Programme director, Dr Niel De Beer
Mr Mark Carwardine and managers from the Financial Times
Ms Anitha Soni and the leadership of the International Marketing Council
Ministers and deputy ministers
Business leaders
Members of the fourth estate
Distinguished guests
Fellow South Africans
I am honoured to be with you on this, the 49th day before the kick-off of the 2010 Soccer World Cup. To those who are visitors to our country, a very warm South African welcome. Allow me to share with you the prospects for the South African economy which we regard as a success story in the making!
Our economy has emerged from recession. We have confidence that the economy is on the mend after five consecutive quarters of negative growth in 2008 to 2009 which was a result of a global finance and economic recession. We felt the negative shocks; we are slowly recovering from an unprecedented loss of close to a million jobs.
On the upside, the signs of economic recovery are evidenced by inflation that is within target range of three to six percent. Last month inflation was recorded at 5.7 percent, with the outlook for 2010 and 2011 projected to be within below the current figure of 5.7 percent.
Household consumption expenditure is modestly rebounding, with much activity still devoted to addressing the levels of indebtedness. The 2007 National Credit Act helped in setting the trends for prudent lending but for some households the levels of debt were already at high thresholds.
Ladies and gentlemen,
Our preoccupation with employment still continues. Noting that employment is a lagging indicator, we have not relaxed our employment interventions and enhanced social protection measures. Starting with a modest 18 000 jobs created by the economy in January 2009, we are keeping a close watch on the responsiveness of our policies.
We have concerns that the pace of recovery for small and medium sized enterprises is low partly because of low credit extension by the banking industry. But this could change soon. We have noted that most indices including the Rand Merchant Bank and Bureau of Economic Research (RMB/BER) confidence index and the Kagiso/BER purchasing managers' index point to the fact that business confidence is up.
While we have been shaken by the recent world economic downturn, compared to some big economies, we have not fared badly. We have taken note of how our economy responded. Importantly, the lessons learned from previous crises have taken root.
Since 1996,we have followed prudent macroeconomic policies, we advocated for strong supervision and regulation of the financial sector, we maintained low public sector borrowing and we sustained investment in social and economic infrastructure. In retrospect, this has proved to be an appropriate macroeconomic strategy for South Africa.
Programme director,
The counter-cyclical policy stance proved to be worthwhile. From a one percent of gross domestic product (GDP) surplus in 2007/08 we increased the level of government deficit to over seven percent in 2009.
This was not reckless. It was a call of the times. But now, by the end of March 2010 South Africa Revenue Service (SARS) has recorded a positive surprise on collected government revenue, thereby enabling us to lower the projection of government deficit to 6.8 percent of the GDP.
Ladies and gentlemen, South Africa is not alone in raised economic expectations. The latest world economic outlook of the International Monetary Fund (IMF) shows world growth being led by Asian economies closely followed by Latin America and Africa.
This bodes well for our exports; it should be particularly good for exporters to the African continent where through proximity, innovation, adaptability and tenacity some South Africa companies have performed remarkably well.
Of course, some may point out that the Rand appreciation at this time has different effects on different sectors. The South African Reserve Bank (SARB) can comment with authority on the impact of an appreciating currency. We, however, remain optimistic that our trade prospects are positive.
In this regard our approach to trade will continue to work toward the realisation of gains offered by the current trade agreements such as the trade and development cooperation agreement that we have with the European Union.
Our recent meeting in Brasilia as part of IBSA (India, Brazil and South Africa), which took place alongside BRIC (Brazil, Russia, India and China), also contributes towards efforts of strengthening South-South relations. Individually and as a group, we have much to gain by stronger development ties with Brazil, China, India, and Russia.
Some of these countries used their own resources to great effect in stimulating their economies during the crisis, now they are poised to lead the world economy out of a downturn. Notwithstanding the challenges of the global downturn, South Africa kept true to international commitments on keeping markets open to trade, protecting the environment while at the same time making provision for energy security.
At the G20 Leaders Summit in November last year, we were one of the two countries that had not created significant new trade barriers. This means that we hold ourselves accountable and within the global governance sphere we are able to exercise due influence.
Right now our Minister of Labour is in Washington DC, representing us in the G20 Ministers of Labour Conference. There he will share our experience in working with social partners to create employment solutions during the crisis.
Programme director,
We have participated in the G20 since inception in 1999. Currently we are witnessing some shifts in the management of global affairs with the decision to designate the G20 as a premier forum for international cooperation.
South Africa holds a view that for lasting solutions to global problems the world will be best served by reforming the multilateral system.
In this connection, we are starting to see some positive results in response to our decade long call for reforming the international financial institutions.
For example, this year, a third chair for Sub-Saharan Africa will be added to the boards of the IMF and the World Bank. This is a small step towards strengthening the voice of the South in these important institutions.
