Pretoria - The Gauteng government needs to increase its trade relations and investments with other African countries to boost the local economy, Finance MEC Jacob Mamabolo said in an address.
The address came as the provincial economy was showing signs of having recovered from the financial hardships caused by the outbreak of the Covid-19 pandemic, which resulted in a massive loss of jobs and increasing levels of poverty.
In his address last week, Mamabolo was upbeat about the economic recovery, saying Gauteng’s output comprised 35% of the country’s GDP, amounting to more than R1.2 trillion.
“Data from our Socio-Economic Review and Outlook, one of the key publications that we are releasing today, shows that the provincial economy is estimated to have grown by 2.1% in 2022 against an expectation of 1.8%.
“The province’s economic output is projected to moderate to 1.5% this year, before stabilising at an average annual rate of 2% in the period to 2026,” he said.
Mamabolo, however, said to address the socio-economic challenges of the province, it must record annual growth rates of 4.5% a year by 2030.
“To achieve this target, the province should concentrate on increasing growth, which will lead to an increase in per capita GDP and reduce unemployment.
“In order to grow the Gauteng economy, we will engage key economic actors, the private sector and the residents of the province to look at innovative and creative methods of consolidating the 35% contribution of the province to the GDP,” Mamabolo said.
“We will report back on the specific interventions we are going to make on this matter,“ he said.
Mamabolo said interventions would include partnering with municipalities and exploring a set of incentives to address municipal red tape that constrained fixed investments; engaging the private sector on supporting the fastest growing sectors of the economy; and engaging national government and SOEs on supporting the Gauteng economy.
He said the finance and business services sectors were primarily concentrated in Gauteng, which also accounted for a significant share of manufacturing output.
“Therefore, growing these two sectors would likely increase the growth of Gauteng’s economy. Furthermore, a significant share of South Africa’s exports of banking services and manufactured goods are sold to other African countries. Thus, increased economic growth with the right African country would likely increase demand for Gauteng’s exports.
“We also take into account the risk posed by greylisting to our economy. However, we believe that the National Treasury is adequately handling the matter.”
He said the Gauteng budget comprised transfers from national government in the form of a Provincial Equitable Share, amounting to R148.2 billion in 2023/24, growing to R153.3bn in 2024/25 and R160.2bn in the outer year of the Medium-Term Expenditure Framework (MTEF).
Added to this was money from national government in the form of Conditional Grant allocations, accounting for an average of 18% of total transfers, amounting to R27.4bn, R27.9bn and R29.1bn in each respective year of the 2023 MTEF, to realise policy imperatives within the education, health, human settlements and transport sectors.
Mamabolo said Gauteng’s provincial own receipts account for 5% of the gross revenue available for the province to appropriate for its spending requirements, and this equated to R7.6bn, R8bn and R8.4bn in 2023/24, 2024/25 and 2025/26 respectively.
“The provincial’s own revenue consists mainly of motor vehicle licence fees, casino and horse racing, patient fees and interest earned on short term investments, which contributes to close to 98% of total own revenue.
“As indicated in the Medium Term Budget Policy Statement in October last year, we have set a target of R7.3bn and I am pleased to announce that as at end of February we have collected a total of R6.7bn, representing 92% of the appropriated target,” he said.
Mamabolo said the province’s own revenue collection had to date also reflected the recovery of the economy post Covid-19 pandemic as observed in the collection of gambling and horse racing revenue.
“Over the medium term, a total of R24bn is estimated to be collected.
“These estimates are mainly driven by growth in new vehicle sales of 16.4% in the fourth quarter of 2022, of which a greater proportion is attributable to the province, according to Statistics South Africa February 2023,” Mamabolo said.
Pretoria News