Nicola Mawson
South Africa must ensure that competent people are running the country to enable growth, while also bringing in the private sector to tackle infrastructure issues that were a drain on the fiscus.
This was said Saki Zamxaka, Group CEO of the Gauteng Growth and Development Agency last week at the 11th annual SA-EU CEO Dialogue on Southern Africa hosted by The European House - Ambrosetti.
Zamxaka said he had challenged colleagues in government to create a $1 trillion (R18 trillion) economy, from $400 billion, in South Africa. However, that would mean growing gross domestic product (GDP) to 5% each year to reach that target in the next two decades, or 10% per annum to reach that target in the next 10 years.
“Now there’s a quote I like by Henry Ford that whether you believe you can, or you can't, you are right. And I think the point about what growth we can achieve is dependent on the choices that we make as a country,” Zamxaka said.
To get the economy moving, South Africa needed to have “competent people running the economy,” Zamxaka said.
More fundamentally, he said it was becoming clearer that the fiscus cannot afford to have government do “everything” from building houses through to energy, water, and logistics infrastructure.
Zamxaka said South Africa’s government was starting to realise that it cannot do everything on its own. This, he said, was where public-private partnerships (PPP) come to the fore.
“Not the long, convoluted, ones, but where there is private sector participation, bringing something to the table. And I think that’s where a lot of opportunities are going to be in South Africa,” said Zamxaka.
Government, Zamxaka said, could leverage historical assets to participate in projects and has the capacity to provide licenses or concessions and secure revenue out of such a plan.
Zamxaka said less reliance on the National Treasury was what will allow investment into the economy. He said the government did not have the money to do everything, and other players were needed to help improve infrastructure, yet in a way that was fair and ensured that the state did not overpay.
“The reality is just simply that we're going to need a lot more investments into the economy coming from the private sector in areas which may traditionally have been [from] government,” he said.
Zamxaka noted that investment as a percentage of GDP in South Africa was less than 15% and needed to be more than 25% for there to be growth.
“So, all we are doing is practically to maintain the infrastructure that we have. And there is money, but you know, we talk about, let's say, investment in energy and people think PPP projects take years to get off the ground,” he said.
“So, we’ve got to look at more creative ways of doing it. You see it happening already with Transnet. So, it’s not a conversation about a minimalist State or privatisation.”
Jacko Maree, deputy chairman of Standard Bank, noted that he and former Finance Minister Trevor Manuel, who is currently Old Mutual chairman, had been on investment envoys trying to attract around R1trln into the economy over five years.
Maree said the figure that Zamxaka was suggesting in terms of a percentage to GDP was “almost the entire target we had for five years”.
He added that this would be a “dramatic” increase and would require huge commitment and “liberalisation of policies” to get the private sector to invest, which it would only do if it could make a profit”.
Resolving infrastructural issues that led to, for examples, delays in moving containers, would make South Africa “more inviting to prospective foreign direct investors,” added Manuel.