Cape Town - President Jacob Zuma sought to repair relations with business leaders, pledging to work more closely with companies that he described as the “backbone” of the economy.
Zuma spoke to more than 140 business leaders and cabinet ministers on Tuesday in Cape Town on ways to improve investor sentiment and stimulate growth in an economy weakened by a fall in metals prices, slowing demand from China and the worst drought in more than a century.
Among those at the meeting were Barclays Africa CEO Maria Ramos and Shoprite chairperson Christo Wiese.
“There was a constructive mood in the room and I think business and government were committed to the process,” Stavros Nicolaou, head of strategic trade at Aspen Pharmacare, said after the three-hour meeting.
“The reality is that we are approaching a crisis and if parties do not work together now it can become a lot worse. There was a strong willingness to turn things around.”
The meeting came almost two months after Zuma, 73, shocked investors by appointing a little-known lawmaker as his finance minister. He was forced to backtrack after the nation’s rand and bonds dived and named Pravin Gordhan to the post that he held from 2009 to 2014. Africa’s most-industrialised economy faces a credit-rating downgrade to junk.
“Business came in an organised way and said they would do things to support our ratings if we do immediate things like fiscal consolidation,” Gordhan said.
The talks, two days ahead of Zuma’s annual state-of-the- nation address, focused on an economy that the central bank and the World Bank expect to expand less than 1% this year.
“We had a deep meeting with a good discussion on how we could all work together to deal with the domestic economic challenges in a very tough global economic environment,” Ramos said in an interview.
The controversy and market reaction to Zuma’s decision to fire Finance Minister Nhlanhla Nene on December 9 may have served as a wake-up call to the authorities, Goolam Ballim, chief economist at Standard Bank, told reporters in Johannesburg.
“Rather ironically, December may have been the gift that gives us the political room for a credible, fiscally sustainable promise,” said Ballim.
Gordhan’s budget speech on February 24 may result in a “level of fiscal rectitude that has not been entirely evident over the last four years,” allowing South Africa to avoid a credit-rating downgrade, he said.
Speaking on the sidelines of the Investing in African Mining Indaba, Zweli Mkhize, treasurer of the ruling African National Congress, said the current economic “crisis” made South African leaders realise the urgency of the situation.
Mkhize said the government would try and split the bill regulating the mining and energy sector into two separate acts, as requested by businesses.