Govt wants to help SA firms expand in Africa | Fin24

Govt wants to help SA firms expand in Africa

Aug 11 2014 11:43

Johannesburg - The SA government is committed to supporting the expansion of SA firms into the rest of Africa, according to Minister of Finance Nhlanhla Nene.

This will be mutually beneficial and bolster long-term growth prospects on the continent, since South Africa’s prosperity is increasingly being linked to that of the rest of the African continent.

"Growth in Africa has been pronounced in dynamic sectors with high growth potential, including technology, telecommunications, financial services and retail," he said at the 17th Southern African Internal Audit Conference.

"Macroeconomic stability, political reform, favourable demographics and stronger institutions have transformed Africa into a rapidly growing region that is attracting investment."

Economic growth in sub-Saharan Africa is expected to accelerate to about 5.5% this year and Africa’s share of global foreign direct investment is rising.
Over the last decade South Africa’s investment into other parts of the continent has doubled every five years to about R30bn by 2012.

"These trends contribute to a virtuous cycle of increased investment and economic growth, supported by growing consumer demand for goods and services," said Nene.

"In contrast, wage and consumption growth has stagnated in Europe and the United States."

Brics and Africa

South Africa provides a number of natural advantages as an African hub, including advanced financial, regulatory, tax and accounting standards, a modern telecommunications network, extensive economic infrastructure and direct air connections to most major cities on the continent and internationally, explained Nene.

The agreement by the five Brics member countries (Brazil, Russia, India, China and SA) to launch the New Development Bank will benefit SA and the rest of the continent, in Nene's view.

"As a potential borrower, SA could use the bank as an alternative source of financing its infrastructure build programme or infrastructure development plans, as well as for regional integration initiatives," he said.

"The Bank offers SA another benefit. Sub-Sahara Africa is one of the world’s fastest growing economic regions, but has infrastructure bottlenecks, which make it difficult for the region to achieve its growth potential as well as for the world to do business in African markets."

The World Bank estimates that sub-Sahara Africa requires $93bn per year to meet its infrastructure needs. The region, however, only manages to raise half of this on annual basis.

"Addressing these challenges is a priority for the region. The bank’s regional centre which will be based in SA will be strategically located to meet this need," said Nene.

"A significant number of the New Development Bank’s clients will come from sub-Saharan Africa."

- Fin24

nhlanhla nene  |  africa  |  economy  |  brics


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