Even though it is an informal discussion forum, the G20 has demonstrated its usefulness with the coordination of the response to the global economic crisis and for its ability to bring together all major global economic players. We have called for enhanced African participation in all structures of the G20. It is not enough that at the last summits the African Union and New Partnership for Africa's Development (NEPAD) have attended as observers.
It agreed on actions that worked. Now it has to coordinate exit strategies and create frameworks for balanced and sustainable economies. We think Africa has much to offer by way of solutions to problems being addressed internationally. Our regional trading blocks; Economic Community of West African States (ECOWAS), Southern African Development Community (SADC) and others have learned to cooperate and negotiate for shared success.
Southern African Customs Union (SACU) is the oldest customs union in the world; and, we have proved that it is possible to synchronise monetary policies with the common monetary area.
Ladies and gentlemen,
Africa shares threats on the global commons such as those posed by negative externalities of climate change. Africa contributes less than four percent of global carbon dioxide emissions and yet it is the region most vulnerable and least prepared to cope with impacts of global warming.
It is for this reason, amongst others, that we presented a unified approach to climate change negotiations in Copenhagen. On the one hand, the solutions that we develop on free movement of peoples and shared protected environmental spaces can be future models for the world. On the other hand, Africa has a lot to gain by employing proven regional development tactics on border management.
Honoured guests,
With the approval of the ESKOM loan of $3.75 billion by the World Bank, there is now increased certainty regarding energy supplies. The construction of the Medupi plant will provide extra base-load capacity. It is remarkable that the country will, at the same time, address its objectives of growing a green economy by adopting state of the art new and clean coal technology. This is a demonstration of a joined-up energy and climate change strategy.
Accordingly, government is serious about the call to save 10 000 gigawatt hour (GWh) through renewable energy solutions. Our plans for creating 5 000 to 10 000 new jobs in this sector are on track. We are looking at residential solar water heaters as high impact solution for immediate short to long term planning.
Consistently, we have committed ourselves to intensify:
* energy efficiency
* renewable energy generation and
* sustainable economic growth.
We are on course to strengthening our energy security through:
* the Kusile 4 800 megawatt (MW) plant to be commissioned in 2014
* the Ingula hydro-electrical 1 364 MW plant to be commissioned in 2013 and
* we have de-mothballed three power stations.
Recent announcements that the government has made regarding the creation of a regulatory body for the grid are a testament to our placing emphasis on the energy sector. As we create market space for independent power producers, we are mindful that their success will be part of future economic prosperity for the country.
Ladies and gentlemen, I am sure you will agree with me that monopoly of any kind is actually non-productive for the economy. Much still needs to be done to improve our competitiveness and protect South African consumers. We have kept focus on price movements in such sectors as food, aviation and communications.
Part of the economy's competitiveness is imbedded in our investment in education and skills, improved healthcare and in building an efficient criminal justice system. We have taken strides towards fulfilling education outcomes in the millennium development goals.
It is our intention at this point to improve on the quality of basic education and to raise the higher education institutions through-put. We are fully aware that our trading partners, competitors, and countries with rising growth trajectories have tended to do very well on education outcomes.
Similarly, we are investing smartly on the health of our population. The government, through the Minister of Health, has unveiled new immunisation drives, and a general drive to improve the efficiency of the health system. The national budget has made provision for increasing health personnel, revitalise public clinics and hospitals and we continue to discuss the best possible options for providing health insurance.
With renewed vigour, we have improved our efforts aimed at combating communicable diseases including HIV and AIDS. We have recognised a need to secure the future of rural communities and to safeguard our transformation agenda with respect to land use and management. We have tasked the Department of Rural Development and Land Reform with knitting together institutions for rural development support and to speed up land reform.
Ladies and gentlemen,
Reducing crime and corruption ranks high among our priorities. We have increased funding for fighting crime and the police force is set to expand. Monitoring and evaluating government performance is set to be a way of doing business. Minister Chabane's department is tasked with ensuring that we keep record of our performance and monitor whether our activities have met targets and capture learned lessons.
Programme director,
The good news is that our infrastructure investments will continue beyond the 2010 FIFA World Cup. We will continue to invest in health, bulk water and transport infrastructure.
For many who reside in Gauteng, there must have been considerable inconvenience with the continuous highway improvements conducted by South African National Roads Agency Limited (SANRAL) and the construction of the Gautrain rapid rail link conducted by the provincial Department of Roads, Transport and Public Works.
I must indicate that other provinces are in line to get road improvements which may cause temporary traffic jams.
In conclusion, ladies and gentlemen, I am sure you will agree with me that this is indeed a success story in the making.
I thank you.
Issued by: The Presidency
22 April 2010
