The South African economy is not growing at the rate required to decisively tackle unemployment, inequality and poverty, Deputy President Cyril Ramaphosa said on Tuesday.
"All levels of government, public finances are under a great deal of stress, limiting the scope for further social spending and increased infrastructure investment," Ramaphosa said at the South African Local Government Association conference in Sandton.
"Local government should play a critical role to advance the economic activities in local areas that would increase more employment," he said.
He also urged municipalities to use various instruments, such as technology, to foster innovation.
He said this would encourage local investment and economic activities. He also added that municipalities should be incubation centres for entrepreneurs.
After he addressed delegates and journalists, Ramaphosa was rushed out of the meeting.
0.4 percent growth
On Friday, Moody's Investors services warned that if South Africa didn't accelerate economic growth, the country risked being downgraded.
"The negative outlook on South Africa's Baa2 government bond rating reflects risks related to the implementation of structural reforms aimed at restoring confidence and encouraging investment, upon which Moody's bases its expectations for a gradual growth recovery and debt stabilisation in coming years," said Moody's in a statement.
The South African Reserve Bank has forecast that the country's growth will top just 0.4 percent in 2016 and only accelerate beyond one percent in 2017 and 2018.
South Africa dodged a downgrade to "junk status" in both May and June.
Rating agencies have been sympathetic towards South Africa's current lack of economic growth, influenced by weak external demand, which has had an impact on exports, as well as the drought, said Renier de Bruyn, equity analyst at Sanlam Private Wealth.
A credit rating reflects the borrower's credit worthiness. This involves the likelihood that the borrower will pay back a loan within the confines of the loan agreement, without defaulting, explained Mampho Modise, a postgraduate researcher at the University of Pretoria.Suggest a correction