Johannesburg - Finance Minister Pravin Gordhan yesterday threw down the gauntlet to business, calling for investment in the country amid sluggish economic growth prospects.
He told the leadership of the SA Chamber of Commerce and Industry that the country had to rely on South African money to be invested.
“If we want the economy to grow, become more stable and create better prospects for jobs, we have to invest our own money,” Gordhan said. “We cannot sit back and say we invite investors from elsewhere in the world.”
The call follows last week’s report by Moody’s that South Africa was the most vulnerable economy in sub-Saharan Africa to market volatility and the potential shift in investors perception linked to Britain’s exit from the EU.
Most exposed
The rating agency said the extent of South Africa’s integration into global financial markets, including its investment and financial links with the UK, meant it was the most exposed sovereign to the immediate financial sector fallout from Brexit.
“Europe as a collective represents the second-largest economic unit on the globe. Anything that happens there will have a spillover effect on other economies. What that is will play out over the next years as we begin to understand negotiations between the EU and Britain,” Gordhan said.
South Africa managed to avoid a downgrade to sub-investment grade from Moody’s, Fitch and S&P Global Ratings earlier this year, but still faced a risk of sliding into “junk” by the end of the year if the economic outlook deteriorated.
The International Monetary Fund last week revised the gross domestic product growth forecast for 2016 to just 0.1 percent from the 0.6 percent it had last predicted in May.
The Treasury, however, said it had a more optimistic forecast of 0.9 percent. The SA Reserve Bank sees 0.6 percent expansion.
“If we don’t grow and revenue does not come through as we have to expect, we will have to make tough decisions,” Gordhan said. “While our own situation is noisy, we have a stable environment. We are not in negative territory like other developing countries. We have a lot going for us, so let us focus on the positives.”
One of world’s best
Not only was South Africa’s financial services sector one of the best backed by sound regulatory and legal framework, but the automotive incentive scheme had helped the automotive industry.
“The question is how we duplicate that to the rest of the country. Also the depreciation of the rand has helped exporters and provided benefits to tourism,” Gordhan said.
“Our focus needs to be to implement plans. There is no shortage of money in the system; there is a shortage of capacity to get things done.”
Over the next few months, South Africa would need to deliver results on economic growth. “In the next few months we have to deliver results that will persuade ratings agencies that we can deliver” on our promises, Gordhan said.
BUSINESS REPORT