R/€ = 15.26Change: -0.01
R/$ = 14.41Change: -0.03
Au 1057.95 $/ozChange: 0.07
Pt 835.50 $/ozChange: 0.00
Note: Search is limited to the most recent 250 articles. Set date range to access earlier articles.
Where? With... When?

And must exclude these words...
Close Main Search
Close Main Login
My Profile News Alerts Newsletters Logout Close Main Profile
Agriculture   Automotive   Chemicals   Competition Policy   Construction   Defence   Economy   Electricity   Energy   Environment   ICT   Metals   Mining   Science and Technology   Services   Trade   Transport & Logistics   Water  
What's On Press Office Tenders Suppliers Directory Research Jobs Announcements Letters Contact Us
RSS Feed
Article   Comments   Other News   Research   Magazine  
Oct 15, 2008

Promote greater competition, economist urges policymakers

© Reuse this A strong industrial policy, robust fiscal policy, and sound inflation targeting, were the three instruments that could ensure South Africa achieved lower inflation, a lower unemployment rate and “a far more prosperous country”, said Investment Solutions economist Chris Hart.

Speaking at the South African Chamber of Commerce and Industry’s yearly convention in Johannesburg, Hart emphasised that industrial policy should be set in such a way that barriers to entry are lowered and playing fields are levelled.

By driving competition in this way, more people could be absorbed into the economy.

“So you achieve two things by opening up industries to competition, [because] the only way you survive is by improving productivity, that helps to suppress inflation, but you also reduce unemployment”.

Hart said that one of the problems in South Africa during the period of sanctions was that companies outgrew the economy. “So you had over-concentration of industries. And you have got big dominant players, and they have got pricing power in an industry. So if they experience a cost, well then customers can just pay for inefficiencies,” he added.

“Bread collusion, for instance, occurs when there are structural problems with the industry. And I’ve got no problems with sanctions being applied to people who collude, but collusion is only possible when there are few players,” he said.

He stated that if there were numerous competing players in an industry, prices could not simply be increased unilaterally, and there was, in fact, a “price inertia” when it came to pricing. The value pool created among industries would be shared among more people.

With regard to fiscal policy, Hart said that boosting the savings rate, which he felt could be lifted to as much as 20%, could ‘help immediately’.

“Instead of raising rates to try and boost the savings rate, you can actually use tax policy to boost your savings rate. [However] they started raising rates in 2006, because the savings rate was too low, and the credit growth was too high. I think you could have achieved a better result with fiscal policy - to boost the savings rate as a national emergency. And that meant you wouldn’t have put the currency at such risk by hiking rates, and helping to propel it weaken, which then fuelled the inflation rate,” Hart said.

He warned that the country should stay committed to its inflation targeting policy. “Our assets are completely mispriced... if we abandon our inflation targeting policy, we will have to de-rate the market and the bond market completely. That makes capital a lot more expensive to raise,” he cautioned.

“So those are the big things to watch – do we blow the budget? And, is our long-term inflation targeting policy going to remain? Those are the two key things that we need to watch out for,” he said in his 2009 economic outlook presentation..

Looking at the South African economy in the context of the global market crisis, Hart said that although South Africa had stable banking systems, the real economy would most certainly be affected. However, emerging markets were proving to be a kind of safe haven amid the turmoil.

Edited by: Liezel Hill
© Reuse this Comment Guidelines (150 word limit)
Latest News
French conglomerate Bollore may have to halt work on the Niger to Benin section of its giant West Africa rail project after a rival company won a court order to stop it going ahead. The dispute concerns rival rail schemes in the area.
A week ahead of the second annual gathering of the Forum on China–Africa Cooperation (Focac), in Johannesburg, the JSE is rolling out the proverbial red carpet for Chinese investors looking to Africa’s largest bourse for possible investment opportunities, calling...
The South African National Roads Agency Limited (Sanral) applied for leave to appeal on Friday against the Western Cape High Court judgment that set aside the approvals that would enable it to toll sections of the N1 and N2 freeways in Cape Town. This prompted the...
Recent Research Reports
Water 2015: A review of South Africa's water sector (PDF Report)
Creamer Media’s Water 2015 Report considers the aforementioned issues, not only in the South African context but also in the African and global context in terms of supply and demand, water stress and insecurity, and access to water and sanitation, besides others.
Input Sector Review: Pumps 2015 (PDF Report)
Creamer Media’s 2015 Input Sector Review on Pumps provides an overview of South Africa’s pumps industry with particular focus on pump manufacture and supply, aftermarket services, marketing strategies, local and export demand, imports, sector support, investment...
Liquid Fuels 2015: A review of South Africa's liquid fuels sector (PDF Report)
Creamer Media’s Liquid Fuels 2015 Report examines these issues in the context of South Africa’s business environment; oil and gas exploration; fuel pricing; the development of the country’s biofuels industry; the logistics of transporting liquid fuels; and...
Road and Rail 2015: A review of South Africa's road and rail sectors (PDF Report)
Creamer Media’s Road and Rail 2015 report examines South Africa’s road and rail transport system, with particular focus on the size and state of the country’s road and rail infrastructure and network, the funding and maintenance of these respective networks, and...
Defence 2015: A review of South Africa's defence sector (PDF Report)
Creamer Media’s Coal 2015 report examines South Africa’s coal industry with regards to the business environment, the key participants in the sector, local demand, export sales and coal logistics, projects being undertaken by the large and smaller participants in the...
Real Economy Year Book 2015 (PDF Report)
There are very few beacons of hope on South Africa’s economic horizon. Economic growth is weak, unemployment is rising, electricity supply is insufficient to meet demand and/or spur growth, with poor prospects for many of the commodities mined and exported. However,...
This Week's Magazine
The BMW Group will invest R6-billion at BMW Group South Africa’s (BMW SA’s) Rosslyn plant to produce the next-generation X3 sports-activity vehicle (SAV) for the local and export markets. Rosslyn will continue production of the current 3 Series through its lifecycle,...
The lack of consequences for poor performance and transgressions on the part of contractors remains a significant hurdle to tackling South Africa’s service delivery challenges, delegates heard at the Consulting Engineers South Africa Infrastructure Indaba, on...
City of Ekurhuleni executive mayor Mondli Gungubele earlier this month officially named the city’s bus rapid transit (BRT) system, Harambee.
NICK CHRISTODOULOU As about 58% of data stored by organisations is dark, they must identify this dark data to expose risks and valuable information
About 58% of unstructured data stored by companies is dark data, which means that the value or regulatory importance of the data has not been determined. Subsequently, most of the stored data add costs, rather than increasing revenue or reduce regulatory risks, says...
BRIAN VERWEY Effective management, review and administration of non-core elements can improve business operations and increase revenue and decrease unforeseen risks
Effective logistics, import/export and manufacturing consulting services require detailed industry knowledge and experience, but can add significant value to these industries by providing expert advice on various technical elements in their value chains, says...
Alert Close
Embed Code Close
Research Reports Close
Research Reports are a product of the
Research Channel Africa. Reports can be bought individually or you can gain full access to all reports as part of a Research Channel Africa subscription.
Find Out More Buy Report
Engineering News
Completely Re-Engineered
Experience it now. Click here
*website to launch in a few weeks
Subscribe Now for $96 Close
Subscribe Now for $96