The small business sector is where jobs are created and South Africans have a responsibility to recognise the sector as the key for successful economic growth, according to Reserve Bank governor Gill Marcus.
Speaking at the University of Johannesburg Centre for Small Business Development this week, Marcus highlighted that the small business sector in South Africa faced overwhelming obstacles to the successful development of entrepreneurship.
“There is still a shortage of skills and a lack of finance and the current environment is not conducive to operate businesses,” she said.
Marcus added that exports should be used as the driver to break out of financial difficulty, and pointed out that although the economy was expected to grow by 3.6 percent, the employment question had not yet been resolved.
She painted a downbeat picture of the economy, explaining that South Africa had experiencing capital outflows of nearly $20 billion (R136.6bn) this year compared with total inflows of $80bn last year.
“We need investment which will lead to growth… and it is important to build reserves. South Africa has $44bn in reserve compared with China’s $2.8 trillion,” she noted.
“Housing prices are either stagnant or declining, economic recovery is fragile and we are growing at a slow pace. It is imperative that we understand the economy to ensure that growth takes place.”
Marcus argued that current spending was driven by consumers, and that an ideal situation would be capital investment-led growth. She said skills and unemployment should be dealt with on an equal basis.
“Household debt is at 77 percent of disposable income. This means you have only 23 percent of your disposable income to spend on something else other than servicing your debt.”
Marcus highlighted issues in the global financial system that could affect South Africa. She said emerging markets were doing well despite instabilities in the global financial system, but warned that even though the recession had ended, South Africa was still not out of the financial crises.
Future oil prices would reflect what was going on in north Africa. This would have a negative impact on inflation which came in at 3.7 percent in January and February.”
Food inflation was at 3.6 percent, she said. “We are concerned about rising inflation as we expect it (food inflation) to rise to 5.7 percent next year.
“The high price of oil directly affects the price of fuel and the Reserve Bank will hold talks with the government in this regard,” Marcus said. - Ayanda Mdluli and Sapa