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Ramaphosa: Economy may be recovering, but urgent reforms are needed

Sep 04 2019 10:15
Lameez Omarjee, Fin24

The South African government is making an effort to improve the ease of doing business in the country, to attract more investment, President Cyril Ramaphosa said.

The president was speaking at an Ease of Doing Business Seminar organised by Brand SA on Wednesday, ahead of the World Economic Forum Africa which officially launches at midday.

The forum, will see business leaders from 28 African countries congregating in Cape Town over the next three days, to discuss issues related to their economies.

Speaking at the ease of business seminar on Wednesday morning, Ramaphosa commented on the latest GDP figures which showed growth of 3.1% for the second quarter of the year.

"While the quarterly growth figures announced yesterday are encouraging – and may suggest the green shoots of recovery – the reality is that our economy is barely growing to address the challenges our country is currently facing," Ramaphosa said.

"And while the economy is creating new jobs, they are not nearly enough to bring down the overall rate of unemployment," he added.

"We are hard at work to stimulate growth, ensure economic stability and restore the credibility of state institutions.

"We recognise the urgency with which we need to reform our investment promotion architecture to remove policy, regulatory and other impediments," Ramaphosa said.

South Africa ranks 82nd among 190 economies in the World Bank’s Ease of Doing Business Index. Ramaphosa said the government has set a goal to be within the top 50 of the ranking and has been engaging with business on reforms.

"All of us in this room share a common goal, to make South Africa the destination of choice for ease of doing business.

"We all want to build an economy that is more equitable and from which all South Africans can benefit," he said.

Ramaphosa further called on investors to make the most of the "new momentum" in the country.

"We want and need foreign direct investment, and scaled up domestic investment is the necessary catalyst.  We all want to see a South Africa that is thriving and prosperous," he said.

Attracting investment

Earlier on Wednesday advisory firm EY released its report on investment flows on the continent which showed foreign direct investment in the continent is stable but still low by global standards.

In 2018 there were investment 710 projects in the continent which created 117 000 jobs and attracted $75.5bn in capital, according to the report. The US and France remain Africa's single largest investors and Egypt, South Africa and Morocco are three of the largest recipients of investment.

"Despite being a country critically lacking in consumer and business confidence, and with employment stubbornly high, it is encouraging that South Africa remains on investors' radar," Sandile Hlophe EY Partner noted.

"An urgent focus on implementing economic reforms as outlined in the President’s economic stimulus and recovery plan announced in September 2018, and progressing State Owned Enterprise plans to strengthen governance and stabilise cash flows, will go a long way towards stimulating increased FDI flows," he said.

The report also shows South Africa is the fifth largest investor into the rest of the continent, after the US, France, UK and China.

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