Debating South Africa's growth prospects

A high profile list of attendees gathered in Johannesburg on March 30th to consider South Africa’s growth for the coming year and the immediate challenges facing the government.

Senior economic policymakers who contributed to the discussion included: Kgalema Motlanthe, deputy president of South Africa; Pravin Gordhan, minister of finance; Rob Davies, minister of trade and industry; Ebrahim Patel, minister of economic development and Nelisiwe Magubane, director general, Ministry of Energy.

Addressing delegates, Deputy President Motlanthe pointed out that while the country weathered the global meltdown and subsequent recession well, it did not emerge completely unscathed.

"Many countries suddenly found that their policies were poor. The crisis (also) exposed some weaknesses in South Africa—we lost more jobs, and faster than we expected," Motlanthe said.

During the roundtable, several national ministers relayed the details of new policy interventions to delegates. The main focus was on the need to promote economic growth by focussing on the production side of the economy while creating in excess of 500,000 jobs a year. Nevertheless, many delegates questioned the need for new policy interventions when past initiatives did not generate the desired result.

"Participants pointed repeatedly to the lack of policy implementation and execution thereof as a major constraint of growth," said Delia Meth-Cohn, who co-chaired the event. "But the ministers and executives attending the roundtable insisted that both the public and private sectors need to find more innovative ways of collaborating to solve some of the most insistent economic and social problems."

The Minister of Finance, Pravin Gordhan, pointed out that it was a sound policy environment that allowed South Africa to weather the global recession. He also called on delegates to accept that the new economic growth and sustainable job creation policies being implemented needed to be accepted as a necessity.

Nevertheless, Minister Gordhan admitted that there was a real gap between the policy his government comes up with and the practical application thereof. "Let us be frank—this is a problem with humans whether they are in government or in business… Government is very aware that it has an implementation challenge," the Minister said.

The deputy president added to this, saying that specific efforts were underway to close the gap between policy and implementation and this includes continuous and specific evaluation within government departments.

Business delegates also called for a consistent approach to policy and clear communication from the Government on its stance on matters that affected their operating environment. This included topics such as nationalisation, skills development, Broad Based Black Economic Empowerment and legislation.

Delegates and speakers agreed that the way forward would have to be a shared one where both parties actively engaged the other, sharing resources and knowledge.

"We are moving into a phase where new and bold (ideas) are needed (to go forward). If we are going to create businesses that are going to grow in, and beyond South Africa, then government is not your constraint but your partner," Minister Gordhan said.

Feedback from the event included the following comment from Stuart Clarkson, CEO of Siemens Southern Africa: "Extremely relevant, well timed, good panels and high level speakers, and an excellent networking opportunity."

Please click to access the Economist Intelligence Unit briefing and chairman's summary, prepared by Pratibha Thaker, Regional Director, Africa, Economist Intelligence Unit.