SA economy will weather the storm

Wednesday, June 8, 2016

By Minister of Environment Affairs Edna Molewa

In the past few months, South Africans in their numbers have begun to follow the discussions about our economy. The visits of international rating agencies and their decisions have become staple discussions for many.

In such an environment it is all too easy to become consumed, or to lose sight of the larger global picture. However, the underlying fundamentals and strength of our governance and economic models remain sound.

We remain a country that is open for business and offer great value to investors.  The economy continues to grow, albeit at a slower pace and while there are risks to growth from the weak global economy, our fiscal framework continues to remain strong.

This is underpinned by revenue collection of over R1 trillion which enables government to service debts, ensure social services and deliver infrastructure to further grow the economy.

When our economy is viewed from this prism it is easy to see why international investors continue see South Africa as an attractive and safe investment destination. It further gives them confidence that they will reap the rewards by investing in South Africa.

In the past year alone a number of international companies have set up shop, or expanded their operations in South Africa.  Our large urban malls are home to some of the most iconic brands from all over the world. 

They clearly see great value in our markets and have in most cases rapidly expanded their footprint.

The global coffee giant Starbucks recently entered South Africa through a partnership with locally based Taste Holdings.  There are currently two stores, but demand has been so high that plans are in place to open 20 stores in the next two years.

Obviously, there are those who would argue that one swallow does not make a summer. Such an argument would have greater credence if international investments in South Africa were once-off events. 

The story of investments into our country has been of rapid growth and expansion.  News that  Toyota had invested R6.1-billion to expand the production of its Hilux and Fortuner models in South Africa should come as no surprise, given that the motoring industry has drawn investments of more than R25-billion in the past five years.

Last year BMW said it would invest R6-billion to produce the new generation BMW X3. The vehicles are being manufactured at the company’s Rosslyn plant, north of Pretoria for both the South African and export.

The success of drawing in new investment has not been left to chance.  It was made possible through interventions such as the New Growth Path and the Industrial Policy Action Plan.

Interventions such as Operation Phakisa have begun to unlock economic growth in marine transport and manufacturing, offshore oil and gas exploration, aquaculture and marine protection.  It has also been expanded to the mining industry.

At the same time government has focussed on addressing specific bottle necks through the Nine Point Plan.  One of the key pillars is the Industrial Policy Action Plan which focuses on increasing manufacturing, employment creation and exports.

Given the sound fiscal framework we have in place and strong partnerships with both business and labour, we are convinced that our economy is well placed to weather the ravages of a slowing global economy. 

Government will continue to ensure that we create an enabling environment for investors.  The responsibility of positioning our country rest with all of us.   What we say and do matters and will ensure that our nation can grow and thrive.