Finance Minister Enoch Godongwana has sought to reassure investors that no matter the outcome of the current political negotiations around the formation of local governments following the municipal elections last week, local municipalities will be largely stable, with National Treasury working on policy to ensure that’s the case.
He was speaking at the 13th edition of The European House Ambrosetti (TEHA) CEO Dialogue on Southern Africa, in Melrose Arch, Johannesburg. Attendees of the meeting include business leaders, government representatives, investors as well as economists.
The main focus of the TEHA CEO Dialogue on Southern African, which has been running for 13 years, is to explore how the private sector can help to catalyse economic growth as well as finance development across the continent.
South African Presidential Investment envoy, businessman Jacko Maree lamented that South Africa had not been able to achieve the National Development Plan’s aim of an investment to GDP ratio of 30 percent to drive significant economic growth. It’s currently just below 14%.
“What drives long-term growth – it’s confidence in the future of the country concerned, it’s businesses looking to expand and capture market share and compete because the economy is interesting. It’s about entrepreneurs in that country being prepared to take risks and I’m not talking about tenderpreneurs who create no value and just add another layer of cost into the structure. Proper entrepreneurs. It’s all about investing in the future. And so, I think if you want jobs, you’ve got to have growth. If you want growth, you’ve got to have investment,” said Jacko Maree.
Investors assured of stable municipalities:
Finance Minister Enoch Godongwana sought to allay investor concerns about the country having 123 hung municipalities — meaning that no one party was able to win majority seats at the local elections. He stressed that no matter the outcome of current political negotiations to form local governments, National Treasury would be doing its part to ensure stable municipalities, adding that it would continue to use s216 of the Municipal Finance Management Act instrument to withhold funds from municipalities it deemed not to be performing well.
“We said over the MTEF, we’d be providing over a trillion rand for infrastructure. Of that, R205 billion is going to be deployed by municipalities. If those municipalities are dysfunctional, that money is not going to be used effectively. So, it’s in our interest that we have those municipalities function properly,” Godongwana explained.
The Minister added that a number of state institutions like the Development Bank of Southern Africa and Infrastructure South Africa would be working with municipalities to help capacitate them to deliver infrastructure projects and basic services more effectively.
At a broader country level in working to make South Africa more investable, the Finance Minister said progress was being made in the area of structural forms.
“So, you’ve got to make that structural reforms work; you’ve got functioning network industries, such as Eskom, such as Transnet. That’s why for instance now on the logistics side, we’re bringing in competition on rail and in the ports — those are structural reforms that are intended to make sure that we can be able to provide better services on the utilities side.”
When asked by a member of the financial asset management community whether the South African government could work to include the voices of that community in terms of financing African development at G20-level, in a similar way that broader business contributes in B20 discussions, Godongwana indicated that that was something that might be entertained, given the importance of all manner of resource mobilisation to help fund development.