South Africa can weather the global storm posed by growing international economic integration — with its accompanying buffeting of the rand, exports and imports — by implementing sound economic policies and working together to use the country’s more open economy to the best advantage, according to Finance Minister Trevor Manuel.
Manuel, who was addressing delegates at the Western Cape-Metropolitan Black Economic Empowerment (BEE) Conference on Monday, stressed the advantages of South Africa maintaining an open economy, despite being tested by the “gales of globalisation”.
“In 1998 and in 2001, we were buffeted by external speculation, but we did not capitulate. Indeed, we emerged stronger for that experience,” he said. “We have stood strong in the face of the global slowdown…in 2002 the South African economy again demonstrated its resilience to return growth of 3%, while the major economies such as the US, EU and UK realised growth of 2,4%, 1% and 1,8%, respectively.
“Trade benefited from the weakening of the rand in 2001, but most heartening was the accelerated pace of investment, building a platform for local growth.
“Trade liberalisation has expanded markets for many South African industries, creating opportunities for production that were simply not there in the past.
Gradual liberalisation of the financial account of the balance of payments enables South Africans to diversify their savings and earnings, at the same time opening access to a global pool of capital to fund investment in the domestic economy.
“While challenges remain, we can be deeply proud of our achievements.”
Looking ahead, Manuel said the outlook for 2003 remained “quite uncertain”, as mixed signals continued to emanate from many regions. In its April World Economic Outlook, the IMF had forecast global growth of 3,2%, rising to over 4%
next year, he noted. However, the IMF added a caveat, saying it was “cautious”
about this forecast.
“While the US remains the engine of global growth, the performance of the newly industrialised countries in East Asia remains impressive,” the Minister added. “Of these, countries such as Malaysia hold important lessons for us in South Africa…Malaysia is expected to grow by 5% this year, rising to almost 6% next year. Thirty years ago, Malaysia faced similar empowerment challenges to those faced by South Africa today.
“The sustainability of their growth performance over the past 30 years is underpinned by a number of very sensible domestic policy choices. In particular, their commitment to broadening participation ensured the economy to benefit from the talents, spirit and energy of all its people.
“One of the lessons learned is that we can’t transform the economy in only five or six years–it took Malaysia 30 years. While mistakes were made, Malaysia’s courage to try, its commitment to success and the overwhelming realisation that everyone matters, has led that country to a solid position in the world. It competes with the best, while demonstrating enviable vibrancy that is required for sustainable economic growth and development.”
The South African government will not act irresponsibly or irrationally by giving taxpayers’ funds to previously disadvantaged individuals or companies that are ill prepared or ill-equipped to meet the challenges ahead as part of the broader BEE agenda, Finance Minister Trevor Manuel said on Monday.
Addressing delegates at the BEE Conference for the Western Cape, sponsored
by the provincial government and financial services group Metropolitan, Manuel
said the government was working to facilitate empowerment through, for example,
its R70-billion procurement program, of which 20% (or R14-billion) is a built-in subsidy for preferential procurement for black-controlled businesses and entrepreneurs, as well as the Khula program that provides loan guarantees to those without the necessary collateral.
“We may want to speed up the process and quality of black economic empowerment, but we are not going to go awarding some individual in Mitchell’s
Plain a 2 billion rand contract to build jet fighters just because they have applied,” he observed. “Financial services companies are intermediaries between savers and investors, and if the promise to pay collapses then the entire financial sector collapses. We can’t rewrite the rules of economics-if we destroy the financial services companies, we destroy investment capital.
“Clearly we have to try to distort the patterns that have shaped the market in South Africa,” Manuel continued. “The Financial Services Charter (providing rules for black ownership and participation in the financial services industry) is about trying to put the market on an even keel. But we can’t just give funds away irresponsibly.”
Manuel suggested that a body or group be created with the responsibility of monitoring progress in both BEE and the creation of sustainable small, medium and micro enterprises (SMMEs). It would listen to those in need and measure their progress, while also acting as a forum for developing new structures or methods for facilitating participation by blacks in the economy.
“The government must be listening and responsive, directing opportunities,” he noted. “It must be able to understand what people are saying and respond appropriately, while guarding against unintended consequences.” – I-Net Bridge