Download Dr Roelof Botha slides

Transitioning to a
world-class country
Dr Roelof Botha
Overview of themes – getting SA to the elusive high
road scenario
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Health data – a snapshot
Megatrends impacting on the global economy
SA’s competitiveness challenges
Policies employed by advancing nations with high growth
Rewards of free enterprise reforms
Pockets of excellence in SA
A pragmatic policy agenda for South Africa
Economic growth prospects – gradual improvement
The Southern African economy
Prospects for
Global health trends – a
sustained growth
snapshot
Structural increase in household expenditure on
health (SA)
210
Index; 1997 = 100
Health
190
170
150
Total
130
110
2
'1
1
'1
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'1
9
'0
8
'0
7
'0
6
'0
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'0
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'0
3
'0
2
'0
1
'0
20
00
9
'9
8
'9
'9
7
90
Health expenditure as % of totals – government &
households (SA)
13
%
Government
12
11
10
Households
9
8
7
'97
'98
'99
'00
'01
'02
'03
'04
'05
'06
'07
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Composition of government expenditure (functional
classification) FY 2013/14 (Rb)
Total R 1.1 trillion
Other economic
Transport 60.8 serv. 60.7
Public order 106.2
Housing & comm.
Dev. 105.4
Health 137.7
General services
70.9
Defence 40.6
Education 225.8
Interest 99.7
Social protection
171.5
Environ. & culture
13.8
Composition of household consumption expenditure
in South Africa 2012 (R billion)
Recreation 73
Other 215
Education 57
Transport 310
Food &
hospitality 542
Health 182
Household
goods 129
Clothing 97
Housing 302
Total 1,9 trillion
Life expectancy at birth 2011 – selected African
countries
Mauritius
Namibia
Tanzania
South Africa
Uganda
Zimbabwe
Nigeria
Angola
Lesotho
Years
DR Congo
Sierra Leone
45
50
55
60
65
70
75
Life expectancy at birth 2011 – selected countries
Japan
Singapore
Germany
US
China
Brazil
Russia
India
Ghana
Years
Afghanistan
South Africa
55
60
65
70
75
80
85
Health expenditure as % of GDP – selected countries
US
Germany
Canada
UK
Australia
South Africa
%
Chile
South Korea
Mexico
Turkey
5
7
9
11
13
15
17
Megatrends & the
emergence of
multiple
superpowers
The World Economic League
1st Division
2nd Division
3rd Division
High
Income
Countries
Emerging
Market
Economies
Potential
Emerging
Markets
Recommended route of progress (higher per capita income)
4th Division
(a)
Small
Economies
(b)
Failed states
Megatrends en route to 2020 (selection)
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World population exceeds 7.6 billion
Increased urbanisation, ageing rises
Life expectancy increases to 71 years
Further spread of democracy
Rising per capita incomes
New applications for nano-technology
Further progress with bio-technology
Computers will be 200 times faster
Increased focus on renewable energy
Emergence of multiple superpowers
World outlook beyond 2010
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Social: Your phone will tell you when you are in love
Social: Complete surveillance through nano-devices
Demographics: World population to reach 9.2 billion by 2050
Demographics: Africa’s population to outstrip China’s in 2030
Business: Development of a digital, virtual, universal currency
Business: Thought recognition as everyday input means
Science: A robot in every home in Japan by 2015
Technology: Tomorrow's televisions will not need screens
Environment: Acute water shortages affects 65% of world
Science: Space solar power stations
No of Boeing 747s in service
900
850
800
750
700
650
600
1985
1990
1995
2000
2005
2010
2013
Structural decline in global electricity intensity more
pronounced in South Africa
(Terrawatt-hours per $billion GDP )
0.8
0.75
SA
0.7
0.65
0.6
0.55
0.5
World
0.45
