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Cape Town – Cabinet has praised President Jacob Zuma for his interventions to boost economic growth as the country moves to avoid being downgraded to “junk status”.
Fitch and Standard & Poor’s are touted to downgrade South Africa's debt rating to junk, with S&P expected to make a move as early as June.
S&P officials were in South Africa last week for an assessment before its review due to be published on June 3, and South African officials reportedly also spoke to Fitch.
Minister in the Presidency Jeff Radebe said in a post-Cabinet meeting statement on Thursday that Zuma has led several effective interventions through partnerships, both domestically and internationally to boost economic growth and job creation.
He said Cabinet noted the growing number of investment initiatives that have been announced in the country as a vote of confidence by the international investment community in South Africa’s economy.
Path to recovery
“It demonstrates that our country is on a path to recovery and continues to be a viable investment destination,” he said.
Finance Minister Pravin Gordhan said that in his meetings with the rating agencies last week he was able to explain everything they wanted explained, the Financial Mail reported on Thursday.
He told the publication in fiscal terms and on building confidence, South Africa has a credible story, and with enough work, the country can also turn the corner as far as growth is concerned.
Three big boosts
The three big investment boosts Cabinet mentioned were:
1. Toyota’s new Toyota Hilux and Fortuner manufacturing plant in Durban, which will add over 4 000 jobs as part of Toyota's R6.1bn injection into SA’s manufacturing industry.
2. BMW’s announcement on the start of its R6bn construction of its new body shop, which will enable it to produce and export the next generation of the BMW X3.
3. Trade and Industry Minister Rob Davies’ launch of the R100m Dursots & All Joy Tomato Processing Plant in Modjadjiskloof near Tzaneen. The factory currently employs 70 people with a potential increase of 300 by next year. It would also create a further 900 seasonal jobs.
Expenditure ceiling
“The magnitude of the following investments demonstrates the continued confidence that global automotive producers have in South Africa as an investment destination, and the supportive policy environment that government is providing,” said Radebe.
He said the government remains focused on reigniting economic growth, preserving existing jobs and creating more sustainable jobs through working together with business and labour.
“Through our programme of structural reforms and fiscal consolidation, government will remain within its expenditure ceiling to ensure that our economy emerges stronger when the global economy recovers.
“These investments showcase the steady implementation of the Nine-Point Plan and the Industrial Policy Action Plan that focus on increasing manufacturing-based value addition, employment creation and export-intensity to grow the economy and create jobs.”
