Stable rand vital for affordable imports, says Ramaphosa | Fin24
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Stable rand vital for affordable imports, says Ramaphosa

Oct 07 2016 18:24
Fin24, Reuters and Bloomberg

Cape Town - The South African government wants a more stabilised and stronger rand to make imports more affordable, Deputy President Cyril Ramaphosa said during his 3-day visit to Singapore.

"We import diesel, petrol, machinery and it costs the country quite a lot," Reuters reported Ramaphosa as saying.

On Thursday SA Reserve Bank governor Lesetja Kganyago said during an interview on Bloomberg TV that the rand is currently undervalued and fluctuations in the currency are partly driven by political turmoil.

Although the rand has gained 13% against the dollar since the beginning of the year, it lost 25% of its value in 2015. It was also the most volatile among 31 major and emerging-market currencies tracked by Bloomberg during the last six months.

By mid-afternoon trade on Friday the rand was down 0.28% at R13.88 to the dollar.

In a speech delivered during his visit to Singapore, Ramaphosa emphasised that South Africa is an integral part of the African continent, which is seeing significant economic growth and social development.

He pointed out the potential of the African market with its one billion people.

"However, to achieve its full potential, African countries need to address the legacy of colonialism and underdevelopment," cautioned Ramaphosa.
In his view, Africa needs to diversify its economies, improve its transport networks and energy supply, educate its youth and increase intra-African trade.

"Together with Singapore we can explore commercial opportunities which will benefit our countries and the people of Africa," said Ramaphosa.

READ: Kganyago: Political turmoil takes toll on undervalued rand

Good for doing business

Ramaphosa said, in addition to its proximity to Africa’s fast growing markets, South Africa is an attractive place to do business.

"We are a stable country with a vibrant democracy. Transparency and accountability is supported by independent institutions. The Constitution is paramount. The rule of law respected," said Ramaphosa.

He admitted that, as South Africa works to grow its economy and create employment for millions of young people, a critical area of focus is education and skills development.

"One of the most devastating of apartheid’s legacies is a substantial skills deficit that constrains rapid economic development. The challenge we now face is to match our achievements in improving access with the outcomes our education system produces," said Ramaphosa.

"We are paying specific attention to the extent to which our education and skills development programmes prepare our young people for the requirements of a modern industrial economy."

Youth unemployment is one of the huge challenges faced by SA, he said.

READ: Rand gains as investors bet ECB will delay tapering

That is why the SA government has embarked on a process which Ramaphosa called "accelerated industrialisation to increase investment in the economy and create jobs".

"South Africa has made important progress in resolving energy supply challenges, which are the result of years of under-investment in generation capacity," said Ramaphosa.

With new power stations coming online and a growing renewable energy programme, South Africa will be able to ensure security of supply well into the future, in his view.

"We are also working to revitalise the agriculture and agro-processing value chain and develop the ocean economy in areas like ship building, maritime transport and aquaculture," he said.

"By developing South Africa’s manufacturing sector and making it more competitive, we intend to give our firms a better chance of competing with their international peers."

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cyril ramaphosa  |  rand  |  sa economy


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