S.Africa to spend more to help poor, spur growth

JOHANNESBURG – South Africa will spend more to help the poor, while offering tax relief and other pro-business steps in a country where nearly a quarter of the population is unemployed, the finance minister said Wednesday.

In presenting the budget of Africa's most important economy to parliament in Cape Town, Pravin Gordhan said he was following up on pledges President Jacob Zuma made in his state of the nation speech two weeks ago to focus on fighting poverty and creating jobs.

The pledges to increase assistance come amid criticism that Zuma's government has not done enough to overturn the deep economic injustices created by apartheid.

Gordhan, who opened the speech with a casual, "Cheers," outlined plans to spend more on housing, schools, health, developing rural areas, welfare for the elderly, disabled and for children, and student aid.

Small businesses, seen as a potential engine of growth and job creation, would get tax breaks. Increased spending on roads and other infrastructure would also help business, Gordhan said.

Acknowledging the enormity of the task amid a global recession high unemployment, Gordhan said: "Building South Africa is a multi-decade project."

He paraphrased the title of former President Nelson Mandela's biography, saying, "We have embarked on a long walk to economic freedom. All South Africans aspire to these freedoms."

Part of the government's plan was announced a day earlier by the government's Industrial Development Corporation, which said it would spend 10 billion (about $1.4 billion) over the next five years on low-interest loans to businesses seen as having the potential to grow and create jobs.

The government promised last year to create 5 million jobs over the next decade. Gordhan has estimated that would require growth of over 6 percent a year.

The economy grew 4.4 percent in the fourth quarter, and unemployment shrunk slightly from 25.3 percent to 24 percent. Some of the nation's economic gains were credited to its hosting of the 2010 World Cup soccer tournament, but experts have said they fear the advances may not stick.

In his state of the nation address, Zuma said the government has established a 9 billion (about $1.3 billion) rand fund that would promote job creation. Zuma also announced tax breaks of 20 billion rand (about $2.8 billion) to boost the manufacturing sector.