South African households which are highly in debt are a worrying trend, finance minister Trevor Manuel said on Tuesday.

Speaking at a policy debate in Johannesburg on the country's economic future, Manuel said the trend of borrowing was a disinvestment for the country.

"There is something wrong. We have to make choices as a nation as we cannot live in debt and not save for tomorrow," Manuel said.

On the overall economy, Manuel said South Africa needed to pay more attention to micro-economics and deal with growth.

Labour and job creation

He said the country should focus on issues like the labour force and job creation.

Too much emphasis was put on macro-economics and issues of inflation.

Executive Director of the Edge Institute Dr Stephen Gelb said the xenophobic attacks in May reflected the "extreme inequality" in South Africa's society, stating that inequality was not the same as poverty.

"Our future will be characterised by inequality and we need to address this issue.

"We have done a good job in addressing poverty but not inequality," he said.

A substantial amount of money had been allocated to improving people's lives through grants and water allowances but this did not address inequality.

Gelb said it was disturbing that the country's education system was not doing well although a lot of money had been put towards it.

Manuel added that although the education sector got R120-billion (5.4 percent of GDP) in this year's budget, the returns on the investment were poor.

"Not a money problem"

"It is not a money problem. As a nation we must take responsibility to get schools to operate properly.

"We need to get school inspectors back in order to ensure we get systems back in place."

Absa's group Chief Executive Steve Booysen said there was a need for South Africa to retain and attract skills in order to boost the economy.

He said it was necessary to create an environment which would retain skills in the country.

Commenting on Black Economic Empowerment, Gelb said there was a need for a deadline to be set.

"There has to be an end date on BEE. Five to eight years from now," he said.

AFP

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