There was good reason to expect that South Africa could, in 2014, catch up with the rest of the African continent in terms of growth, Standard Bank joint CE Sim Tshabalala said on Wednesday.
Speaking at Frontier Advisory’s Africa Frontiers Forum, in Sandton, Tshabalala stated that, according to the International Monetary Fund (IMF) Africa’s growth would accelerate during the course of the year to about 6%, adding that similar predictions indicated that South Africa would, during 2014, possibly regain a growth level of 3%.
“Standard Bank’s view is that the country may very well perform far better, certainly in the medium term,” he said.
Tshabalala added that, according to the banking group’s economists, if the regulatory environment was right, South Africa’s offshore gas endowment could potentially add another 1.4% a year to the country’s growth over the next five years.
Further, South African government policy was also beginning to cohere around the National Development Plan (NDP), with Standard Bank expecting greater policy certainty over the coming months, despite it being an election year, he said.
“The ANC’s [recently] released election manifesto is a clear sign that there will be more reinforcement of the NDP in the coming State of the Nation and Budget speeches,” Tshabalala added, stating that this should support a more stable regulatory environment that would make it easier to do business in South Africa.
“Five per cent growth is not in the realms of the impossible by 2015 if we make substantial progress in the implementation of the NDP,” he added.
African Growth
Tshabalala further stated that growth in Africa was good for South Africa, noting that Standard Bank disagreed with “sceptics” who believed that Africa’s growth would soon taper off.
“[These people] tend to argue that Africa’s economies are at the point of overheating, the commodities supercycle is at an end, Africa has no internal growth engine to supplement external demand and Africa’s institutions are too weak to support sustainable growth. We at Standard Bank disagree,” he said.
Tshabalala highlighted that many African economies had prevented overheating and that policy makers had inflation and fiscal deficits well under control.
Further, while it did seem likely that the era of steep commodity prices had come to an end, the IMF was, at worst, predicting mild declines in commodity prices until 2018, he pointed out.
The argument that Africa lacked internal economic dynamism was false, said Tshabalala, as Africans were becoming healthier, better educated and more urbanised. All of which were drivers of growth.
He did, however, concede that, with regard to African institutions, there was still far too much red tape and corruption.
“But we are seeing a number of African countries making an effort to strengthen government efficiency. According to the World Bank, 17 out of the 55 fastest improving regulatory environments are in sub-Saharan Africa,” added Tshabalala.
Shared Wealth
Also speaking at the event, Frontier Advisory CEO Dr Martyn Davies said Africa had to rethink its growth model.
“We have to ask ourselves whether [what] we are creating [is] embedded middle-class economies and competitive companies,” he said, stating that Africa needed governments that proactively enhanced the livelihoods of all citizens, rather than a single group.
Global Alliance for Improved Nutrition (GAIN) board and partnership council chair Jay Naidoo also highlighted this challenge, asking, “when we speak of Africa rising, whose Africa is rising?” and pointed out that there was a difference between creating more wealthy people and achieving benefits for all.
He also said Africa had to understand the advantage of its young population and leverage this to achieve a better outcome for all.
“Because, if we do not create pathways for young people out of poverty, then they will become a demographic nightmare. It will be a time bomb that explodes on us,” Naidoo said.
He further stated that education was the most basic ladder out of poverty, however, currently one-third of Africa’s youth still lacked basic literacy skills.
Specifically with regard to South Africa, Naidoo said the pathways being created for the youth had to be redefined to ensure that education was improved and jobs were created.
“I am not sure that we are training people to create their own livelihoods. We are training people to look for jobs, but who is going to create those jobs?”
South Africa should be looking at ways to enable people to build their own enterprises and support the entrepreneurial economy, Naidoo said, adding that, if attention was not paid to this, it would be the country’s downfall.
By: Leandi Kolver
Standard Bank joint CE Sim Tshabalala discusses the South African economy and GAIN chairperson Jay Naidoo discusses the concept of shared wealth. Camerawork: Nicholas Boyd. Editing: Shane Williams. Recorded: 15/01/2013
