Download GDP figures point to a need for South Africa to explore new markets

GDP figures point to a need for South Africa to explore new markets
28 November 2012
Nkosiphendule Kolisile
The latest GDP figures which show that South Africa's economic growth slowed to
1.2% in the third quarter of 2012 do not bode well for South Africa’s objective to grow
the economy by 6-7% growth and lower the staggering unemployment rate.
Analysts share a consensus that the slow growth of our economy is as due in large
part to the turbulence and unrest in the mining sector, which has seen high
incidences of violence and loss of life.
The violent strike in the freight and logistics sector, during the same period,
compounded the situation. According to analysts, labour unrest is largely responsible
for the economy’s poor performance in terms of production; export earnings and the
negative perceptions of the country in the eyes of prospective investors.
However, as much as this analysis has some credence, there is more to our
disappointing economic performance than meets the eye. Globally, the figures do not
look positive as well. Global economic growth decelerated in the third quarter of
2012. The seemingly never ending troubles of Europe continue to hinder economic
activity in other parts of the world.
In addition, negative trade patterns are also evident in emerging markets such as
Brazil, Russia, India, China, all of which are important trading partners for South
Africa.
These statistics are more worrying for Gauteng as the economic hub of the country,
which hosts nearly all critical sectors of our country’s economy. Manufacturing , 40%
of which takes place within Gauteng’s borders, has recorded a marginal increase
from -0.8% to a mere 1.2% during the 3rd quarter of 2012. This trend is replicated
across all other sectors.
Although agriculture, forestry and fishing sector grew by 7.4% in the country, it plays
a negligible role in the province in relative terms contributing only 6.0% of value add.
In fact, there has been no growth in this sector over the last decade with the sector
having had insufficient fixed investment to cover the value of depreciated capital.
In the last ten years, Gauteng's economic growth has always been slightly higher
than the national growth rate. While the South African economy recorded an average
growth rate of 4.0% from 2001 to 2011, Gauteng province was above the national
average with rate, achieving 4.6% over the same period. The province experienced a
decline in 2007 tumbling to a negative growth of 1.7% in 2009. This was a symptom
of a bigger problem, which is the global recession which left very few countries
unscathed. Gauteng’s economy made an impressive, yet inadequate comeback in
by achieving economic growth of 3.2% and 4 % in 2010 and 2011 respectively.
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This growth was as result of the wholesale, retail and motor trade; catering and
accommodation industry, general government services, the finance, real estate and
business services, and the manufacturing industry.
The current reality in Gauteng, as spelt out by Census 2011 results, is that despite
our small geographic size, the province is now home to more than 12.2 million
people; a figure that has risen by 33.7% from a total of 7 million in 1996.
This makes Gauteng which accounts for 24% of the South Africa’s total population,
the most populated province in the country. This provincial population increase
directly translates into rising demand for housing, bulk infrastructure, health and
education.
Under these circumstances, the need to foster dialogue and cooperation with
industry player in order to bolster the recovery of sectors crucial economic sectors
such as manufacturing, mining and construction becomes particularly urgent.
The creation of jobs also demands that government increases its proactive support
to small businesses which account for a significant percentage of jobs created in our
economy.
On a positive note, Sub-Saharan Africa and other emerging economies are expected
to grow their economies by about 6.0% this year. The African continent is currently
home to seven of the fastest growing economies in the world. This change in Africa’s
fortune means that as government and policy makers, our strategies to grow the
economy of South Africa and Gauteng in particular should place premuim on the
opportunities presented by the continent. This is more imperative as growth
projections in more advanced and developed markets remain discouraging. South
Africa and Gauteng’s future is inextricably linked to the future of Africa as a whole.
Kolisile is the MEC for Economic Development in Gauteng.
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