Aug 28, 2012
SA economy has globally competitive aspectsBack
Agriculture|Johannesburg|Polokwane|Africa|Ghana|Investment Solutions|Africa|Brazil|Ghana|Malawi|Nigeria|Senegal|South Africa|Zambia|Agriculture|Manufacturing|Mining|Solutions|Chris Hart|Jacob Zuma
"The country is solvent, there is yield and there is growth," Hart said in Johannesburg.
"We see this reflected in our financial markets, where investors are supporting our bonds and supporting our stock markets. That suggests that South Africa has an attraction as an investment destination."
However, the country's internal problems were hampering long-term investment, he said.
Hart, chief economist at Investment Solutions, was speaking at a Johannesburg Chamber of Commerce and Industry breakfast.
He said policy uncertainty played a role in hampering the growth and movement of long-term investment, and the country needed policy certainty.
Long-term investment was essential in industries such as mining, agriculture and manufacturing.
"It's not a case to say we've got policy certainty – you've got a choice between dreadful and awful – which is what happened in the mining industry," he said.
"It needs to be supportive policy choices to attract investment."
Hart said it was extremely difficult for small businesses to be formed and to operate in the South African economy, and this contributed to the high unemployment rate.
The economy faced a major problem with its levels of unemployment.
"The reason for unemployment is internal more than external," he told the meeting.
"Unemployment [in South Africa] is exceptional."
He compared South Africa's unemployment rate to that of Brazil. In 2002, joblessness in both countries started decreasing. Then came the 2008 global financial crisis.
The period between 2002 and 2008 generated many jobs. Brazil's unemployment rate decreased after this, but not South Africa's.
"Polokwane also happened... and that's a problem," he said, referring to the African National Congress' elective conference, held in Polokwane in December 2007, where President Jacob Zuma was voted in as ANC president.
"The unemployment rate suggests that we need to be looking at this as a national priority. I think job creation is one of our lowest policy priorities."
The regulatory structure for small businesses was wrong because regulations required economies of scale to administer, which was inappropriate for small business, he explained.
"Your source of capital for small business is largely your households, [which] are effectively savings deficient," he added.
"[Households are savings deficient] because of policy, which basically taxes household capital formation; and it's taxing the things like dividend and interest, which reduces the viability of actually saving."
The fact that people were not being compensated with interest also contributed to the lack of savings.
South Africans should put small business formation at the centre of policy by restructuring the regulatory framework, he said.
The country was fortunate because it was in a good "neighbourhood", with Africa seen as a potential growth region.
"South Africa can still be a gateway, but that opportunity is closing because Africa, in its own right, is establishing itself."
Countries with improving constitutional arrangements, such as Senegal, Ghana, Malawi, Nigeria and Zambia, were places to target in terms of business, Hart said.
Edited by: SapaComment Guidelines (150 word limit)
Other Macro and Micro News
Anglo American Inyosi Coal and Eskom “are broadly aligned” regarding Eskom’s empowerment imperatives for the New Largo project, Anglo American coal business in South Africa CEO and Anglo American Inyosi Coal chairperson Themba Mkhwanazi reported on Friday. In a...
Zimbabwe expects lacklustre economic growth next year, hit by a lack of foreign investment, low commodity prices, a liquidity crunch in the financial sector and weak domestic savings, Finance Minister Patrick Chinamasa said on Thursday. In his 2015 budget to...
There is widespread consensus that the Price Preference System (PPS) –introduced in September 2013 to restrict the export of scrap metal before it had first been offered for sale to the domestic consumers at a 20% discount to an international benchmark price – has...
Updated 6 hours ago South Africa’s National Treasury on Friday reissued its amended request for proposal (RFP) for the five-year multibillion-rand project to replace the legacy systems currently in use with an enterprise resource planning (ERP) solution for an integrated financial...
Updated 6 hours ago The handover of specialised computer equipment to the Umfolozi Technical and Vocational Education and Training College would address one of the greatest challenges faced by Transnet Port Terminals (TPT) at the Port of Richards Bay – a lack of skills in a highly...
Updated 7 hours ago Through hosting the WorldSkills 2014 competition’s mechatronic pre-national finals, industrial control and automation company Festo would promote and support skills development. Festo said the mechatronic competition would give schoolchildren, trainees and students...
Recent Research Reports
Defence 2014: A review of South Africa's defence industry (PDF Report)
Creamer Media’s Defence 2014 report examines South Africa’s defence industry, with particular focus on the key participants in the sector, the innovations that have come out of the sector, local and export demand, South Africa’s controversial multibillion-rand...
Road and Rail 2014: A review of South Africa's road and rail infrastructure (PDF report)
Creamer Media’s Road and Rail 2014 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 network, the funding and maintenance of these respective networks, and the push to move road...
Real Economy Year Book 2014 (PDF Report)
This edition drills down into the performance and outlook for a variety of sectors, including automotive, construction, electricity, transport, steel, water, coal, gold, iron-ore and platinum.
Real Economy Insight: Automotive 2014 (PDF Report)
This four-page brief covers key developments in the automotive industry over the past 12 months, including an overview of South Africa’s automotive market, trade figures, production and the policies influencing the sector.
Real Economy Insight: Construction 2014 (PDF Report)
This five-page brief covers key developments in the construction industry over the past 12 months. It provides an overview of the sector and includes details of employment in the sector, infrastructure and municipal spending, as well as insight into companies’...
Real Economy Insight: Electricity 2014 (PDF Report)
This five-page brief covers key developments in the electricity industry over the past 12 months, including details of State-owned power utility Eskom’s generation activities, funding and tariffs, independent power producers and prospects for the sector.
This Week's Magazine
As the City of Ekurhuleni continues its bid to develop the largely industrialised metropole into the continent’s first aerotropolis, executive mayor Mondli Gungubele has committed the city to creating a predictable, stable and enabling business environment in which...
While Ford Motor Company of Southern Africa (FMCSA) did not have “significant issues” with power supply in Gauteng, it was a different story in the Eastern Cape, said FMCSA and American Chamber of Commerce in South Africa president Jeff Nemeth earlier this month....
In 2000, exports into Africa from South Africa represented less than 5% of the turnover of Federal Mogul Motorparts Africa, with sales largely centred around Zimbabwe, Zambia, Malawi and Mozambique. Today, African exports represent 30% of sales, with trade expanded...
The Malawi government has launched a $50-million project to upgrade the Kamuzu barrage, on the Shire river, an outlet of Lake Malawi, which is used to control the flow of water from the lake to the lower Shire area. The project will run from this year to 2017 and...
Our new Technical and Vocational Education and Training (TVET) Colleges will replace the Further Education and Training (FET) Colleges which have served us for the past twenty years. The buildings will be the same and most of the staff will be the same but as the...