A task team would be set up to develop a national programme for boosting investment in the local economy, President Thabo Mbeki said on Sunday.

The team, chaired by Deputy President Phumzile Mlambo-Ngcuka, would include the ministers of Trade and Industry, Public Works, and Finance and the premiers of Gauteng and the Eastern Cape.

The Cabinet had decided at last week's three-day twice-yearly lekgotla that progress was needed in the fight against poverty, Mbeki told reporters in Pretoria.

This could only be achieved by speeding up the current economic growth rate of between three and four percent — which was in turn dependent on increased investment.

According to Business Day on Monday, the government says growth must exceed six percent if it is going to be able to make inroads into addressing unemployment.

"We need a supply-side process of growth, which requires investment in the South African economy," the president said. "One question the committee will have to answer is: Invest where?"

Hurdles to market access and lacking infrastructure would be other specific areas for investigation.

Mbeki said the task team had to come up with a growth strategy that was realistic, quantifiable and assisted the government in planning for the next financial year.

"Whatever decisions we make, we should take those decisions within the context of the budgeting process so... it should be possible for us to reflect those in the 2005/06 budget," he said. "They must not only be philosophical objectives or good aims, but we must be able to translate them into practical things."

Specific steps should have been identified by around September, the president said.

He pointed out that the private sector had been increasing its rate of investment in the local economy "quite significantly.

"The problem seems to be more with the public sector. We must look at what the government should be doing to increase its own contribution to the pool of investment."

The lekgotla also agreed that fiscal and monetary authorities should pursue a stable and competitive exchange rate.

This meant, Mbeki said, that the exchange rate should not be so weak or so strong that it impacted negatively on the economy.

"It is the stability of the exchange rate that is important rather than guessing what would be a competitive rate," he added.

Sapa

SA economy South Africa is the economic powerhouse of Africa, with a gross domestic product four times that of its southern African neighbours and comprising 25% of the entire continent's GDP.

ECONOMY UPDATE Business confidence near record high 4% growth 'not good enough' SARB gets a new deputy governor Brace for another petrol price hike 'Willing buyer/willing seller' rejected 500 000 jobs created in SA Producer inflation slows in June Inflation figures buoy rate cut hopes Govt task team to boost investment Spending boom far from over SARB signs R9.9bn loan deal Where is the rand going? Business confidence rises Consumer confidence stays high Transnet returns to profit