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'0
9
'9
8
'9
19
97
0.4
Share of global GDP (PPP) of emerging markets &
developing economies
55
%
50
45
40
35
30
25
1980
1985
1990
1995
2000
2005
2010
2017
Sizeable gap between the GDP growth performance
of advanced & emerging economies
(Source: IMF)
% (real)
8
Emerging markets
6
4
2
Advanced
0
1998 '99
-2
-4
'00
'01
'02
'03
'04
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'06
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Top-ten economies in the world (BRICS = $14.4 trillion;
20% of world total)
Source: IMF
US
China
Japan
Germany
France
$trillion
UK
Brazil
Russia
Italy
India
0
2
4
6
8
10
12
14
Regional composition of world population 2011
(BRICS = 42% of world total)
(Source: UNDP)
Total 6.9 billion
India 1.2
China 1.4
SADC 0.3
Europe 0.6
Brazil 0.2
Russia 0.14
Other Africa 0.7
South America
0.2
North America
0.53
Other Asia 1.6
Forecast increase in the world’s population 2010 to
2030 (Source : UNDP )
Million
(Total 1.4bn)
China 52
Latin America
112
India 300
S/East Asia 113
Europe 3
South/Central
Asia 152
Other Asia 88
Africa 540
North America
57
Emerging markets – top-ten populations
(total 3.85 billion)
China
India
Indonesia
Brazil
Pakistan
million
Bangladesh
Nigeria
Russia
Mexico
Philippines
0
200
400
600
800
1000
1200
Most populous developing countries & SADC
population
China
India
SADC
Indonesia
Brazil
Million
Pakistan
Bangladesh
Nigeria
Russia
Mexico
Philippines
0
250
500
750
1000
1250
Emerging markets – top-ten economies
(total $18.9 trillion)
China
Brazil
Russia
India
Mexico
$trillion
Indonesia
Turkey
Saudi Arabia
Poland
Argentina
0
1
2
3
4
5
6
7
8
Emerging markets – 2nd top-ten economies
(total $2.8 trillion)
South Africa
Venezuela
Thailand
Malaysia
Nigeria
Chile
$bn
Philippines
Pakistan
Peru
Kazakhstan
150
200
250
300
350
SADC share of world reserves for selected metals &
minerals (2009)
Chrome ore
Platinum
Manganese
Diamonds
Gold
Cobalt
%
Vanadium
Zircon
Titanium
Uranium
Copper
Coal
0
20
40
60
80
100
South Africa’s key
competitiveness challenges
Sharp contrast between the GDP growth paths of
Zambia and Zimbabwe (nationalisation in action)
20
Zambia
$ billion
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14
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Zimbabwe
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2
2000 '01
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South Africa’s lowest ranked global competitiveness
indicators (out of 144 countries)
Cooperation in labour-employer relations
144
Hiring & firing practices
143
HIV prevalence
141
Quality of the educational system
140
Flexibility of wage determination
140
Pay & productivity
134
Business costs of crime & violence
134
Life expectancy
133
Business impact of tuberculosis
132
Burden of government regulation
123
Factors contributing to the relatively low Quality of
Life index score (recent MasterCard survey)
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65% of SA’s 256 state entities fail audit procedure
Country-wide escalation of social unrest since 2008
Several local authorities have become semi-dysfunctional
Lack of road maintenance causes 1,700 deaths in 4 years
10,000 officials involved with wasteful expenditure of R20 billion
Cost of rehabilitating public health estimated at R57 billion
Cost of corruption to the economy estimated at R40 billion
Electricity supply remains precarious
Rigid labour legislation deters foreign direct investment
Structural decline in the share of agriculture in total
fixed capital stock
10
%
8
6
4
2
0
1971
1976
1981
1986
1991
1996
2001
2006
2011
2012
Structural decline in the ratio of agriculture exports
to imports
250
%
200
2000
150
2012 (JanMay)
100
50
0
Meat
Vegetables
Food & beverages
Total
Employment in agriculture in South Africa
(forecast for 2013)
‘000
1100
1000
900
800
