This week, at the World Economic Forum (WEF) on Africa 2016 held in in Rwanda, the government has the opportunity to restore confidence in South Africa’s economy. Our country’s economic growth prospects have improved since dodging a possible ratings downgrade to junk status.
Moody’s Confirms Rating
On Friday, the country’s spirits were lifted after international ratings agency, Moody’s announced an unchanged investment credit rating for South Africa. Although, it adjusted the outlook from stable to negative, with a Baa2 rating – two notches above sub-investment grade.
Moody’s also said that the country was advancing towards a turning point, after numerous years of tumbling growth. While the International Monetary Fund (IMF) said that from 2017, the economy may experience mooted recovery.
Deputy President Cyril Ramaphosa would head a business and government delegation to the WEF, promoting South Africa as receptive to business and a favoured investment destination, said the Presidency. The delegation would be punting the macroeconomic environment, which it claimed was resilient “with a dynamic and stable economy underpinned by solid economic fundamentals”.
The delegation would include Ministers of Trade and Industry Rob Davies, Finance Pravin Gordhan, in the Presidency Jeff Radebe and Post and Telecoms Siyabonga Cwele. Eskom, Old Mutual, ArcelorMittal and Industrial Development Corporation Representatives would also be attending.
Turning Point for Economic Growth
The government needs to show that it is on the mend, after an incredibly difficult and doubtful six months, said Bart Stemmet, senior economist at NKC African Economics yesterday.
“Policy certainty and continuation are vital for prospective investors and the South African delegation will look to assure the international business community that the government is working to create a friendly environment and not impeding property rights in the country,” he said.
Investors want institutional stability, said Dawie Roodt, Chief economist at Efficient Group. “If I invest in a country, I want to know that the rules will be enforced… I want clarity on policy and I want to see efficiency,” he said.
The theme of the WEF Africa 2016 would be the digital revolution.
Current economic history has proven that developing countries do not have to take the same road of development as industrialised countries, said Trudi Makhaya, consulting economist at Mercantile Bank.
“They can ‘leap-frog’ the phase of heavy industry… and jump straight into harnessing technologies such as artificial intelligence and 3D printing. There is some truth to this idea but human capital development is still central to economic development, whatever the technology in use,” she said.