15 March 2011
South Africa has to redefine its economic transformation strategy and create an environment for investment if it is to meet the ambitious target of growing the economy by seven percent per annum, says Finance Minister Pravin Gordhan.
Addressing the Investment Forum of the Association of Black Securities and Investment Professionals Student Chapter at Wits University in Johannesburg on Monday, Gordhan said the South African economy could not afford to grow between three and five percent.
The minister has said long maintained that economic growth of at least seven percent is needed in order to transform South Africa’s economy.
In order to achieve this, “we need to find a new model of growth,” Gordhan said, adding that this was also needed to address economic inequality.
“We have to redefine economic transformation. We are merely mimicking what the previous elite did … We wear the same clothes and drive the same cars. Where is the social conscience of the new elite?”
The world was changing, the minister said, and the beneficiaries should not just be the elite. “It’s important to set the right aspirations for South Africa and to make sure our economy becomes globally competitive.”
Investment was crucial for economic growth, Gordhan said, adding that the youth had a pivotal role to play.
In order to create an environment for investment, a county’s savings also played a role.
“The challenge is whether a country has enough savings … There are serious imbalances of investment, savings and consumption. The question is how you rebalance. We have a serious savings gap; we don’t save enough in South Africa.”
On the matter of “hot” capital inflows into South Africa, the minister said these had appreciated the currency and created some instability.
There was also a need to create an environment where small business would flourish.
On the debate of nationalising the country’s mines, Gordhan said: “It is not our policy as South Africa. We have an important contribution to make to create the right climate for economic growth. We need to do what it takes to create the appropriate confidence in our economy.”