Rewind

Finweek English Edition - - INSIGHT - David Mckay

SA’s econ­omy needs min­ing more than ever. In a later in­ter­view with Fin­week, Bax­ter said too much of the econ­omy was be­ing driven by the non-trad­able sec­tor; that is, con­sumers with ac­cess to credit. But as Stan­lib econ­o­mist Kevin Lings ob­served in what may be­come a fa­mous com­ment, SA’s econ­omy has to be driven by more than just shop­ping.

“SA is at a cross­roads,” says Bax­ter. “Trad­able ex­port sec­tors are as im­por­tant in balancing the coun­try’s growth pro­file. Apart from the fact that it cre­ates skilled and semi-skilled jobs and there­fore bal­ances the labour mar­ket, it also cre­ates ex­port rev­enues.

“This is rev­enue that can be used to ser­vice the cur­rent ac­count deficit (some­where around 6% of GDP presently) and makes eco­nomic growth more pre­dictable,” he says.

In the last 10 years, the min­ing sec­tor has been neg­a­tively af­fected by ex­oge­nous forces: Eskom power deficits, re­stric­tions on freight, and even the dam­ag­ing na­tion­al­i­sa­tion de­bate were a func­tion of poor Government plan­ning, or in­ter­nal pol­i­tick­ing, rather than fun­da­men­tal min­ing in­dus­try over­sights.

Even the labour re­la­tions prob­lems in the plat­inum sec­tor last year were ex­ac­er­bated by a na­tional fever; ser­vice de­liv­ery protests didn’t start in the in­for­mal set­tle­ments of Rusten­burg. “There have been a set of com­plex is­sues that have weighed on the sec­tor stop­ping it from grow­ing quicker,” says Bax­ter.

New head­winds ap­proach. A tax re­view, which in­cludes the min­ing sec­tor, is due later this year while the like­li­hood of a car­bon tax comes into view. Given the lack of devel­op­ment in re­spect of nu­clear power, and the costs of de­vel­op­ing wind and so­lar power, coal-fired power needs sup­port­ing, not dis­cour­ag­ment.

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