Donna Block
The Alpine resort of Davos is where the world’s leading movers and shakers are gathered for the next few days to ponder the challenges of globalisation in the 21st century. New Beginnings: Making a Difference is the premise of the 30th annual session of the World Economic Forum which started on Thursday, with hundreds of mostly behind- closed-doors sessions by the participants taking on an array of political, economic, technological, environmental and ethical questions facing the planet.
Among the luminaries attending the conference are President Thabo Mbeki and most of his Cabinet – with South Africa at the top of international fund managers’ hit parade, the timing of such an occasion couldn’t be better. Mbeki and his team will use the affair to try and drum up the foreign direct investment (FDI) South Africa so desperately needs to promote jobs and growth.
Minister of Finance Trevor Manuel, who took part in a radio phone-in programme this week, said: “We aim to persuade a number of investors that South Africa is a destination, not just to take bets in the stock market, but also for long-term investment.”
The Johannesburg Stock Exchange along with the bond market has been clocking up new highs and has been earmarked for explosive growth by several top-flight foreign investment funds. But this type of “hot money” disappears at the first sign of trouble. Manuel expressed concern at the dangers that loom in overstretched capital markets and said what counted was the sort of investment in buildings and machinery which would not desert the country at a moment’s notice.
South Africa attracted slightly more FDI in 1999 than it did in 1998, but the amount is paltry compared with the amounts that other emerging markets manage to pull in.
But there is much to be proud of: growth is projected at more than 3,5% for this year, there are reasonable inflation prospects, stable monetary and fiscal policies, and good prospects for a far more stable currency.
However, convincing investors that South Africa is a prime destination for their money is not a simple task. Besides all the good news, they will want to be clued into some tougher issues: the implementation of inflation targeting by the Reserve Bank to guide their interest rate policy, labour practices, as well as the high crime rate and the effects of HIV/Aids on businesses.