Finance Minister Pravin Gordhan at the post-budget breakfast with News24 Frontline event on Thursday. (Pic: Eugenie du Preez, Fin24) ~ Fin24
Cape Town - South Africa should have a “greater sense of hunger” to bring foreign direct investment (FDI) into the country, said Finance Minister Pravin Gordhan.
Speaking to an audience who attended a live broadcast of News24 Frontline on Thursday, Gordhan said there’s much more space for collaboration to instill investor confidence in South Africa.
South Africa has in recent years experienced substantial FDI outflows, which is a sign of waning investor confidence.
“Investors want to know if there money is safe in South Africa and if our politics are unsettling (it’s going to hurt investment),” Gordhan said.
Gordhan pointed out though that politics have always been the “single most disruptive factor throughout the world”.
“There’s a connection between political decision-making, economics and the world as a whole – just look at Brexit.”
In a referendum in June this year, British citizens voted in favour of leaving the European Union. The decision, dubbed Brexit, sent the British pound in a tailspin and led to the resignation of a number of top British politicians, including former prime minister David Cameron.
READ: Brexit effects will only be felt next year - Pravin Gordhan
Gordhan said on Thursday world leaders in general are deeply concerned about the general distrust between elites and citizens globally. “Globalisation has only benefited the top and at the World Bank and G20 meetings we are discussing how the benefits (of globalisation) can be shared.”
Returning to domestic matters, Gordhan said South Africa has a “systemic problem”. He acknowledged that globally there have been an economic downturn and a lack of business confidence and investment appetite, but the African picture particularly has deteriorated, he said, with economic growth on the continent adjusted downwards from 3% to 1.4%.
“And it’s quite embarrassing, because when I was in Washington (to attend the annual meetings of the International Monetary Fund and World Bank) I was told it (the low growth in Africa) is because of us (South Africa’s muted growth).”
In early October, the International Monetary Fund (IMF) predicted that South Africa’s GDP will grow only marginally at 0.8% in 2017 - lower than the 1% forecast in July this year.
READ: IMF lowers SA's growth for 2017
The body singled out South Africa’s high unemployment rate, policy uncertainty and political risks as obstacles to growth.
In his medium-term budget policy statement delivered on Wednesday, Gordhan also revised South Africa’s GDP growth projections downwards to 0.5% for the year.
Asked if he thinks the MTBPS was “credible enough to allay fears of a sovereign ratings downgrade in November and December, Gordhan said government isn’t preoccupied with ratings agencies, but rather to place South Africa on the right path.
“[But] I believe South Africa has a product to sell to ratings agencies and to convince them that government has done the best it could and that we offer opportunities.”
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