Johannesburg – It is time to take collective responsibility and present a united front to ratings agencies and foreign investors, Finance Minister Gordhan said at a Deloitte conference on Thursday.
According to Gordhan the collective message to ratings agencies or foreign investors must be that they are most welcome to do business in SA.
He welcomed what he deems to be the first positive steps being taken following recent high-level meetings between business and government leaders. These positive steps will kick into gear with a joint roadshow next Monday to meet and engage with ratings agencies and foreign investors.
Other measures being considered following the recent business and government meetings include the creation of a special fund for supporting small businesses and entrepreneurs as well as numerous co-investment opportunities.
While there will be no “quick fixes” to improving South Africa’s economic ills, greater levels of trust, confidence and collaboration could turn the current "vicious cycle" into a virtuous one, Gordhan told delegates.
Gordhan was speaking a week after presenting a much-anticipated Budget 2016 following his hasty reassignment to the Finance Ministry in December in a move that was widely applauded by the business sector.
READ: Gordhan: Fiscal adjustments aimed at 'credible budget'
Budget 2016 aimed to achieve a tough balance between raising taxes and cutting expenditure. The expenditure ceiling was cut over the next three years by R25bn, but the budget made it clear that taxes on the wealthy remained under review.
According to Gordhan, there is also a need to “put our heads together” to understand the impact of the drought so that inflation in food prices could be managed and that food supplies were secure.
In his view, social cohesion would underpin confidence and there would be a much bigger impact “if we can rally all our resources”.
“We must address issues of inequality, as if left unaddressed it will leave us in a less favourable position. Today’s leaders in both public and private sectors have a wider set of responsibilities,” said Gordhan.
A key “SA disease” in his view, is that lots of nice ideas and policies were often provided, but question marks could be raised on their implementation. Collaboration and policy certainty are crucial too.
READ: Gordhan's budget: SA must just grin and bear it
Gordhan said from government’s side, more caution was needed about the unintended consequences of legislation. He called for “a lot more dialogue” on business regulations, for example.
“We need a practical, problem solving approach that happens in a way which does not strangle opportunities, or creativity,” he said.
In his view, sound institutions needed to be built to ensure future generations were in a better place. He said the public and private sectors needed to act in a collaborative way to create more inclusive levels of growth in order to create greater social cohesion.
“The task at hand lies with all of us – there won’t be quick fixes,” said Gordhan.
Deloitte Africa CEO Lwazi Bam said the business community needed to ask what it could do to help, as a great deal of effort would be required to get the country back on a growth path.
“The need for strong institutions is critical, while the business community recognises it has a big role to play in creating confidence in SA. There will be disagreements, but common goals can overcome these and a common goal has to be about raising living standards of average South Africans,” said Bam.
Nazrien Kader, managing partner of Deloitte Africa Taxation Services, called Gordhan’s confidence “contagious” and said that South Africans and the business community stood ready to support the new initiatives to bring about change.
“But the challenge lies in the execution,” she added.
Meanwhile, Business Leadership South Africa (BLSA) expressed strong support for the Finance Ministry and highlighted the importance of strengthening key state institutions such as those forming part of National Treasury as well as the South African Revenue Service (Sars).
At a post-budget briefing session with Gordhan and Deputy Minister Mcebisi Jonas on Thursday, BLSA said it looks forward to government implementing the budget and stands ready to provide support as required.
Gordhan, in turn, challenged BLSA and business to work together with government to achieve higher growth. This will, accordingly, form an important focus area of BLSA going forward.
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