Nene takes the reins as economy shrinks

Finance Minister Nhlanhla Nene. Picture: Sam Clark

Finance Minister Nhlanhla Nene. Picture: Sam Clark

Published May 28, 2014

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Johannesburg - Newly appointed Minister of Finance Nhlanhla Nene will have his work cut out for him as he takes over the reins at a time when the South African economy has experienced its biggest dip since the recession in 2009.

Commentators largely attributed the decline in gross domestic product (GDP) in the first quarter to the protracted strike that has rocked the platinum industry, costing the companies nearly R20 billion in lost production and employees R8.8bn in lost wages that could have found their way into the domestic economy.

Dave Mohr, the chief investment strategist for Old Mutual Wealth, said Nene would have plenty to ponder and named the ongoing platinum sector strike as the main contributor to the 0.6 percent contraction.

This industry contributed to a 24.7 percent decline in the economic activity of the mining sector even though diamond and gold output also fell.

The manufacturing sector contracted by 4.4 percent. These two sectors account for 20 percent of GDP.

Mohr was quick to note that even though platinum played a major role in the slump, the underlying growth rate of the private sector would still be a paltry 2 percent without it.

Tryphosa Ramano, the president of the Association of Black Securities and Investment Professionals, told Business Report that her main concern was not only about the appointment of black people in senior positions but for transformation to be part of the DNA of organisations both in the public and the private sector, meaning that major changes would have to be made to ensure more people participated extensively in South Africa’s economic landscape to boost production.

“With the National Development Plan (NDP) taking centre stage in implementation in the government’s next five years – it is imperative… to make the necessary moves to re-focus our economic priorities so as to achieve the much-needed inclusive growth that will create jobs and attract investment to our country,” she said.

She also argued that in order to successfully realise the objectives of the NDP, in particular the economic objectives, the new administration would have to consider competence, continuity and integrated planning to weather some of the challenges ahead.

Nene’s appointment after spending five years as deputy to Pravin Gordhan, as well as serving as chairman of the portfolio committee on finance during the fourth Parliament, represented the continuity required to run an efficient administration, Ramano concluded. - Business Report

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