Although the rand continues to hover around multi-year lows - and was at R13.12 when I sat down to write this - it seems not everything is doom and gloom.
For that, I’m grateful because reading endless stories about the rand’s demise, lower markets, the global commodity rout and a contracting economy is, well, depressing.
I was well chuffed to see that Volkswagen - the people’s car, as it used to be known - will plug R4.5 billion into increasing the production capacity of its Uitenhage plant by 50 percent to 150 000 units a year, and to produce at least two new models.
That’s excellent news at a time when South Africa really needs foreign direct investment to come in through the front door.
It’s also good news for job creation, and the local economy around Uitenhage.
VW isn’t alone in looking at investing more. Imperial Holdings, which has seen its motor vehicle import business battered by the weak rand, is looking at setting up a manufacturing plant in South Africa to produce Hyundai passenger cars.
If this happens, Hyundai will be the first new brand to be manufactured in South Africa since 2009 when Nissan started producing the Renault Sandero as part of the global Renault Nissan alliance. Local production of the Sandero was subsequently discontinued.
More good news.
The reason these companies are looking at SA production and not, say, European is because of the weak rand. The same currency that has dropped to a point where inflation is now going to smack us hard(er) could become an economic lifeline.
It’s not rocket science: the weaker rand means it’s cheaper for international companies to set up shop here because their input costs drop.
Ditto industries such as business process outsourcing, and I’m hoping umbrella body BPeSA is on the international stage marketing the whatsit out of the fact that it’s just become a whole lot cheaper to set up shop in SA.
We need the investment. Not only because we need job growth that will boost the economy, helping us claw our way out of the hole we are in, but because this will reduce poverty, too.
It will also have a spin-on effect on levels of education and health care.
Plus, the more stuff we make inside our borders, the less we need to bring in.
Sure, our current account deficit isn’t too bad, and not near its highs, but we don’t need more debt.
The gap on the current account, the broadest measure of trade in goods and services, eased to 4.8 percent of gross domestic product in the first quarter, from 5.1 percent in the previous three months.
This could well increase on the back of the rand, which will have the adverse effect of - yup - weakening the rand. Sigh.
So, what I reckon we need to do is take advantage of the weak rand. Let’s get policies and regulation into place that will help us do this, such as tax breaks.
Then we can persuade multinationals to set up shop here, and not somewhere else.
And the benefit of a company actually setting up a plant in SA is that’s real FDI, and not the sort of money that can be pulled out quickly.
* Nicola Mawson is the online editor of Business Report. Follow her on Twitter @NicolaMawson or Business Report @busrep.
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