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Phosa: SMEs are pivotal to jobs drive

May 24 2012 14:21 Reuters

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London - Small businesses are more important to creating jobs in South Africa than the government’s huge infrastructure drive, ANC treasurer general Mathews Phosa said on Thursday, adding that the country must diversify to avoid “European flu”.

“I’m a believer in small and medium-sized businesses.

"I welcome the huge infrastructure project we have, but I don’t think it’s going to create the many jobs we are dreaming of,” Mathews Phosa told Reuters in an interview in London.

“It’s the small and medium-sized businesses that we need to put in place,” said Phosa.

Africa’s largest economy has set out a huge infrastructure programme to create jobs at home and increase trade on the continent, for which South Africa is currently seeking partners.

Unemployment in the country was 25.2% in the first quarter of 2012. Education at all levels will be a top priority at next month’s ANC policy meeting, Phosa said, as the country seeks to reduce poverty and create a large middle class.

Phosa, who sits on South Africa’s national executive committee, said the mineral-rich country must seek to diversify its markets as the debt crisis in Europe rages and said “we can only wish and pray” for economic recovery on the continent.

“The European flu will infect Africa so we should not be over-confident, ” he said, adding, “If we diversify our markets, find new markets as well where there is no such crisis, it may buffer the blow.”

Phosa was in London to encourage trade between Britain and South Africa and said the country wanted more investment from both East and West.

South Africa is a “very small player” in the Brics, the group of high-growth countries of Brazil, Russia, India and China it joined in early 2011 and is still trying to define its role in the club, Phosa said.

“The big strong economies could take advantage of us and eat us for breakfast,” he said.

South Africa must work out how to get the most out of trading relationships with countries like China, currently its biggest trading partner with which it had a trade deficit of about $3bn in 2011.

Phosa reiterated President Jacob Zuma’s view that the ANC will not back nationalisation of some parts of South Africa’s economy, despite some party members calling for nationalisation of industries like mining.

“I don’t think the ANC is likely to go for nationalisation. If people want to be populist, I will not join the choir.”

In earlier comments, Gwede Mantashe, the day-to-day head of ANC, said South Africa was increasingly looking East to China and India for investment.

The left-leaning ANC has been deeply suspicious of the West and distrusting of the United States, former European colonial powers and free market capitalism. 

mathews phosa  |  sa economy  |  job creation  |  smmes
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