Stag­nat­ing growth, in­fla­tion­ary pres­sures

The Star Early Edition - - BUSINESS NEWS - Joseph Booy­sen

SOUTH Africans would have been worse off had the in­ter­na­tional rat­ings agen­cies down­graded the coun­try to junk sta­tus at the end of last year, as this would have pushed about 160 000 peo­ple into poverty, said An­dré Roux, a pro­fes­sor in economics at the Univer­sity of Stel­len­bosch Busi­ness School (USB).

Roux was a key speaker at a sem­i­nar in Cape Town – pre­sented by USB and the In­sti­tute for Fu­tures Re­search – on how de­vel­op­ments in the econ­omy, pol­i­tics and ed­u­ca­tion will in­flu­ence South African or­gan­i­sa­tions this year.

In a pre­sen­ta­tion on the out­look for South Africa, Roux said a num­ber of fac­tors in­flu­enced South Africa from a global per­spec­tive last year, in­clud­ing tepid growth and low in­fla­tion, fis­cal bal­ances, mon­e­tary re­lax­ation, com­mod­ity prices, chang­ing de­mo­graph­ics, eco­log­i­cal con­cerns and in­equal­ity.

Roux said South Africa cur­rently had stag­nat­ing growth and in­fla­tion­ary pres­sures while the coun­try’s un­em­ploy­ment con­tin­ued to grow. He said if South Africa were down­graded at the end of last year, short term bor­row­ing costs would have risen by 60 ba­sis points, while 1 per­cent would have been shaved off the coun­try’s gross do­mes­tic prod­uct.

“We are on the brink of junk sta­tus, ac­cord­ing to Stan­dard and Poor’s and Fitch rat­ings agen­cies. The pri­mary ob­jec­tive of the South African Re­serve Bank is to pro­tect the value of the eco­nomic cur­rency in the in­ter­est of the bal­ance. Labour con­straints in South Africa have moved side­ways. In­vest­ment spend­ing fell by 6 per­cent,” said Roux.

Roux said ev­ery South African would have been R1 000 worse off and also 160 000 peo­ple would have been pushed into poverty, had South Africa been down­graded to junk sta­tus. Facts from the ex­ter­nal en­vi­ron­ment and the im­pact of Brexit in­clude that South Africa is the big­gest re­cip­i­ent of Bri­tish for­eign di­rect in­vest­ment, to­talling 30 per­cent in 2014. On the other hand, Bri­tain ac­counts for about 20 per­cent of South Africa’s ex­ports to the EU.

Roux added that in 2015, UK res­i­dents rep­re­sented 17 per­cent of over­seas tourists vis­it­ing South Africa.

He said there was a need to cre­ate new trad­ing agree­ments with the UK and rene­go­ti­ate some of the key trade agree­ments with the EU in or­der not to fur­ther raise the un­cer­tainty faced by South African busi­nesses.

Mean­while, Piet Naudé, a di­rec­tor at USB said, on fi­nanc­ing higher ed­u­ca­tion, gov­ern­ment spend was R50 bil­lion in fi­nanc­ing higher ed­u­ca­tion. The state con­tri­bu­tion de­clined from 49 per­cent to 40 per­cent in 2014.

On tech­nol­ogy, Martin But­ler, a se­nior lec­turer in In­for­ma­tion Sys­tems Man­age­ment and Tech­nol­ogy Fu­tures at USB, said there were ap­prox­i­mately 27 at­tempts of cy­ber crime a minute.

“It (cy­ber crime) is more com­mon than what you think, has a higher im­pact than what you think, is more so­phis­ti­cated than what you think. It is the re­spon­si­bil­ity of all man­agers in or­gan­i­sa­tions. It starts with your em­ploy­ees and with you.”

But­ler said the av­er­age to­tal cost of data breach in South Africa last year was R28.6 mil­lion.

He said cy­ber crime is a big prob­lem be­cause the in­ter­net ac­counts for large pub­lic net­works with vast sets of anony­mous traf­fic, large sets of valu­able in­for­ma­tion on the in­ter­net and vast amounts of un­se­cured net­works.

Ev­ery South African would have been R1 000 worse off and 160 000 peo­ple pushed into poverty.

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