Aug 28, 2012
SA economy has globally competitive aspectsBack
Johannesburg|Polokwane|Investment Solutions|Africa|Brazil|Ghana|Malawi|Nigeria|Senegal|South Africa|Zambia|Agriculture|Manufacturing|Mining|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
Other Macro and Micro News
The rise of black business and black industrialists in South Africa will be a natural process, says Medu Capital executive director Nhlanganiso Mkwanazi. “Eleven years ago, when we started our private-equity business, we were influenced by experience. So, as more...
The growth of the South African economy was held back and activity slowed in the third quarter of 2013, the South African Reserve Bank said on Tuesday. "Given the tepid growth registered in the third quarter of 2013, the level of real gross domestic production in the...
Recent Research Reports
Defence 2013: A review of South Africa's defence industry (PDF Report)
Creamer Media’s 2013 Defence Report examines South Africa’s defence industry, with particular focus on the key players in the sector, the innovations that have come out of the defence sector, local and export demand, South Africa’s controversial...
Road and Rail 2013: A review of South Africa's road and rail infrastructure (PDF Report)
Creamer Media’s Road and Rail 2013 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...
Liquid Fuels 2013 (PDF Report)
Creamer Media’s 2013 Liquid Fuels report examines South Africa’s liquid fuels market, focusing on the business environment, oil and gas exploration, the country’s feedstock supplies, the development of South Africa’s biofuels industry, fuel pricing,...
Projects in Progress - Second Edition (PDF Report)
Creamer Media’s second Projects in Progress supplement considers some of the major project developments under way, including high-profile energy and transport projects, as well as a few of the lower-profile public and private developments. What remains apparent is...
Water 2013: A review of South Africa’s water sector (PDF Report)
Creamer Media’s Water 2013 report considers the aforementioned issues, not only in the South African context, but also in the African and global context, and examines the issues of water and sanitation, water quality and the demand for water, among others.
Canadian Mining Roundup for June 2013 (PDF Report)
The June 2013 roundup includes details of the development of TSX-V-listed Aldridge Minerals’ flagship Yenipazar polymetallic project, in Turkey; the Canadian Nuclear Safety Commission’s renewal of Cameco’s uranium mining licence pertaining to the Cigar Lake...
This Week's Magazine
Mitsubishi Motors South Africa (MMSA) has introduced a 4x2 derivative of its Pajero Sport sports-utility vehicle (SUV), which will give it access to a substantial slice of the full-size SUV market, where it will compete with the likes of the Ford Everest, Chevrolet...
South African Energy Minister Ben Martins has affirmed that the government wants the country to be globally competitive in the nuclear sector. "Our responsibility has always been ... to ensure that, in nuclear energy, South Africa can compete with the rest of the...
Mercedes-Benz South Africa (MBSA) president and CEO Dr Martin Zimmermann describes the new S-Class as “a special place to be”, with the car creating a sense of “wellness” once you are seated inside the German brand’s flagship model. It is difficult to argue...
Water scarcity and water-quality issues are broadly recognised and understood in most political, business and civil organisations in South Africa, but solving water issues will require wide and continuous action in catchments and municipalities by organisations and...
Work is well under way on the R212-million Imvutshane dam, 30 km north-west of Stanger, in KwaZulu-Natal, which is a key link in supplying people in rural Maphumulo with a reliable source of safe drinking water.