February 10, 2011

Government declares 2011 as year of job creation

Government will devote a wealth of energy and resources to creating jobs but the private sector will have to play a key role in solving the country's unemployment crisis, President Jacob Zuma said in his state of the nation address. Zuma announced the establishment of a jobs fund of R9 billion over the next three years to finance new job-creation initiatives. In addition, the Industrial Development Corporation (IDC) had set aside R10 billion over the next five years for investment in such economic activities with a high job creation potential, he told parliament. "It is also my pleasure... to announce R20 billion in tax allowances or tax breaks to promote investments, expansions and upgrades in the manufacturing sector," Zuma said. For a project to qualify, the minimum investment should be R200 million for new projects, and R30 million for expansion and upgrades. The programme would provide an allowance of up to R900 million in tax deductible allowances for new investors and R550 million for upgrades and expansions.
As a debate rages in the ruling party on the role of the state in creating jobs, Zuma signalled that he expected the private sector to create most of the jobs the country needs. "We cannot create these jobs alone. We have to work with business, labour and the community constituencies. Experience shows that we succeed when we work together. "While looking at the private sector in particular to help us create most of the jobs, government will certainly play its part.

Whereas Zuma used his state of the nation address in 2010 to call on government to speed up delivery, he claimed a number of successes this time around, notably the performance of the financial sector and forecasts of a steady decrease in the budget deficit. Other improvements included a declining murder rate, improved access to basic services and the success of hosting the first Fifa World Cup on African soil last winter. But as expected, job creation was the main focus of the president's speech, written with what is becoming trademark simplicity. Zuma said the small business sector was a critical component of the job creation drive. "We will continue to provide financial and non-financial support to small, medium, and micro enterprises (SMMEs), small scale agriculture as well as cooperatives. "We need to cut administrative costs, avoid duplication and direct more resources to small business," he said. Therefore, consideration was being given to merging the three agencies Khula, the SA Micro-Finance Apex Fund and the IDC's small business funding into a single unit.

The programmes of state owned enterprises and development finance institutions should also be more strongly aligned to the job creation agenda. Research had indicated that jobs could be created in six priority areas. These were infrastructure development, agriculture, mining and beneficiation, manufacturing, the green economy and tourism.
Turning to mining, Zuma said the government would make it a priority this year to adopt a beneficiation strategy "so that we can start reaping the full benefits of our commodities". Other priorities included giving a third of the 1.2 million households living in informal settlements security of tenure within the next three years. "By the year, 2014, 400,000 of the said households should have security of tenure and access to basic services." Zuma acknowledged that service delivery needed to be speeded up and, in a first, cited angry complaints citizens had posted on government's Facebook page. (SAPA)

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