Finance Minister Trevor Manual, in his Budget speech on Wednesday, provided further insight into government’s planning and Accelerated and Shared Growth Initiative for South Africa (Asgisa).

Government has adopted the initiative to put the economy on a higher growth path, and Manuel emphasised that every element of the National Budget had been geared to support the initiative.

Asgisa, which is championed by Deputy President Phumzile Mlambo-Ngcuka, will seek to introduce further reforms to relieve constraints to economic expansion and improve the competitiveness of certain sectors.

“Economic growth, and broad-based development, also depend on other institutional dynamics, or may be held back by particular barriers or constraints,” Manuel said.

“(Asgisa) is designed to ensure that we understand these dynamics fully, and to prepare appropriate policy interventions.” The chemicals industry, clothing and textiles, business services, tourism and hospitality, agriculture and food processing have been identified for specific analysis and microeconomic intervention.

As part of the Asgisa process, government has also commissioned a panel of international experts to comment on constraints to more rapid growth and help to identify ways to boost long-term economic expansion.

The panel held an initial series of workshops in January.

Issues on the table include the level and the stability of the exchange rate in an export-led growth strategy, the role of public infrastructure in lowering the costs of participating in the economy, the importance of appropriate, efficiently-administered labour-market institutions and empowerment policies to support employment growth the role of modern industrial policy, appropriate competition and trade policies, the need to increase innovation and investment in new technology in competitive markets, and the role of financial markets in supporting investment activity. According to the Budget review, initiatives focused on small-business development and broadening economic participation were also seen as a priority in the drawing up of the fiscal plan.

These include investment in facilities for informal traders, improving access of small businesses to finance, skills-development programmes, land reform and stepped-up support for emerging farmers.

Key industrial-development projects have been identified for the period ahead, including:

- the development of a biofuels industry;
- improved coordination of national, provincial and local spatial and economic-development planning;
- the repositioning of the industrial policy framework to include coherent and synchronized sectoral initiatives and targets;
- lowering the cost of telecommunications and other information-network services;
- building and growing a business-process outsourcing (BPO) and ‘offshoring’ industry’; - accelerating tourism growth and associated business promotion; and
- promoting research and development through targeted science and technology expenditure.

On the development of the BPO industry, an initial amount of R70-million has been allocated for the 2006/7 financial year for the drafting of a BPO sector-support programme.

However, Manuel emphasised that Asgisa should not be viewed in an economic-framework vacuum, and that it did not replacec previous policies.

"As we enter a new phase of policy development, under the accelerated and shared growth initiative, we do so on the strength of continuing implementation of our reconstruction and development programme, which itself was supported by the macroeconomic consolidation initiated in 1996 as the growth, employment and redistribution strategy.

In the noise and haste of economic policy debate, we forget too easily that there are long lead times in the practical implementation of policy," he said.

"Our present economic performance reflects the choices we made a decade ago, and the economic reforms now in progress will yield their returns five and ten years from now."