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Wednesday, April 17, 2024

National Treasury says electricity, logistics challenges stifle growth

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National Treasury has called on government to address impediments to growth, saying lack of electricity supply, weak investments and challenges in the logistics sector have led to weak economic growth.

Head of the Budget Office in the National Treasury, Edgar Sishi, said these impediments have persistently stifled growth in the last few years.

Sishi was briefing members of the joint committees on finance in Parliament on Friday after submissions were made by various stakeholders on the Budget.

Finance Minister Enoch Godongwana tabled the Budget last week.

Sishi said the reform agenda was in place to address lack of economic growth.

However, in the last few years South Africa has battled power cuts, damage to the railway infrastructure, congestion at the ports and there has been lack of investment in the economy.

Transnet has for the last five years witnessed a decline in the volumes on the railway network from 226 million tonnes to 149 million tonnes. This is due to damage to the infrastructure.

Eskom has been implementing various stages of load shedding almost everyday in the last two years.

Business said recently that the two State-Owned Entities cost the economy billions.

President Cyril Ramaphosa was in Richards Bay and Durban last year after the congestion at the two ports led to vessels being stuck at sea for weeks.

But the president said in his State of the Nation Address there has been an improvement in the performance of Transnet since the beginning of the year.

Cabinet has approved the National Logistics Roadmap and Transnet will from May allow third-party access onto the railway network.

Sishi said they wanted improvement in the performance in the energy supply and freight logistics sector to ramp up economic growth.

“We fully accept that South Africa’s central challenge is a lack of economic growth and the reform agenda is directed at addressing this problem.

“The economic growth of South Africa has been poor for some time. Poor economic growth has strongly correlated with weak investments, lack of electricity availability and logistics performance. We must address the impediments to growth,” said Sishi.

He added if the challenges outlined by National Treasury were properly addressed they will start to witness growth.

“There must be appropriate foundations for growth, There must be electricity. The trains must move on time and the ports must operate efficiently. These are key things without which you cannot have economic growth and they have been clearly having an impact on growth over the last number of years and in some cases for more than a decade-and-a-half.”

Economic growth would be realised if these issues were addressed.

He said the state must get basics right and this mist be reflected in its capacity to deliver.

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