Gordhan calls on local businesses to invest in economy

In order to attract foreign investment into the South African economy, locals will have to add their bit to the investment pot, Finance Minister Pravin Gordhan said on Tuesday.

“If we want this economy to grow, to become more stable and if we want to create better job prospects and grow businesses, we will have to invest our own money in this economy and make a go of it so that we inspire others to invest,” Gordhan told business leaders at an event hosted by the SA Chamber of Commerce and Industry (SACCI).

“We can’t invite investors from elsewhere in the world to invest in South Africa when we can’t demonstrate confidence in our own economy,” he stressed.

The “turbulent and uncertain global context” provides South Africa with very little support, Gordhan said.

“We as South Africans need to build on our own strengths, understand where our own competitive advantages are and buckle down to some hard work, which will take our growth numbers above, for example, what the IMF says we will produce,” he emphasised.

Last week, the International Monetary Fund (IMF) slashed its growth forecast for the South African economy to 0.1% in 2016.

Gordhan said business leaders in the room should think about what they can do to aim towards a 1% growth rate.

Business, government and labour need to “work as team South Africa in this very difficult context we find ourselves in”, he stressed.

“Our focus needs to be not just talking but getting things done. There is no shortage of money in the system, but a shortage of implementation capacity to actually get things done, whether in business or government,” he said.

We have to collectively deliver concrete results to persuade ratings agencies that “what we said in the first six months of this year is in fact being delivered on in the second six months”, Gordhan noted.

“While recognising that growth is not something you can click your fingers and deliver, ratings agencies and investors want to see that we are doing enough as government to be supportive of a growth environment and that as business you have confidence to invest in the current environment and don’t take the easy route of cutting staff; because unemployment is our collective challenge,” he highlighted.

Gordhan pinpointed South Africa’s world class financial services sector, consistently rated in the world’s top five by the World Economic Forum (WEF), and status as “gateway” to the rest of the continent as strengths that the economy should exploit in order to boost growth.

South Africa’s well-developed capital markets are key in ensuring we don’t get into “the problems faced by other countries”, Gordhan said, since much of the government’s borrowing is done internally and there is a limit of 10% on foreign borrowings.

Speaking to some of government’s growth-enhancing initiatives, Gordhan listed the Nine-point Plan and Invest South Africa, which is being developed by the department of trade and industry (dti) and aims to offer a one-stop shop for investors wanting to invest money in South Africa, in terms of securing concessions and permits.

The renewable energy independent power producers’ programme (REIPP) has been one of the most successful IPP programmes in the world, according to Gordhan, attracting about R120 billion in investment to date from both foreign and local investors.

At the same time, Gordhan acknowledged, “We must be frank about our challenges. We have high levels of inequality, which today is a worldwide concern, and also need to improve the low skills base in the economy.”

He listed government and private sector initiatives to train young people via, for example, Technical and Vocational Educational and Training (TVET) colleges and internships.

“The destiny of the SA economy and the welfare of our people lies in our hands,” he said.

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By Hanna Ziady