Marikana effect ‘holds back growth’

South Africa spent R190 billion more than it received in the past financial year, Finance Minister Pravin Gordhan said in his Budget speech, which was delivered in Parliament this afternoon.

Gordhan said this was “partly a consequence of the disruption of mining sector activity and the structural reduction in minerals due to lower demand”.

The past few months have seen a number of wildcat strikes in mines, the most tragic having been the strike at Lonmin’s Marikana mine, where 34 workers were shot dead by police in August.

Trade performance has been holding back economic growth, Gordhan said, with an export growth in real terms of just 1.1% last year, while exports increased by 7.2%.

The deficit on the current account of the balance of payments was 6.1% of GDP.

Gordhan said the economy grew by 2.5%, lower than the 2.7% projected in last year’s Budget.

Economic growth in the next year is expected to be 2.7%, rising to 3.8% in 2015.

The national development plan (NDP), which was tabled by Planning Minister Trevor Manuel in August last year, targets an annual growth rate of more than 5% a year.

“This would double the resources available to government in the next two decades,” Gordhan said.

Gordhan said while some foundations for faster growth are in place – such as strong capital investment by the public sector, the building of more power stations, relatively stable inflation and low interest rates – more was needed.

He said the private sector should invest more and competitiveness in the wider economy should go up.

He called on especially the agriculture, manufacturing, tourism and communications sectors to play a part in expanding trade, investment and job creation.

Gordhan told journalists ahead of his speech that although these were difficult times, “the upsides are about turning potential into reality” and implementing the NDP.