‘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

CityPress - - Busi­ness - XOLANI MBAN­JWA xolani.mban­jwa@city­press.co.za

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.”

PHOTO: GCIS

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

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