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.
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.
1