700
600
500
400
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Indices of labour productivity & unit labour costs in
manufacturing (2000 = 100)
190
Index
Labour costs
170
150
130
Productivity
110
90
2000
'01
'02
'03
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'06
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Policies implemented by
winning countries
The recession is over –
prepare for higher growth
Dr Roelof Botha
Post-1980 reforms - high growth economies
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Privatisation
Market-related & productivity-related wage determination
Lower direct tax rates
Pro-active export promotion
Lower import duties
Separation of judicial & executive powers
Public/private partnerships
Vigilant stance towards preventing undue corruption
Effective performance monitoring in the public sector
Deregulation & other measures to encourage SMMEs
Post-1980 reforms - high growth economies
(continued)
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Adequate expenditure on R&D
Strategic industry status afforded to agriculture
Guaranteed property rights (intellectual & physical)
Prudent & transparent fiscal policy
Emphasis on primary education
Improved access to affordable health care
Pro-active monetary policy
Expansion & maintenance of infrastructure
Cooperation between government, labour & business
Expansion & diversification of international trade
Rewards of consolidating the tenets underpinning
free enterprise and democracy
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(Selection)
Fiscal stability & expanding tax base
Improvement of global competitiveness
Relatively low inflation
Enhanced food security
Balance of payments stability
Increased levels of FDI inflows
Sustained economic growth & employment creation
Higher national skills base
Increased longevity
Relatively high level of socio-political stability
Progress with the
transition – slow,
but visible
Towards a radical transformation of institutionalised
society in South Africa
(* denotes qualified success)
Pre-1994
Post-1994
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Exclusive
Adversarial
Labour vs. capital
International isolation
Patronising
Neglect of common place
Hierarchial
Subordination of law to state
Violation of human rights
Inclusive*
Co-operative*
Labour plus capital*
International assistance
Empowering/enabling
Illumination of common place
Networking
Law above the state
Manifestation of human rights
Progress with meeting basic needs
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3 million RDP houses
1000 new health clinics
Access to clean water for 10 million people
New sanitation facilities for 7 million people
4.5 million new electricity connections
Free education
Redistribution of 3 million hectares of land
Primary School Nutrition Programme for 5 million children
15 million new social grant beneficiaries (BIG?)
South Africa’s highest ranked global competitiveness
indicators (out of 144 countries)
Regulation of securities exchange
1
Auditing & reporting standards
1
Efficacy of corporate boards
1
Soundness of banks
2
Availability of financial services
2
Effectiveness of anti-monopoly policy
6
Reliance on professional management
13
Quality of air transport infrastructure
15
Quality of management schools
15
Efficiency of legal framework
16
SA facts & figures - a random selection
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11th largest emerging market in the world
World’s largest paper manufacturer (Sappi)
World’s 2nd largest beer brewer (SAB)
Sole producer of MB Class C RHD vehicles
First-ranked world floral kingdom
Top global ranking for a secondary capital market (JSE)
No 2 global competitiveness ranking for soundness of banks
First heart transplant in the world
World leader in liquid fuel technology
