Stephen Hanival
Photo by: Duane Daws
South Africa needs to sharpen up its industrialisation programme if it is serious about reaching the 5.4% a year gross domestic product growth target as set out in the National Development Plan, as the country can no longer depend on its declining mining sector to drive economic growth.
Speaking at the Vision2030 summit, Department of Trade and Industry chief economist Stephen Hanival noted that the benefits the country experienced from the mining boom cycle from 2006 to 2008 had now run dry and, paired with volatile commodity prices, it was time to focus on other areas of growth.
He highlighted that the biggest potential for growth was in labour-intensive sectors. “We need to look at building the manufacturing and agricultural sectors, as that is where the most jobs are.”
“The reality, as far as we can see, [is that] there is no viable alternative to this.”
Meanwhile, Hanival highlighted that there were a number of things that “needs fixing in the South African economy”, before it could flourish.
“Red tape, across the economy, is something that we need to be mindful of, as well as regulation efficiencies. One of the things that [the DTI] is very concerned about is that, [although] we accept the need for environmental impact assessments and the need for companies to apply for water use licences, [we want to know why] the turnaround times are relatively slow,” he noted.
Hanival added that many companies were repelled by the slow turnaround times, as they were willing to invest but not willing to wait. “Regulation that serves no useful economic purpose is something that we need to remove,” he said.
He further highlighted that there should be renewed focus on what the country could do to improve business confidence. “I don’t think the performance of South Africa has been so poor that we need to ask whether there are opportunities for the private sector. Under the circumstances, our investment performance is as good as we can expect.”
Resolving the adversarial labour relations in the country would go a long way towards improving business confidence. “We can try to develop a programme of action to improve this environment, but would need to break down concrete issues in the country,” he noted.
“Companies are not going to invest in South Africa because they like South Africans; they are investing here because they will make money here,” Hanival averred.
Also speaking at the event, Black Business Council secretary-general Xolani Qubeka said that, although there was industrial development in the country, it still did not benefit the majority of citizens.
However, he noted that the revised black-economic empowerment (BEE) codes represented a corrective and progressive reindustrialisation model for small- to medium enterprises. “These [revised] codes have restored the noble objectives and spirit of BEE and reflects collaboration with economic transformation.”
He stated that the original BEE regime was “big business-oriented and crafted”, which undermined the aims of the Freedom Charter and ANC policy objectives.
Qubeka added that the previous codes were based on the private sector’s desired outcomes and “narrow capitalist objectives of profits”, rather than meeting government’s black ownership objectives.
“South Africa’s economy is highly developed and it is significantly impossible to redistribute historic wealth. The economic balance sheet is in excess of R8-trillion, [but] its ownership is extensively foreign-owned and controlled.”
He added that more than 60% of the country’s employable black citizens were unskilled with no prospects for employment. “How do we convert that resource into productive capacity?” he asked.
“Economic transformation means focusing on new opportunities and investments towards the marginalised, to foster a new epoch and economic class, driving the acceleration of a new middle class,” he said.