South Africa’s economy is still too reliant on mineral exports, Minister in the Presidency Jeff Radebe said on Wednesday.

Opening debate in the National Assembly on Tuesday evening’s state-of-the-nation address, he added detail to President Jacob Zuma’s call for the country to embark on a programme of radical socioeconomic transformation.

Radebe said the basis for this would involve placing the economy “on a qualitatively different path” that eliminated poverty, reduced unemployment, created jobs and reduced inequality.
“Our economy is still too reliant on exporting mineral resources, is still over-concentrated in a relatively few large companies, and is still largely owned and controlled by a racial minority,” he said.

South Africa’s low economic growth since 2008, coupled with a weak export performance, had weakened fiscal balances and resulted in a growing current account imbalance.

“By 2013, approximately R700-billion of foreign savings were required to fund the current account deficit. This dependence on foreign savings exposes our economy to significant financial sector risks and increases our exposure to external shocks.”

First quarter GDP data for this year showed the SA economy had contracted in annualised terms by minus 0.6% compared to the previous quarter.

“[This was] partly as a result of the protracted strike in the platinum mining sector.”

Radebe also warned of a tightening of monetary policy.

“Inflation is also rising, raising the prospect of a tightening of monetary policy with potentially negative consequences for economic recovery, and the recent rating downgrades will raise our cost of borrowing.”

Turning to the mining industry, he said “intolerable” conditions for mineworkers need to be tackled urgently.

“Working together with mining companies and organised labour, we need to urgently address the intolerable situation where our mines which produce so much wealth are surrounded by human settlements characterised by such squalor and poverty,” he said.