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South Africa may still overcome current challenges say economists | Coastweek

JOHANNESBURG South Africa (Xinhua) -- Aerial view of Johannesburg Town, South Africa. The City of Johannesburg Local Municipality is situated in the northeastern part of South Africa with a population of around four million. Being the largest city and economic center of South Africa, it has a reputation for its man-made forest of about ten million trees. XINHUA PHOTO - ZHAI JIANLAN

South Africa may still overcome current challenges say economists

by Ndumiso Mlilo JOHANNESBURG South Africa (Xinhua) -- Economic commentators believe all hope is not lost on South Africa after the downgrading of its foreign currency ratings to subinvestment by international rating agencies.

Standard & Poor’s (S&P) lowered the country’s foreign currency ratings to junk status, which led to seven banks suffering the similar fate. Many economists contributed to a panel of discussion on Thursday saying South Africa could rise from this bad situation if they put their act together.

Lesiba Mothata, chief economist of Investment Solutions, said the South African rand and bonds did not sharply decline after the downgrade.

Countries like South Korea, Hungary and Thailand have fallen into junk status and lost policy direction which is not the case with South Africa.

He said South Korea lost the ability to raise taxes with currency falling and the banking sector in crisis. Columbia was also in the junk status with drugs and wars which made it take long in that state.

"The situation looks different in South Africa, the issues are not exogenous.

"We have prospects to be fallen angels and can turn around things if we do the right things.

"Our banks are capitalized and the Treasury as an institution continues with clear transparency and vision.

"South Africa has shown agile response from Treasury," Mothata said.

Aza Jammine, chief economist of Econometrix, also agreed with Mothata that there is still hope for the country. He said the rand has shown resilience even though had it not been for the downgrade it could be around R12 against the U.S. dollar.

"The story is not over yet, what is worrisome may be an opportunity as well ...

"If Malusi Gigaba (South Africa’s new finance minister) keeps saying the things he has been saying in the last few days, we may renew the momentum of recovery and avoid recession," Jammine added.

Jammine said there were some fears that the interest rate and inflation would increase, but it has not happened and the drought seems to be ending, with also no load shedding that could contribute positively to the country.

The chief economist said the country has to do some structural reforms and also implement the country’s economic blue print, the National Development Plan (NDP).

One of the positive things was the confidence in the business that had been inspired by the former Finance Minister Pravin Gordhan.

He also said Gordhan brought about unity in government, labor and business to avoid protracted strikes. The country should emulate some Asian countries.

"China made private sector partner with government while maintaining oversight on them.

"How they invested on education and skills is unbelievable.

"I do not foresee that happening in our country," Jammine said.

Rabelani Dagada, Member of the Mayoral Committee of Finance, City of Johannesburg, said currently residents owe the city about R17 million.

If the city is downgraded there would be more pressure on residents to pay for the rates, water and electricity, which would increase the debt.

"If we are downgraded further it would be difficult for the city to borrow as the debt would be expensive to service.

"We will be squeezed and affected on our quest to deliver infrastructure," Dagada said.

He said the downgrade would mean that many cities will have a backlog on their infrastructural projects and struggle to maintain and provide services.

Dennis Dykes, chief economist of Nedbank, said South Africa is consuming more than it could produce and has been relying on investment to fill the gap.

There is a need for fiscal sustainability, making the ease of doing business better and reducing unemployment.

The Nedbank economist said it would be difficult for state enterprises, banks and business to borrow.

If they borrow they will pass on the cost to the consumer, and there is still possibility that a country could survive the recession.

Moody’s is expected to announce their decision in June, and a possible downgrading is feared.

Dykes said even if the country goes into recession, the government could respond in a positive way to speed up the recovery.
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UPDATES:

South Africa ranked most attractive destination for FDI in Africa: report

CAPE TOWN South Africa (Xinhua) -- South Africa is ranked the most attractive destination for foreign direct investment (FDI) in Africa, according to the A.T. Kearney’s 2017 Foreign Direct Investment Confidence report released on Thursday.

Globally, South Africa is the 25th most attractive destination for FDI, the report said.

The report cited improvements in short-term economic prospects and the long-term investment in the country’s manufacturing as some of the key drivers of South Africa’s improved rating on the Index.

The A.T. Kearney, a global management consulting firm, considers South Africa as a gateway to Africa, with lucrative value and opportunities for international investor partnerships, boasting a combination of infrastructure and an emergent market economy that gives rise to a vibrant and entrepreneurial investment environment.

The report drew immediate applause from the South African government.

"The government is humbled by this ranking, which shows that South Africa’s strategic partnership with foreign investors is gaining momentum," Minister of Communications Ayanda Dlodlo said.

"The report demonstrates that our country’s blueprint on development is yielding results and requires that we strengthen this with also encouraging South Africans to save so that we balance this show of confidence through involving South Africans," Dlodlo said.

This came after international rating agenices Standard and Poor’s and Fitch downgraded South Africa’s sovereign credit rating to junk status, respectively on April 3 and 7.

