Business confidence buoyed ahead of SONA

Tuesday, February 20, 2018

Economic Development Minister Ebrahim Patel says business confidence has been on the rise in the run-up to the State of the Nation Address (SONA). 

The Minister said this when he participated in a debate on President Cyril Ramaphosa’s State of the Nation Address at the National Assembly on Monday. 

“There is a new mood of optimism and buoyancy in the country. In the weeks and months ahead, we must build on that optimism and translate it into more employment, a stronger economy and deeper transformation.

“There are positive signs of a confidence boost in the run-up to SONA.”

The Minister said n the morning of SONA, Japan's Isuzu Motors announced their decision to take 100% ownership of an assembly plant in the Eastern Cape, while Chinese car maker BAIC reached the halfway mark in the construction of the first new light-manufacturing assembly plant built in more than 40 years in Nelson Mandela Bay.

Five weeks ago, competition authorities approved a transaction that will see Old Mutual reversing its decision of 20 years ago to make London its global headquarters and, subject to final shareholder approval, the company will 'come back home' and use the JSE for its primary stock exchange listing. 

Old Mutual will make Johannesburg the global headquarters for its biggest businesses, bring high-level finance jobs from London to SA, commit to a new fund of R500 million for developing small businesses, ensure no jobs are lost as a result of this homecoming and take its BEE shareholding levels to the best in-class in the industry. 

One month ago, a foreign investor committed to government and the regulators to invest at least R6 billion to modernise the local Caltex refinery and increase the ownership stake of South Africans in the business if its bid to buy the Chevron/Caltex local business is approved. 

A few weeks ago in Davos, the CEO of Coca-Cola briefed South Africa on steps they are taking to implement their commitment to localise more of their shareholding by selling 30% of equity in the local operations to black South Africans, including workers and to maintain current employment levels for a five-year period. Likewise the CEO of ABInBev, another large investor, committed to speed up opportunities for black farmers in the company's barley and hops supply chain. 

Job creation, inclusive growth and transformation a priority for the year ahead 

The Minister said, meanwhile, that unemployment leaves enormous human resources out of the economy, and these are millions of young people. Rising inequality is damaging to the economy and toxic to social cohesion, Minister Patel said.

He said to address this, President Ramaphosa's SONA speech sets a vision on inclusive growth, employment and bold transformation and also the 'how to'. 

He said this will be done by fixing institutions that are broken or have become sources of corruption. Partnerships will also be built with the private sector, organised labour and communities. Government plans, most notably the National Development Plan, will be implemented to drive job creation.

“To achieve this vision of SONA, we must work differently. It requires renewal within the State.

“In the year ahead to drive job creation and radical economic transformation, we will focus on expanding our infrastructure, deepening industrialisation, greater economic inclusion, promotion of innovation and stepped-up African regional integration. Our macro-economic policy framework will promote faster, more inclusive growth and give priority to job creation,” said Minister Patel.

International cooperation anchored on investment promotion 

Meanwhile, Science and Technology Minister Naledi Pandor said implementing the Tripartite Free Trade Area agreement and advancing negotiations on the Continental Free Trade agreement will be prioritised in terms of foreign policy over the period ahead. 

“First, we will implement the Tripartite Free Trade Area agreement that combines markets of 26 countries and a population of over 600 million people. Action on this will increase demand for products, revive manufacturing, and create jobs on a scale not seen before in Africa.

“Second, we are negotiating a Continental Free Trade Agreement. African countries have not developed the art of securing value for the continent as a bloc. Immense potential lies in free trade. Minerals processing and beneficiation could be immensely strengthened through South African technology,” she said. 

The Minister said Africa lies at the heart of South Africa's international cooperation policy. She said government remains committed to deepening integration and cooperation through increased trade, shared markets and the development of strong institutions.

“Our relationships must be those of mutual capacity sharing and not those of a neo-colonial dominance by South African mega corporates,” she said. 

“For years, our foreign policy has been assisted by the success of our own negotiated political settlement. Other countries saw us, and in particular President Mandela whom we celebrate this year, as an example of how to solve political problems practically and without violence.

“Now in our new dawn, it's time to return to the foreign policy that Mandela made famous, to a foreign policy in which human rights are paramount and to a foreign policy in which the rule of international law is its solid foundation.

“Africa remains our focus, our number one priority. However, our foreign policy must sustain warm relations with all important trade and investment partners.” –