City of Ekurhuleni and Mastercard Help Ratepayers Pay Their Bills Using Their Smartphones

The metro is the first local government authority in the world to offer ratepayers Masterpass as a payment option   Budapest, Hungary: More than 900,000 ratepayers in the City of Ekurhuleni can now ...
Read More »

  

South Africa retains pole position for auditing and reporting standards for seventh year in a row

Johannesburg: The Independent Regulatory Board for Auditors (IRBA) has welcomed the news that South Africa has been ranked yet again as the world’s number one for auditing and reporting standards, making ...
Read More »

  

The Digital-Ready Bank - What the African banking market can (and should) learn from Europe

By Darrel Orsmond, Industry Head: Financial Services at SAP Africa CHALLENGE: According to a 2015 KPMG report, banking penetration is as low as 36% in some of the larger African economies. SOLUTION: Digital ...
Read More »

 

More News »

Image

Healthcare »

Image

Life »

Image

Retirement »

Image

Short-term »

Advertise Here
Image
Advertise Here

From The Glossary »

Icon

Nuclear Risks:

By international agreement such risks are excluded from all policies.
More Definitions »

 
 
By using this website you agree to the Terms of Use.
Copyright © Stoker Risk & ICT (Pty) Ltd 2004 - 2016.
All Rights Reserved.
Icon

Advertise

  Icon

eZine

  Icon

Contact IG

Icon

Media Pack

  Icon

RSS Feeds