8 December 2003
Despite the stagnation of global markets, total investment in South Africa grew by more than 8% in the first half of this year, continuing the momentum achieved in the latter half of 2002, which saw an increase of 9%.
Private investment expanded by 7% in the same period, Finance Minister Trevor Manuel told an investment forum of the Organisation for Economic Co-operation and Development (OECD) in Johannesburg last month.
With net private capital flows expected to top the US$110-billion mark this year – the highest level since the mid-1990s – South Africa is “well-placed to capture a substantial share of this to channel into economic growth and development”, Manuel said.
And together with more impressive numbers like the 15 quarters of uninterrupted growth in investment spending and 18 quarters of uninterrupted growth in gross domestic product (GDP), the picture gets even rosier.
South Africans have also been able to diversify their savings and earnings, said Manuel, which has helped spur investment in the domestic economy.
However, Manuel said South Africa still had a number of challenges to overcome to increase the pace of investment, adding that the rate of investment had to rise from the current levels of around 16% of GDP in order for the country to experience more rapid growth, development and poverty reduction.
“Sustained growth, job creation and poverty alleviation demands that we invest more”, he said. “Investment in our people, our infrastructure and our private sector to achieve more rapid growth and rising incomes lies at the heart of our policies.”
Increased levels of investment could be achieved by dipping into the global savings pool, he said, while a favourable credit rating meant that South Africa could attract foreign savings to meet its investment requirements.
“But we also know that the vast majority of our savings for investment must come from our own citizens and corporations.”
Manuel said the recently announced financial sector charter, which will see more people having access to financial services, would contribute to greater saving. “Bringing more saving into the formal financial markets, in turn, will increase the pool for allocation to productive investments, greater employment and growth.”
He said his medium-term budget policy statement, unveiled in October, set out an agenda for fostering high levels of investment, faster growth and lower unemployment.
In the spirit of the New Partnership for Africa’s Development (Nepad), South Africa’s role in fostering economic development beyond its borders to the rest of the continent was highlighted. But, said Manuel, “sustainable development in Africa is only possible if domestic resources, foreign aid, trade and investment are used efficiently and investment is realised.”
Manuel suggested that African governments should put in place enterprise development policies which would help the continent’s private sector to develop and stimulate growth, thereby luring foreign investment.
An abundance of natural resources, large labour supplies, and huge potential markets put the developing countries of Africa in a strong position to attract higher levels of investment, he said.