Address by Zweli Mkhize to the EY Strategic Growth Forum
8 October 2014
It is a great pleasure to welcome you to South Africa for EY`s Strategic Growth Forum Africa. This is good timing for an event of this nature.
Contrary to the old perception of Africa as a dark and backward continent, full of risks, instability and uncertainties, the focus on the positive attributes of Africa has increased investor interest of late.
The African Union has been successful in bringing political stability wherein no unconstitutional ascent to power is tolerated, making democratic change of government the order of the day. The focus of the leadership in the African continent is now peace, economic growth, education , health, building a culture of accountability and good governance, building infrastructure and a strong fight against corruption, unemployment and poverty.
Several countries in the continent have had remarkable growth of above 5% in recent years.
The African economy has grown admirably with GDP growth from US D 344 billions in 2000 and is estimated to reach to USD 1844 billion in 2017.
27 countries in the continent are classified as middle income countries and 75% of countries are predicted to reach that status by 2025.
Between 2001-2010. Six of the 10 fastest growing economies were in Africa. By 2025 11 of the top twenty economies in the world will be in the African continent, according to the IMF
During the height of the global economic downturn, the FDI flows into the continent increased. The intra-African investment has grown by 32% since 2007.
It is postulated that by 2035 the African continent will have the largest workforce in the world combined with the wide array of untapped natural resources has made Africa a continent of endless opportunities. This means increased investment in education and technology and skills transfer are essential tools to be used to face the future.
Africa continues to rise, and it is more important than ever that we are clear on SA`s strategic position on the continent.
What has perhaps been the biggest shift for us in the last 5 years or so is the increasingly significant economic relations between SA and the rest of the continent. While we have long had trading relationships with our partners in the Southern African Development Community, this has grown together with trade and investment relations with key partners in West and East Africa. Although intra-African trade remains relatively low, it has grown more in the last 20 years than trade with any other region in the world other than China.
SA clearly has a key role to play in growing intra-Africa trade to ever greater levels. That is why we are pushing initiatives like the Tripartite Free Trade Agreement to accelerate regional integration.
Similarly, we believe that SA has a critical role to play from an investment perspective, both as a platform for foreign investment into the rest of Africa and as a key investor ourselves. SA`s financial and capital markets system, our standards of corporate governance, our professional class, our infrastructure and our constitutional democracy are as good as in any emerging market.
SA headquartered companies are also leading the way investing in the rest of the continent. According to EY`s own Africa attractiveness report, SA has not only been the largest recipient of FDI projects, but has also invested in the most FDI projects in the rest of Africa in the last 2 years. We see South Africa as an asset at the disposal of the African continent to play a role as an important catalyst for growth. It is inevitable that the growth and development in the continent will result in several growth points in the continent. Emergence of different strong economic centers in the continent cannot be viewed as competition for South Africa but as an indication that Africa is on its way to realise her economic potential. This in fact is an indication of Africa on the rise.
The growth in continent including rebasing of Nigeria `s economy is positive development for the continent.
Clearly the rest of our African continent is important to us as we are integrally tied to its fate and fortunes. SA has taken the view that our roles in BRICS is about Africa having access to the whole BRICS economies.
But all of us - Africans, and all of you with a passion for Africa - need to push even harder. The theme of this conference - Africa 2030: Realizing the Possibilities - is very apt. The time is right for us to look forward at what we still need to achieve.
The progress we have made in the last 20 years - SA and Africa - has been very impressive. But unemployment, poverty and inequality remain stark realities; and there are still many developmental challenges that need to be addressed.
To correct the legacies of our apartheid past and take forward outstanding issues despite the tremendous achievements of the twenty years of democracy, President Zuma has tabled the National Development plan to steer South Africa for the next twenty years ,the vision 2030:
To achieve growth of above 5%
Reduce unemployment to around 6%
Double the GDP
Increase intra-African trade and support for regional economic integration in our continent
Various aspects are identified:
Including massive infrastructure build--global companies have been appointed in this regard but the programme will open up huge opportunities in SA and continent.
Ensuring self sufficiency in energy--coal powered plants, whole range of energy mix solar, wind, nuclear and promotion of independent producers.
Rolling out broad band and extend ICT to remote parts of the country Maximize on mining sector and increase industrial manufacturing with large investments of DFI`s supporting industrial manufacturing
Massive investment in education and building human capital in terms of intellectual development, research and artisenal skills with several technical colleges and new universities being opened, in line with requirements of the economy as focused in vision 2030. Our youth are a great resource.
Building entrepreneurship to produce quality goods and services is at the core of our thrust for competitiveness. The building of small business sector being a key focus for which a dedicated Ministry has been established. This is important in job creation and to create an inclusive economy involving building the rural and peri urban economies where the large population settlements are under pressure. Some of the community protests arise in these areas due to poverty, unemployment and unplanned migration that results in pressure for community services and lack of jobs.
The NDP is the answer for South Africa. The NDP is a formula to grow our economy and turn South Africa around. It is our formula to guide SA as we grow Africa`s economy.
The NDP has received good support from the private sector. Currently President Zuma is convening Government and Business working groups to deepen the partnership in which government and private sector will invest in the economy to achieve objectives of the NDP. In the lead up to the elections in May, trust deficit between government and private sector was identified as an issue to be resolved. There is optimism building in that space which the country needs to mobilise resources to recover lost ground.
Government will focus on easing of beaurocracy and reducing the regulatory burden and private sector focus on releasing hitherto un-invested capital. Strategies are being discussed to focus on unacceptably low levels of growth and respond to impact of downgrades by rating agencies. Currently government is discussing proposals on how to leverage on the balance sheets of various State Owned Enterprise and crowd in private sector participation to inject impetus in the economy in line with the targets of the vision 2030.
The NDP has a strong focus on building a cooperative relationship between private sector and the labour. Already government has stepped in to deal with and stamp out violent strikes especially in the mining sector. The initiative led by he Deputy President will provide a comprehensive solution and the ingredients of the envisaged Social Compact in which the all sectors will focus on the economic growth and fine peaceful ways to resolve labour disputes without harming the economy.
The economy and people of South Africa are resilient and have in many situation rallied together to fight against and defeat challenges in the past and are determined to do so now. That is the legacy of the Father of our nation Nelson Mandela. With our spirit of Ubuntu, we are determined to turn the corner as has been demonstrated in our fight against HIV and AIDS, our successful hosting of the 2010 World Cup and many other challenges which we have overcome. South Africa remains quite optimistic despite negative headlines.
We will never allow the dream of a better lifer for all to be turned into an illusive dream.
Collectively we must answer the question:
How will we realise Africa`s possibilities?
I don`t have all the answers. What I do know though, is that we are only going to be successful by working together - productive partnerships between governments and the private sector - domestic and international - are going to be critical.
Future generations will judge us by the decisions we make today. We need platforms like EY`s Strategic Growth Forum Africa to take time out from our busy schedules to learn from one another, engage in active dialogue, and begin to develop an agenda for collaborative action that will accelerate Africa towards its rightful and best possible future.
I wish you all well over the next 2 days, and encourage you to listen, make your voice heard, and celebrate being a part of our continent`s ongoing growth story.