Ramaphosa’s plans face growth spoiler
commitment to structural reforms, but actual implementation,” Kganyago said.
The two sectors are substantial contributors to GDP. SA is estimated to have the world’s fifth-largest mining sector in terms of its contribution to economic growth — at 8% in 2017. Manufacturing contributed 13%, but this is considerably lower than the 24% in the 1980s.
The mining sector has taken strain with persistent uncertainty that has adversely affected production. Chamber of Mines chief economist Henk Langenhoven said the production decline was worrying and disappointing and a lot needed to be done to bolster the sector. With weakened production and lingering uncertainty, investment decisions could be affected.
Ramaphosa’s plan to boost growth includes the appointment of envoys who will scour the globe to raise $100bn in foreign investment.
Last week, however, Ramaphosa gave assurances that the Mining Charter would be finalised soon. The industry has been significantly hindered by a stalemate on the charter.
Head of mining at Hogan Lovells Warren Beech said that while the election of the president and the appointment of Gwede Mantashe as mines minister had a positive effect initially, news of the appeal against a high court finding that the charter was not binding could weaken sentiment.
“There are two key things that need to be addressed to create policy certainty in the industry. First, the ownership element needs to be addressed and there needs to be clarity around the once empowered, always empowered issue. Second, the procurement processes for goods and services need to be clearer,” Beech said.
Platinum and gold prices were higher on Thursday, but stocks fell on the firmer rand. Platinum was up 0.7% to $920/oz at the JSE’s close, while gold gained 0.44% to $1,318. AngloGold Ashanti closed 2.47% lower at R110.35, while Impala Platinum fell 6.07% to R18.25.
Beech said that while there was still some optimism about the third and fourth quarters the second was likely to tell the same story.
While the sector would see growth in 2018 on stronger global demand and firmer international commodity prices, which would support production and exports, this would be tempered by the difficult operating environment, said Nedbank economist Busisiwe Radebe.
“South African manufacturing has massively underperformed global manufacturing in the past 10 years,” said Stanlib economist Kevin Lings.
While industry body the Manufacturing Circle had ambitious plans for the sector, executive director Philippa Rodseth said it remained volatile based on demand-side growth and the government’s support on supply-side factors, such as export incentives.
The Absa Purchasing Managers index, which gauges sentiment in the sector, points to a revival in April with expectant economic conditions painting a rosier picture.