JOHANNESBURG – Team SA’s delegation will present a strong investment case for the country at the World Economic Forum (WEF) in Davos, Finance Minister Tito Mboweni said yesterday, despite South Africa being on an economic precipice compounded by crippling power outages.
Mboweni said that he did not expect networking sessions in Davos to be easy as South Africa’s reputation is clouded by the notoriety of its financially struggling state-owned enterprises (SOEs), like power utility Eskom and under business rescue South African Airways, among others. South Africa has been on an investment drive under President Cyril Ramaphosa, which saw him net R363 billion worth of commitments from corporates at the 2nd South African Investment Conference last year, a milestone in the country’s bold ambition to raise R1.2 trillion in new domestic and international investment over the next five years.
Speaking at a pre-WEF breakfast yesterday, Mboweni said his delegation would be frank about economic challenges facing the country, especially the rolling blackouts that have crippled production as ailing power utility Eskom ostensibly tries to maintain the integrity of the grid. South Africa’s GDP growth slowed from 1.3 percent in 2017 to an estimated 0.7 percent in 2018.
The medium-term outlook is weaker than projected in the 2018 Medium Term Budget Policy Statement. Economic growth is expected to reach 1.5 percent in 2019, rising to 2.1 percent by 2021. Moody’s Investors Service has cut the country’s credit rating to negative from stable, taking the country one step closer to losing its final investment-grade assessment.
If Moody’s cut South Africa’s rating, Mboweni said the delegation would emphasise the work that the government was undertaking to fix the economy. “We will say that there is political stability in South Africa, which is key to reaching economic objectives in the country. We will say there is an effort on the part of the South African government to put in place structural reforms.This includes, among others, an effort to put SOEs on the right path,” Mboweni said.
“We are probably going to say that we are facing a difficult fiscal environment, but authorities are determined to proceed responsibly in support of growth enhancing activities. I agree that we should move with speed on reforms. “They will ask us what has happened on the spectrum auction and we will answer that a paper on this matter has been issued and the matter is now with the relevant authority. Government is also working feverishly with Prasa to resolve issues with the rail network.”
Mboweni also stuck to his guns about the independence of the SA Reserve Bank, considering his recent spat with the ruling party’s conference resolution calling for its nationalisation.
He acknowledged that the pace of economic reforms, that have been called for by ratings agencies and investors, has been disappointing. “The Reserve Bank is, by virtue of the Constitution, an independent central bank of South Africa that pursues its objectives independently, without fear or favour,” he said. “So we will tell them all of that. I will be honest to say that the pace of the structural reforms is not the way we would want it to be, so we need to speed up on that.” Mboweni also revealed that the government was still trying to find additional financing for troubled state airline, SAA. “As of yesterday when I was speaking to the director-general of the National Treasury we were still trying to find additional financing for SAA. Let’s keep our fingers crossed,” Mboweni said.