A 3% growth rate may exceed what policy permits - Business Day

President Cyril Ramaphosa says “growth of 3% cannot be the summit of our ambition” (“Can SA break 3% growth? Business and government raise the stakes”, August 24).

Given that World Bank data puts average growth rates for middle-income countries at 4% and above, one would hope so. We have argued that the objective has to be about 7%.

And while the president’s overall vision may be commendable, his policy intentions will make it unachievable. He told the Government-Business Partnership summit last week that “the composition of growth matters as much as its rate”, explaining that it needs to be labour intensive, stimulate industrial capacity and produce winners among the various groups or sectors that government decree seeks to empower.

The growth-with-adjectives proposition has made no small contribution to ensuring South Africa’s growth story has fallen behind its peers. Restrictive labour legislation ― most recently the national minimum wage ― has made labour-intensive activity a nonstarter. A failure to keep the infrastructural basics intact, crime, and inept industrial policy have overwhelmed productive enterprises. Empowerment policy has imposed steep effective taxes on doing business.

The fact of ruinous fines possibly being levied on firms for not meeting ministerially determined demographic quotas tells a revealing story about policy priorities. Growth is at best an afterthought.

A 3% growth rate may not be the limit of South Africa’s ambition, but it may well be the limit to what government policy allows. And even that may prove overly optimistic.

Terence Corrigan

Institute of Race Relations

https://www.businessday.co.za/opinion/2026-08-25-letters-to-the-editor/