‘SA is still a good bet’
Zuma will impress on delegates at the World Economic Forum in Davos next week that SA is a resilient country
The South African delegation heading for the World Economic Forum needs to create “optimism and confidence” about the country to investors, despite the weakening rand, a global commodity slide and uncertainty around emerging markets. The South African team, which will be led by President Jacob Zuma, ministers and business executives, will go to Davos, Switzerland, next week, where 2 500 delegates – including other world leaders, businesses, academics and civil society – will meet to discuss the world’s economy.
Finance Minister Pravin Gordhan, who convened a meeting with business leaders and Cabinet to consolidate the country’s message to Davos on Friday, said: “The message we will be taking to Davos is one which says that South Africa is a very resilient country, that South Africa is a country that has many pluses – its business infrastructure, its monetary policy, its fiscal policy, its advanced infrastructure and very sophisticated South African businesses that other people could partner with and work with.
“But more importantly, South Africa still is a very attractive destination for countries that want to establish manufacturing and other plants here or extend existing plants, or extend their operations on the African continent as well,” added Gordhan.
Speaking on the sidelines of the meeting, held at the presidential guesthouse in Pretoria, Zuma told journalists that the most important thing to achieve at the Davos meeting was to “put across South Africa as a destination for investment. And if that is the case, we need to articulate what the challenges are, and also what we are doing and how we are going to receive investors.”
“Selling” the continent would also be an important mission, said Zuma, adding that the National Development Plan for the country was another important component for the Davos visit.
At last year’s meeting, South Africa faced a flurry of questions around its ability to supply the country with electricity, as load shedding was wreaking havoc countrywide.
Business Unity SA president Jabu Mabuza said the progress made in combating the country’s power crisis since then was a signal that, despite the many challenges it faced, the country had the capacity and confidence to rise above them.
“I think it’s a good time to go back and report to Davos that, since then, it’s not that we did not have some days of outages, it’s to say our renewable energy IPP [independent power producer] programme is not only the best in Africa, it’s one of the top three in the world in terms of sustainability and how many megawatts we’ve added to the grid.”
Brand SA CEO Kingsley Makhubela said: “Foreign direct investment has been declining around the world. We’ve been lucky. If you look at the automobile industry, we’ve seen a lot of injection of capital. That’s the message that we’re taking to Davos to speak to people about – that South Africa is still a good place to do business.”
Gordhan said that while the theme of this year’s meeting was “Mastering the fourth industrial revolution”, this represented a massive challenge for the world, as the advancements in technology meant people were being replaced by computers in the workplace.
“One of the challenges with the Davos theme is that we’re reaching a point in some countries where technology replacement of human beings is resulting in structural joblessness. That’s an issue for the next 15 to 20 years that we need to take into account,” said Gordhan. The question for South Africa, added Gordhan, was how the country was going to manage to build on the successes of having a sophisticated economy grappling with low economic growth, poverty and unemployment.
Just like many economies, South Africa’s manufacturing sector was “in trouble” and needed revival, he said.
“We need to search for new markets so that we can sell what we are producing. We need new levels of innovation; we need more commitment to research and development, both in government and the private sector because, unless you produce things that people want, you can’t trade at the end of the day. Whether you’re black or white, or any other colour industrialist – you’re not producing anything that will grow your business,” said Gordhan.
Though South Africa had a refined economy, he added, questions remained about what was needed to help it grow.
“How do you build on that; how do you energise it; how do you expand it and assist other parts of Africa to build up their manufacturing industries? In particular, how do we increase regional integration?”
Gordhan said the Davos meeting was coming at a difficult time, when two of South Africa’s partners in Brics, Brazil and Russia, were experiencing a slump in their economies.
“We know that two of the Brics countries find themselves in a recession as well, so that has led to a particularly negative approach to emerging markets, which we think is totally unjustified,” said Gordhan.
“The other factor that is impacting us is that we are a commodityproducing and exporting country ... it means that when you have a lower commodity demand, we have low prices on the commodities side; the currencies will have some level of volatility; in our case, the currency is an important shock absorber. In other words, we don’t have to spend billions of rands trying to defend the currency – it will go up and down.”
HEADS TOGETHER President Jacob Zuma and Finance Minister Pravin Gordhan at the breakfast meeting held at the presidential guesthouse in Pretoria this week. Zuma will lead a delegation to the World Economic Forum in Davos, Switzerland