Don’t lose heart, says Davies
Trade and Industry Minister Rob Davies believes South Africans should focus on what works with the economy rather than belabour the problems.
In an interview with City Press last week, Davies said: “We’ve got a choice. We have things we can build on, or we can beat ourselves to death and the headwinds will engulf us all.
“We do have challenges, serious challenges, there is no question about it. But we can spend our time making gestures, disrupting meetings or playing around, or we can come together and try to build on the positives, and I know that successful economies are the ones that do the second.”
Echoing President Jacob Zuma’s recent message about external factors that affect the economy, Davies pointed to the depressed economic outlook worldwide and the recessions in Russia and Brazil.
He said South Africa was hit by depressed commodity prices that have resulted in gold being half the value it was a few years ago, and platinum and iron ore are only a quarter of what they used to be worth.
Davies said this was compounded by the worst drought southern Africa had experienced in decades, the full effect of which would only be felt later in the year. “There is no magic wand that will make all those factors disappear. These are acute challenges, but what we should not be doing is lamenting those general external patterns. We should be addressing those things inside our economy that can help us better withstand that.”
Industrialisation and infrastructure development remained the best stimulus for growth, he said. Manufacturing in the country has also been negatively affected by the global glut of steel. But Davies was happy with how the clothing and textile industry had stabilised after years of decline. He said retailers who always imported clothing were now appreciating the value of local manufacturers.
What also gave him hope was a new deal announced by Mercedes-Benz, which would see it manufacturing trucks in East London. Another deal that involved food company Nestlé and the chicory industry had led to the recovery of chicory production in South Africa.
Davies said business had also agreed to work with government to avoid a credit downgrade. He added that by adjusting its budget to take account of new circumstances, the government had gained credibility internationally.
He said that even as the economy was projected to grow at less than 1% this year, “people must understand that less than 1% growth is still a positive growth, but is still far off from the 5% we need and far short of the targets in the National Development Plan”.
Contrary to many who believed the Black Industrialist Programme would allow cronies to cash in, Davies said criteria to get into the programme were quite tight.
“It is very tightly defined. You have to be involved in manufacturing and value-added activities, and you have to be in a leading position in your company.”