South Africa’s economy
is shifting and it should
grow its agriculture and
manufacturing sectors to
benefit from global investor
interest in Africa, economist
Xhanti Payi told maritime
business leaders in Durban
recently.
Payi, lead researcher
and economist at Nascence
Advisory, who was speaking
at a Transnet Port Terminals
business breakfast, said
agriculture was a big driver
of economic growth because
the country had the “know
how” but needed to further
develop agro processing to
add value to products.
“Our economy is starting
to shift. Our mining sector is
in decline. We thought China
would continue to binge on
our resources because there
was a time in the mid-2000s
when people complained
we were not ready to export
as the world wanted these
minerals, but we didn’t have
the right infrastructure.
And now we have invested
in infrastructure except they
don’t want it anymore,” Payi
said.
“Manufacturing is starting
to regain a head because
we have got new markets
on the continent and we are
getting better at this. There
are places we need to look for
growth and the way in which
our economy is changing
means we have got to change
a few things - how we do
business, how we invest and
where we are focusing - and
clearly these two sectors are
important,” he said.
He added that mining,
despite low commodity
prices, remained an
important sector and
employer.
Payi said there was strong
global competition from
China, India, Europe and
the US for South Africa
and Africa as investment
destinations for structural
development, growth
in agriculture and food
security.
However, he said SA
needed to address its trade
deficit with China which
imposed high taxes on some
SA imports, such as wine, to
ensure it benefited from the
trade relationship.
“That is something
that needs to change
fundamentally because if
that doesn’t change we will
continue to be vulnerable,”
he said.
“We need to negotiate with
China in a way that makes us
successful - we give to them
what we do best so they give
to us what they do best,” he
said.
Payi added that the
volatile rand - which had lost
more than 20% of its value
in a year to early December
- had made it difficult for
importers and exporters to
plan for growth. He said the
government had also lost
because if it had to import,
for example R150 billion
worth of goods to roll out
its R362-billion three-year
infrastructure spend, this
would now cost 20% more
before inflation.
“It has enormous
consequences for business
and investment. People are
struggling to know what
prices they can put up or
down,” Payi said.
Positives investors found
on the continent included its
growing young population
which represented a growing
workforce and consumer
market, he added.
“In many cultures in
Europe and China the
biggest risk is everybody
is getting old. They are
spending less over time.
They are spending their
savings and naturally the
government can no longer
afford to make sure there are
enough savings to pay out
pensions so they are finding
ways to keep people at work,”
he said.
INSERT & CAPTION
Manufacturing is
starting to regain
a head because we
have got new markets
on the continent and
we are getting better
at this.
– Xhanti Payi
