11 February 2011
President Jacob Zuma announced several initiatives to boost job creation, including the setting up of a R9-billion jobs fund, as he declared 2011 South Africa’s “year of job creation” in his State of the Nation address in Parliament.
“Our goal is clear,” Zuma said in Cape Town on Thursday. “We want to have a country where millions more South Africans have decent employment opportunities, which has a modern infrastructure and a vibrant economy, and where the quality of life is high.
“We all have a responsibility to work hard to make this a reality.”
The initiatives Zuma detailed helped to flesh out the government’s New Growth Path, released late last year, which aims to create five million jobs by 2020 and bring South Africa’s unemployment rate down to 15%.
The country’s unemployment rate dropped slightly in the final quarter of 2010, from 25.3% in last year’s third quarter to 24%.
Six priority areas
In line with the New Growth Path, Zuma said six priority areas would be targeted in a bid to create more jobs, namely: infrastructure development, agriculture, mining and beneficiation, manufacturing, the “green” economy, and tourism.
He said the private sector would be key in the country’s efforts to create more jobs and that business, labour and communities needed to work together to beat unemployment.
The R9-billion jobs fund would finance new job-creation initiatives over a three-year period and would be complemented by an amount of R10-billion to be set aside by the Industrial Development Corporation (IDC) over the next five years for investment in projects with high job-creation potential.
R20bn in tax breaks for manufacturing
Zuma also announced R20-billion in tax allowances and tax breaks to promote investments, expansions and upgrades in South Africa’s manufacturing sector.
The Department of Trade and Industry unveiled the initiative late last year.
For a project to qualify, the minimum investment must be R200-million for new projects, and R30-million for expansion and upgrades, he said. The programme will provide an allowance of up to R900-million in tax-deductible allowances for new investors and R550-million for upgrades and expansions.
Small business support
To boost support to small businesses, the government would look at merging three of its funds that targeted small businesses – Khula, the SA Micro-Finance Apex Fund (Samaf), and the IDC’s small business funding activities – into a single unit.
This would enable the government to avoid duplication of financial support, cut administrative costs and bolster the available funds for small enterprises, Zuma said.
He added that the government campaign to pay small businesses on time – within 30 days – was proceeding well, adding that in the last financial year the SMME Hotline had received 20 000 calls and facilitated about R210-million in payments.
He also added that other departments had their own initiatives, such as the Department of Public Works’ Re Ya Patala (We Pay) initiative.
The government would continue with legislative reforms to make it easier to register businesses, and would also strengthen the Competition Act to open the market to new participants.
Zuma said South Africa’s Expanded Public Works Programme aimed to create 4.5-million work opportunities, and pointed out that more than a million opportunities have been created already since the beginning of phase 2 of the programme.
The programme focuses on repairing our roads networks; and the government would also develop infrastructure to boost the agricultural sector. Zuma said water reservoirs, windmills and irrigation schemes would be rehabilitated.
“These projects will enhance food security and create work opportunities for many, especially women in rural areas,” he said.
He said the conversion of the country’s television and radio signals from an analogue platform to a digital signal would create many jobs in manufacturing, packaging, distribution and installation.
Zuma said the government’s job creation drive would also enhance youth development.
“The National Youth Development agency is in discussion with state organs and the private sector to mainstream youth development in public sector programmes and to promote youth enterprises and cooperatives,” he said.
He said the government had also developed the National Rural Youth Service Corps programme to assist youth in rural areas. To date, more than 7 000 young people have been employed in the programme.
The government was also looking at targeting the tourism sector, where Zuma pointed out that for every 16 tourists that visited the country, one job was created.
South Africa’s tourist arrivals were up from 6.3-million in 2009 to 7.3-million last year.
The country would strengthen existing markets while exploring the emerging economies, while looking to grow the number of international conferences and sports events the country hosts.
He said South Africa had already secured 95 international meetings and conferences between 2010 and 2016.
The government would also look to into flexible visa requirements, improved landing slots at foreign airports, as well as improved tourism infrastructure.
Linked to tourism, the government will continue to develop the cultural industries sector.
Social security reform
Zuma said that while the government would look to improve the lives of workers, through reviewing legislation on labour brokers, the government’s position paper on social security reform was expected to be released this year for discussion.
“Issues to be dealt with include the funding and nature of the National Social Security Fund, how the private sector occupational and retirement funds will fit into the entire system, and the possible regulatory structure,” he said.
He said the government would this year finalise and adopt its minerals beneficiation strategy to boost the economy.
The country is rich in mineral wealth, but most of the minerals mined are subject to beneficiation outside of South Africa, robbing the country of business opportunities.
Zuma said ministers would detail their respective job targets when they tabled their budget vote speeches.
He said provincial and local governments have been asked to align programmes with the job creation imperative, and that state-owned entities and development finance institutions would also bolster job-creation efforts.