Source: Government of South Africa
While the economic growth rate in the country has been subdued over the past decade, the Deputy Minister of Finance, Dr David Masondo, has asserted that government is serious about growing the economy.
Government has demonstrated it efforts through initiatives to reduce the cost of doing business in South Africa, infrastructure investments, debt sustainability, undertaking structural reforms, attempting to diversify trade partners and working towards exiting the grey listing that was imposed by the Financial Action Task Force (FATF).
“The South African government will spend more than R1 trillion over the next three years on public infrastructure demonstrating government’s commitment to driving economic growth. The spending will focus on the roads, energy, water and sanitation.
“However, this is not enough. [We have] to deliver sustainable infrastructure at the speed and scale that supports our development aspirations. It for this reason that the government is mobilising greater private sector participation in public infrastructure investments,” the Deputy Minister said on Tuesday.
Addressing the Moneyweb Economy and Investing Summit in Johannesburg, Masondo explained that government has various incentive schemes to attract private sector financing and expertise to fast-track the effective delivery of infrastructure.
To unlock private sector investment, government has introduced the Credit Guarantee Vehicle (CGV) to derisk large infrastructure government programs, starting with some transmission infrastructure projects, without the need of sovereign guarantees.
“Government has been using Private Public Partnerships (PPP) to invest in public projects. To accelerate private sector participation, we have revised the Private Public Partnerships (PPPs) regulations, aimed at simplifying the rules governing PPPs.
“For instance, projects below R2 billion no longer require National Treasury approval. These changes will reduce administrative burdens and make it easier for the private sector to participate in infrastructure projects, improving delivery outcomes,” Masondo said.
Since President Cyril Ramaphosa’s sixth administration took office, government’s overarching mission has been to reduce the cost of doing business in South Africa as a necessary condition for economic growth and reducing the cost of living.
“To place our economy on a sustainable footing, government continues to pursue economic and fiscal reforms such as debt sustainability. It is our belief that relatively lower cost of borrowing or bond yields will boost investor confidence in both our sovereign and corporate bond markets,” he said.
As debt-service costs decline, some of the savings may be used to build fiscal buffers and to invest in productive infrastructure.
Improvements in infrastructure have the potential to reduce the cost of doing business and is thus positive for economic growth.
Amid the recent geopolitical tensions that have noticeably generated, amongst others, a complex and uncertain trading environment, South Africa is working towards increasing the diversification of trade partners exemplified by the recent trade agreement with China on stone fruit.
“We have pursued price stability through the Inflation Targeting (IT) Regime of which the mandate is to guarantee not just stability but also low inflation. When prices are low and stable so would be interest rates. For consumers, low inflation and interest rates imply lower cost of living.
“While for producers, it implies low cost of doing business. All these are likely to have a positive impact on economic growth. High inflation increases production costs/ the cost of doing business as workers demand more wages to compensate for erosion of purchasing power,” the Deputy Minister said.
High inflation also reduces international competitiveness, and consumer demand, leading to decline in firms’ profitability.
This is likely to increase unemployment as firms respond to lower profitability by reducing production and shedding jobs. This is detrimental to economic growth.
Currently technical work is conducted by the Macroeconomic Standing Committee (MSC) to draft recommendations on the inflation target and will table them before both the Minister of Finance and the Governor of the South African Reserve Bank (SARB).
“To accelerate economic growth, we have also been undertaking structural reforms through Operation Vulindlela to make the South African economy competitive by reducing the cost of doing business in South Africa.
“We have been working hard to reduce the cost of energy, telecommunication, and freight logistics and make it easy to source skilled labour all over the work through VISA reforms.
In its first phase, the Operation Vulindlela reform programme focused on five areas, which were identified as the most important constraints on economic growth: energy, logistics, water, telecommunications, and the visa system.
The second phase of Operation Vulindlela includes a focus on improving the performance of local government, addressing spatial inequality through housing policy and other reforms, and advancing digital transformation.
Following the greylisting of South Africa by the Financial Action Task Force (FATF) in February 2023, government has worked to address deficiencies in the country’s system for combating money laundering and terror financing.
“At the last FATF Plenary in June 2025, South Africa was deemed to have substantially completed all the 22 action items that were contained in the Action Plan, which is essentially the FATF to-do list, which had been adopted when South Africa was greylisted in February 2023.
“The FATF Africa Joint Group concluded the on-site assessment visit of South Africa at the end of July, completing the last step before the October 2025 FATF Plenary can consider whether to remove South Africa from its grey list. If the outcome of the visit is positive, the FATF will delist South Africa from the greylist at its next Plenary in October 2025,” the Deputy Minister said. –SAnews.gov.za
