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South Africa should prioritise reforms, focus on increasing fixed investment and create a better short-term business climate to bolster the performance of its economy and allow for private-sector led growth, a local commerce group said.
“The private sector has the potential to finally put South Africa on a path of science-based planning, underpinned by the meritocracy drive and visible public sector accountability,” the South African Chamber of Commerce and Industry said Friday in a statement. “In order for a private-sector-led economy to thrive, government at all levels will need to change institutional arrangements and work ethic in public-sector institutions that are charged with supporting economic policy and development.”
Its comments come after President Cyril Ramaphosa, in his state-of-the-nation address in February, stressed that job creation must be led by the private sector and that the government must provide an enabling business environment. His stance marked a shift from a long-held view among some in the ruling African National Congress that the state should play a bigger role in the economy.
While the president’s speech and subsequent budget presented by Finance Minister Enoch Godongwana point in the “right direction,” that the government spends more on welfare than on the so-called productive sector remains a concern, Sacci said. To capitalize on higher commodity prices stemming from Russia’s invasion of Ukraine, South Africa urgently needs better rail and port facilities, it said.
Concerns about the global impact of the war outweighed the lifting of domestic coronavirus restrictions, resulting in a decline last month in an index compiled by Sacci that measures business confidence.
Though the business confidence index fell to 95.6 from 96.9 in February, when compared with a year ago, it still shows a positive trend. However, the global economy that continues to move from “one uncertainty to the next” and geopolitical conflicts mean sentiment is unlikely to remain at current higher levels, the group said.
“The promotion of investor confidence in South Africa among both foreign and domestic investors remains critical to the country’s approach to global issues,” according to Sacci. Ramaphosa last month said the country secured domestic and inbound investment pledges amounting to R774 billion and is on track to meet its target of attracting R1.2 trillion in investments by 2023, though not all the money is new and some of it will come from state institutions.
