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Gigaba woos global investors

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Gigaba woos global investors

Kathy Gibson reports from the World Economic Forum on Africa in Durban – Continuing his charm offensive, Finance Minister Malusi Gigaba has assured government and business leaders that South Africa will follow the fiscal policies outlined in the last budget.

“The budget for 2017 has been presented to parliament and adopted,” he told delegates to the World Economic Forum on Africa. “The budget for 2017 has been set and no-one can tamper with that.”

He adds that there is a pressing need to grow the economy inclusively. “And that inclusive growth narrative must be part of our DNA.

“If we can grow the revenue base, we will have income to invest in social economic expenditure. That will be good for us, for business and for society.”

Gigaba stresses that fiscal prudence will be adhered to. “We can’t spend money that we don’t have, so we need to manage the fiscus in a responsible manner. It must be aligned with growth opportunities in the economy.”

Speaking about radical economic transformation, Gigaba says it’s important to focus on  growing the economy while simultaneously implementing transformation.

“We can call it radical economic transformation or inclusive growth, it is about structural reforms that will change the ownership patterns of the South African economy.

“The economy cannot grow in the basis of a large black community that has no assets. The black community needs to be a part of the economy.”

He stresses that many of the projects aimed at inclusive development have already been set out, and most of the targets published. “We don’t need to start any new programmes. What we need to do is accelerate the programmes we already have.”

Among these are the black industrialists programme and development of black-owned businesses through the government’s R500-billion procurement budget and infrastructure programme.

This programme promises to produce more effective results than the black economic empowerment (BEE) policies currently in place, Gigaba says.

“I have been quit critical of BEE programme we have implemented over the last 22 years which has not created significant numbers of genuine entrepreneurs as it was focused on shared ownership schemes.

“We need to focus on creating black industrialists, and the office of the chief procurement officer becomes very important here to ensure empowerment using government spending.”

He says it is important to find ways of localising the economy and empowering black people to become suppliers.

The process of transforming the economy needs buy-in from business, Gigaba adds.

“It’s not only government that will make it happen. The private sector must regard it as being in their business interest to bring on board more black partners who can create and own assets.”

Gigaba believes the current government could be considered to have been too conservative in restructuring the post-apartheid economy and what is needed is to change the “ownership patterns” of the economy. There are limited opportunities in South Africa’s rural areas and, within the former township areas of the cities, people are generally occupied in menial economic activities such as car-wash businesses and hair salons.

“We argue that youth unemployment is a result of defects in the structure of the economy,” he says. “To reduce it, we need to change the structure of the economy to create employment.”

There is merit in criticism that ore could have been done to effect economic transformation. “We could have better changed the structure of the production to diversify the economy and create a thriving manufacturing sector.

“We could have done more to focus on beneficiation and in developing skills. We could have implemented programmes and developed a regulatory framework for SME development. We could have paid more attention to developing the economy in townships and rural areas, with the spatial problems of apartheid not addressed sufficiently.”

Because of this, people are impatient at the speed of change, Gigaba says.

“We must have the ability to be self-critical,” he adds. “We cannot always be correct, but we must be able to look back and say we could have done better.

“We must make a meaningful shift in economic transformation to take on board those that have been marginalised.”

On the burning issue of corruption, Gigaba says; “We continue as a to be is committed to the fight against corruption, as well as supporting the institutions that have been established to fight corruption.”

However, he cautions that the fight against corruption should not translate to being against transformation.

“Putting black people into the economy is not about corruption.”

With the ANC in government for 23 years, there is a concern that corruption could become embedded or institutionalised, and Gigaba says it’s important to be aware of the possibility.

“The challenge of incumbency is a real one. We are fully aware that we must continuously renew ourselves to continue to enjoy the confidence of the masses by running a clean government and fighting corruption wherever it appears.”

Treasury will continue its oversight role, Gigaba adds. “There is no desire or attempt to change that role.”

However, he says that the other areas of government also have counter-corruption initiatives that are having an effect.

“There is a roust programme in government to fight corruption. And the Competition Commission plays that role in the private sector. So we continue to build that confidence in both public and private sectors.”

Gigaba said the government will continue to work hard to attract investment by addressing investor concerns and increase the confidence of local investors.

“We need to attract investors and convince them that we can manage the processes,” he says.

“The starting point is structural reform and clarity on policies. We also need to boost the confidence of local businesses so they will invest in the economy.”

To do this, he says the programmes already agreed on must be implemented, including the national minimum wage, the SME development fund and the youth employment programme. The private sector will also be involved in infrastructure rollout, and has a significant role to play in growing the economy.

The minister believes the next generation of leaders needs to be well-educated and skilled given the different roles they need to play in government.

He also suggests that young people, who make up a large part of Africa’s total population, need to become brokers in Africa’s political structures. “They will have a different take on political issues from our predecessors.”