World’s most progressive democratic constitution
SA budget deficit/GDP ratio & forecasts – fiscal years
ended 31 March
(Source: National Treasury)
2
%
0
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-2
-4
-6
-8
'01
'02
'03
'04
'05
'06
'07
'08
'09
'10
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'12
'13
'14
'15
Real effective exchange rate of the rand
Index, 2000 = 100)
110
105
100
95
90
85
80
2000 '01
'02
'03
'04
'05
'06
'07
'08
'09
'10
'11
'12
'13
Balance of payments – current & financial account
(including unrecorded transactions)
(Source: SARB)
200
Financial account
150
100
50
0
'03
'04
'05
-50
-100
Current account
-150
-200
R billion
'06
'07
'08
'09
'10
'11
'12
Capital expenditure by public sector returns to growth
mode (after an absence of 3 decades)
16
Capex/GDP %
Private sector
14
12
10
8
Public sector
6
4
2
'75
'80
'85
'90
'95
'00
'05
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A pragmatic policy agenda
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Introduction of a basic income grant (BIG)
Combating of corruption & vigilance with tender procedures
Management training for public service
Incentives for entrepreneurship & SMMEs
Task teams to restore functionality of Municipalities
Implementation of youth wage subsidy
Restructuring of SETAs
Multi-tiered system of labour regulations
Fast-tracking of infrastructure spending
Public/private partnerships (govt/business/labour “Codesa”)
Conclusion - consolidation of
economic recovery
The recession is over –
prepare for higher growth
Dr Roelof Botha
GDP growth estimates for 2012 and forecasts for 2013
– world & key regions
(Source: IMF)
7
% (real)
6
5
2012
4
2013
3
2
1
0
Advanced
Economies
World
Latin
America
Emerging
Markets
SubSaharan
Africa
Asia
Real retail trade sales (index, 2008 = 100)
114
Index
111
108
105
102
99
96
Q 4
1'
13
3
2
Q 4
1'
12
3
2
Q 4
1'
11
3
2
Q 4
1'
10
3
2
Q 4
1'
09
Q
3'
0
8
93
Household debt to disposable income in South Africa
%
80
75
70
65
60
55
50
45
40
1999 2000 '01
'02
'03
'04
'05
'06
'07
'08
'09
''10
'11 2012
Debt service cost to disposable income of households
in South Africa
12
%
11
10
9
8
7
6
20
12
'1
1
0
''1
'0
9
'0
8
'0
7
'0
6
'0
5
'0
4
'0
3
'0
2
'0
1
20
00
19
99
5
Household debt as % of GDP – selected high income
countries & BRICS
UK
USA
South Korea
Japan
Germany
%
France
South Africa
China
Brazil
0
20
40
60
80
100
Real growth trends for the components of domestic
expenditure
210
(Sources: SARB, own calculations)
Index; 2000 = 100
Capital formation
190
170
Govt. consumption
150
130
Household consumption
110
90
2000
'01
'02
'03
'04
'05
'06
'07
'08
'09
'10
'11
2012
Convergence of consumer & producer inflation to
within the Reserve Bank’s target range of 3% to 6%
10.5
%
9
PPI
7.5
6
4.5
CPI
3
ay
M
ar
M
13
Ja
n'
No
v
pt
Se
Ju
ly
ay
M
h
ar
c
M
12
Ja
n'
No
v
pt
Se
Ju
ly'
11
1.5
Lowest prime rate in 40 years enhances household
spending power
22
%
19
16
13
10
2
'1
0
'1
8
'0
6
'0
4
'0
2
'0
0
'0
8
'9
6
'9
4
'9
'9
2
7
Formal sector employment – progress after recession,
but now stuttering
‘000
9 600
9 500
9 400
9 300
9 200
9 100
Q 4
1'
13
3
2
Q 4
1'
12
3
2
Q 4
1'
11
3
2
Q 4
1'
10
3
2
9
1'
0
Q
Q
4'
0
8
9 000
Economy has now grown in real terms for
15 successive quarters
Real annualised GDP growth (%)
7
-3
-8
Q 4
1'
13
3
2
Q 4
1'
12
3
2
Q 4
1'
11
3
2
Q 4
1'
10
3
2
Q 4
1'
09
3
2
Q 4
1'
08
Q
3'
07
2
Modest real GDP growth forecast for 2013
3
%
2.8
2.6
2012
2.4
2013
2.2
2
1.8
SA
Reserve
Bank
IMF
Reuters
poll
Sanlam
Absa
National
Capital Treasury
PwC
CitiBank
New record high for JSE all share index (Alsi)
42
Index (‘000)
39
36
33
30
27
24
21
2
Q
1'
13
3
Q
1'
12
3
Q
1'
11
3
Q
1'
10
3
Q
1'
09
3
Q
1'
08
18
New record high for real disposable income per
capita of households (at constant 2011 prices)
36
R ‘000
34
32
30
28
26
24
22
'94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12