In the current phase, the confidence in South Africa, as demonstrated in the report, bodes well for the country, Dlodlo said.

"In this regard, South Africa has heeded President Jacob Zuma’s call to focus on changing any negative perceptions held by foreign investors by strengthening synergies within civil society," the minister said.

South Africa remains a destination of choice, Dlodlo added.
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South Africa says committed to BRICS membership

PRETORIA South Africa (Xinhua) -- South Africa is committed to the BRICS bloc of leading emerging economies and hopes being a member helps address the country’s various challenges, a senior official said Thursday.

While addressing a seminar in Pretoria on Thursday, Dave Malcomson, chief director at South African Department of International Relations and Cooperation, said the country is satisfied with the progress achieved by the bloc and wants to continue using it to address the country’s triple challenges of poverty, unemployment and inequality.

Malcomson said BRICS will assist the industrialization process in South Africa and the whole African continent by supporting infrastructure, investment facilitation and an upgrade of the manufacturing sector.

"We want to use BRICS to promote South South cooperation, change global architecture, respond to global challenges and bring about peace in the world," he added.

China will host the 2017 BRICS Summit in September as the current chair.

The bloc will discuss global economic growth, promote cooperation and development then.

Noting that BRICS members, namely, Brazil, Russia, India, China and South Africa, have coordinated and cooperated in multilateral global bodies over major global issues such as climate change, Malcomson said the bloc will always remain relevant to global affairs.
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South African experts say BRICS relevant to tackling global challenges

PRETORIA South Africa (Xinhua) -- BRICS is relevant to tackling various local and global challenges, experts attending a seminar held here said Thursday.

The event, co-organized by the South African BRICS Think Tank (SABTT), Institute for Global Dialogue (IGD) and the University of South Africa in Pretoria, features topics such as the future of BRICS amid changing global dynamics.

IGD Executive Director Philani Mthembu said BRICS is relevant to global affairs, especially at a time of increasing uncertainties.

For BRICS to be sustainable, it has to expand beyond the economic sphere to include exchanges between think tanks, businesses and people-to -people communication, he said.

"BRICS will remain relevant and will not fizzle out.

"The onus is on us to sustain the relationship.

"The government has laid the foundation and it’s an opportunity for us to capitalize on this strategic relationship...

"Let us not be distracted by many interpretations from the North," said Mthembu.

He said BRICS should use the current uncertainties to make the bloc stronger.

South Africa has access to both the Indian Ocean and the Atlantic Ocean and can use that to its advantage in BRICS, he added.

Ashraf Patel, a researcher with SABTT, said there are potential beneficiaries in the New development Bank, a multilateral development bank established by the BRICS members, since Breton Wood Institutions like the World Bank and the IMF "were operating like merchant banks and did not serve the purpose they were established for."

"BRICS have a bright future and will remain relevant. It is relevant as a counter-balance force.

"South Africa must articulate more clearly its policy in partnership with BRICS countries and no in competition with them," said Patel.

Serges Djoyou Kamga from Thabo Mbeki Leadership Institute echoed the idea that BRICS is relevant to correcting the imbalances in the financial and multilateral institutions.

"BRICS is relevant because we all need it.

"It should be used to eradicate poverty, and economic development.

"If BRICS in all these meetings forgets people on the ground it will become irrelevant," he said.
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Former national defence force member arrested for army base robbery

CAPE TOWN South Africa(Xinhua) -- A former South African National Defence Force (SANDF) member was arrested on Thursday for an army base robbery that rocked the country earlier this month, police said.

The 40-year-old man was arrested in Khayelitsha, Cape Town, the South African Police Service (SAPS) said.

The man, whose name was being withheld pending further investigation, was among the men who robbed the Khayelitsha Military Base in Cape Town on April 14, the SAPS said.

In an intelligence-led operation, police pounced on the suspect at an identified location in Khayelitsha early this morning, the SAPS said.

"Our detectives are currently questioning the man," Captain FC van Wyk said.

During the armed robbery at 9 South African Infantry (SAI) base in Khayelitsha, five armed robbers overpowered guards and five soldiers, stealing a number of rifles and ammunition. The robbers reportedly forced the guards inside the base and overpowered another five soldiers in an armoury guard room.

Parliament’s Portfolio Committee on Police commended the swift arrest of the man in a joint operation between the SAPS and the Directorate for Priority Crime Investigation (DPCI), also known as the Hawks.

"The speed with which the police and Hawks moved in apprehending the alleged perpetrators of these serious crimes is commendable. We hope this will send out a strong message that the country does not take kindly to any form of crime," said Committee Chairperson Francois Beukman.

Beukman called on community members to continue assisting police in the fight against crime by informing their nearest police station of any criminal activities taking place in their respective neighborhoods.
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SEE ALSO:

International rating agency explain South African 'downgrade'

South Africa not to nationalize banks assure Finance Ministry

FOCUS: South Africans take steps to avoid further Downgrade

South Africa President Zuma rejects call for him to step down

             

 

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