Good times in SA: Financial Times


12 June 2006

Describing South Africa as “a country enjoying the benefits of high commodity prices, solid growth and low interest rates”, a special report by London’s influential Financial Times has expressed qualified praise for SA’s economic successes.

Published on Tuesday, the 10-page report pays particular attention to the government’s Accelerated and Shared Growth Initiative for South Africa (Asgi-SA), discussing it on almost every page. It describes the policy as “a wordily named plan to pursue promising economic opportunities to remove the bottlenecks in their way”.

The lead article, “Good times put system under strain”, uses the example of traffic congestion on the highway between Johannesburg and Pretoria to make its point: that the country’s unprecedented prosperity and economic growth is challenging its infrastructure.

“Although unpleasant to negotiate,” journalist John Reed writes, “the traffic is a sure sign of good times in South Africa. High commodity prices and a long period of solid economic growth and low interest rates are contributing to a 10% annual growth in vehicle ownership.”

The article discusses the Gautrain project, the “European-style rapid rail network” between Joburg and Pretoria now under construction, describing it as “probably the best known of several government plans to prime the economic growth pump with billions of rand in new infrastructure spending”.

Spending spree
In “Black middle class helps fuel a spending spree”, the Financial Mail get to grips with South Africa’s rapid economic expansion, making the point that the share of income going to the black majority has risen from 35% in 1990 to 50% today.

“People talk about the emerging black market,” it quotes a retail developer as saying. “It’s emerged.”

The Times says the “spending spree”, which it ascribes to low interest rates, cheap imports and new consumer demand, has “pushed growth up to a rate not seen since the end of apartheid in 1994 or during the decade before that. The official 2005 growth estimate of 4.9% is expected to be revised upwards.”

The report profiles the province of Gauteng, which with 9% of Africa’s GDP is the economic powerhouse of the country, and examines “ambitious plans” to expand the tourism industry of KwaZulu-Natal.

Tourism and outsourcing
Tourism is one of two key sectors, with business process outsourcing, identified under Asgi-SA as having particular potential for growth, and the Times looks at both in depth.

“Having tripled the number of overseas visitors since 1994,” David White writes of the tourism industry, “it is regarded as being ready for ‘a second phase of growth’ that could take its share of gross domestic product from 8% to 12% by 2014 and add a further 400 000 jobs.”

While he emphasises the impact poverty and crime on have international tourists’ experience of the country, White also looks at government efforts to broaden the South African population’s participation in the white-dominated sector .

“Scouting for more happy customers” examines South Africa’s efforts to compete with Asian countries – India in particular – for a share of the global call centre and business outsourcing market.

“While not competing with India on its own terms, South Africa aims to capture clients looking to diversify their growing offshore operations away from India.

“Industry promoters are touting South Africa’s advantages of time zone, a relatively neutral accent and closer cultural affinity with customers in the rich north than Asian countries.”

The succession debate around President Thabo Mbeki, his axed former deputy Jacob Zuma and new Deputy President Phumzile Mlambo-Ngcuka gets close attention in articles titled “Succession skirmishes at the top” and “Short honeymoon for president’s new protege”.

“In today’s economically buoyant environment,” Reed writes, “investors are betting – correctly or not – that the presidential succession will unfold with minimal upset to their profits.”

Elsewhere in the report, the Financial Times profiles Soweto businessman Richard Maponya, a highly successful entrepreneur who built up his business empire during the apartheid era. This was when black people were actively discouraged from selling anything but their labour – and a long time before black economic empowerment.

It also looks at author Damon Galgut, “better known abroad than at home”, who published his first novel at the age of 17 and was shortlisted for the Man Booker prize for his last book, The Good Doctor, in 2003. reporter

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