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Johannesburg - South Africa needs to build its savings base to decrease reliance on foreign capital, Finance Minister Pravin Gordhan said on Friday.
Last week Reserve Bank governor Gill Marcus said that the economy, recovering from a recession in 2009, needs to increase investment levels to between 25% and 30% to sustain growth.
On Friday Gordhan said South Africa had a low savings rate, making it highly dependent on capital flows which were creating instability and volatility in global markets.
“South Africa has a very low savings rate, therefore (we) are highly dependent on flow of capital … which is creating huge amounts of instability and volatility in the world.
"Therefore it’s crucial we build our savings base, so that we are less reliant on foreign savings,” Gordhan told pension fund managers of civil servants' pension funds.
He said while many global economies were on the mend after a recession, the crisis was not yet over. He cautioned fund managers and other investors to take account of both the opportunities available and the prevailing risks.
"We live in a situation where we have recovery and while the recovery is taking place in many places of the world, the crisis is not over," Gordhan said.
"There's certainly clouds of doubt that investors like yourselves have to take account of, both the opportunities available and the risks that are so pervasive in the global environment.”
Gordhan reiterated that South Africa needs a new growth path to solve its chronic joblessness, with about 25% of the labour force currently unemployed.
“The necessity of the growth path rises from a realisation that what we’ve done so far will not solve acute unemployment and structural unemployment,” Gordhan said.
“For the first 16 years of our democracy, we’ve done well for ourselves, but what we’ve done to this point is not good enough for the (future).”
The government has said that the economy, seen expanding by 3.4% for 2011, needs to grow by 7% for 20 years to make a significant dent in unemployment.
Last week Reserve Bank governor Gill Marcus said that the economy, recovering from a recession in 2009, needs to increase investment levels to between 25% and 30% to sustain growth.
On Friday Gordhan said South Africa had a low savings rate, making it highly dependent on capital flows which were creating instability and volatility in global markets.
“South Africa has a very low savings rate, therefore (we) are highly dependent on flow of capital … which is creating huge amounts of instability and volatility in the world.
"Therefore it’s crucial we build our savings base, so that we are less reliant on foreign savings,” Gordhan told pension fund managers of civil servants' pension funds.
He said while many global economies were on the mend after a recession, the crisis was not yet over. He cautioned fund managers and other investors to take account of both the opportunities available and the prevailing risks.
"We live in a situation where we have recovery and while the recovery is taking place in many places of the world, the crisis is not over," Gordhan said.
"There's certainly clouds of doubt that investors like yourselves have to take account of, both the opportunities available and the risks that are so pervasive in the global environment.”
Gordhan reiterated that South Africa needs a new growth path to solve its chronic joblessness, with about 25% of the labour force currently unemployed.
“The necessity of the growth path rises from a realisation that what we’ve done so far will not solve acute unemployment and structural unemployment,” Gordhan said.
“For the first 16 years of our democracy, we’ve done well for ourselves, but what we’ve done to this point is not good enough for the (future).”
The government has said that the economy, seen expanding by 3.4% for 2011, needs to grow by 7% for 20 years to make a significant dent in unemployment.
