South African Reserve Bank (SARB) Governor Tito Mboweni said on Tuesday that government support of the private sector is important and development of the local bond and corporate bond markets should be encouraged.
Mboweni also said that it is important to improve international ratings to add to foreign-investment confidence in South Africa. “If this happens, then the story will unfold itself,” he said.
Mboweni said various questions can be asked about how to raise capital for infrastructure development, and while this capital can be found internationally, it also has to be asked what can be done locally to facilitate this growth.
“The South African bond market has a lot of depth today. In a very short space of time the market began to develop quite significantly. Also, as South African corporates began to grow there was gradual development of the corporate bond market,” he said.
“Today the JSE is well known and has developed significantly. The economy has opened up and international borrowing is possible. The JSE has linked with London Stock Exchange and there is sufficient depth in that market.
“If we are in a position to leverage bond issuance by government and also encourage corporate bond issues at home, we might be in a better position to get better credit ratings, which will improve views of non-residents in our market,” said Mboweni.
He said that in the year to date about R25-billion has come South Africa’s way from foreigners.
“Improved credit ratings have helped a lot and we have recently also experienced this thanks to changes in the policy environment. There has even been some raising of debt in the South African market by a Mauritius company — this is very interesting. Confidence in South African markets helps,” said Mboweni.
The governor said the challenges on the continent are less about economic technicalities and more about whether Africa has the correct leadership to guide it through the difficulties — political and economic.
“The challenge is whether the leadership supports and encourages growth of independent thinking or not. We must have an environment that is sufficiently supportive of attempts by the private sector to do things — for example, it is possible to have toll roads; the private sector will fund it if you can develop the market.
“We need political leadership to create an environment that will be good for everybody,” concluded Mboweni.
Mboweni was speaking during the visit to South Africa of the International Monetary Fund (IMF) to release a report on the economic conditions in sub-Saharan Africa as well for the IMF to discuss key policy issues with senior bank officials from throughout sub-Saharan Africa.
The IMF’s first deputy MD, John Lipsky, is visiting South Africa for the first time and has met government officials as well as representatives from the private sector. — I-Net Bridge