Minister Enoch Godongwana: Pre-WEF breakfast engagement with business

12 January 2023

Honourable Ministers, Esteemed Colleagues

Programme Director, Ms Cleo Mosana

Ladies and Gentlemen

Introduction

Thank you for making the time to meet with us today to collectively prepare for Davos.

This gathering gives us an opportunity, as Team South Africa, to construct a common message…about our country… that we will take to the international business community and other global investors at Davos.

The theme for this year’s Annual Meeting…Cooperation in a Fragmented World… aptly captures the combination of economic, geo-political and social challenges we face.

Our economic challenges here at home are being compounded by these risks.

In the face of these multi-pronged challenges, this Government has been clear that rebuilding investor confidence, and mobilising investment, is a priority for growing our economy.

Fortunately…we are heading to Davos with numerous and encouraging examples, of the concrete reforms that we have taken, to improve the business environment.

Through Operation Vulindlela, we are fast tracking reforms aimed at achieving energy security, speeding-up infrastructure development, food security, creating employment and the green transition.

For these reforms to take root, your support, as well that of other stakeholders in the economy, is critical.

Global Outlook

Ladies and Gentlemen, the IMF recently painted a dark outlook for the global economy. It expects one-third of the global economy to be in recession in 2023.

The three biggest economies…China, the EU, and the U.S…are all slowing down simultaneously. This comes as the war in Ukraine is still ongoing, food and energy prices are rising…higher interest rates…and the spread of COVID-19, in China, is weighing on the global economy.

For emerging market and developing economies, the outlook is equally grim. Higher interest rates, and the appreciation of the US Dollar, pose a challenge particularly for countries with high levels of debt.

Domestic Outlook

On the local front, the last few years have been challenging. Economic growth has hovered at very low levels, and business confidence and investment have been subdued.

Economic activity has also been disrupted by a significant increase in the frequency and intensity of load shedding.

Despite these challenges, real GDP increased by 1.6 per cent in the third quarter of 2022 – well above market expectations. The economy is now back to pre-pandemic levels, with real GDP 1.2 per cent higher than pre-pandemic levels.

However, the scarring impact of the pandemic on employment and investment…both of which remain well below pre-pandemic levels…is expected to weigh on growth over the medium term.

The National Treasury projects that real GDP growth will average 1.7 per cent between 2022 and 2025, which is downwardly revised from 1.8 per cent in the 2022 Budget.

Despite this out sobering outlook…with the right level of investment…it can be turned into an opportunity for all.

The common message for WEF

The common message we are taking to the Annual Meeting is that South Africa remains open for investment, and committed to creating a conducive environment for business.

We are committed to translating policy plans into action, and carrying out the implementation of structural reforms.

We remain a gateway for international investors into Africa.

The African Continental Free Trade Area provides great opportunities for South African businesses to expand and grow their business in Africa, and for international businesses to partner with their local counterparts to increase their presence on the continent.

Loadshedding

As the Government, we are aware of the challenges Eskom faces. An unstable electricity supply remains one of the biggest barriers to economic growth and it disturbs the lives of all South Africans. In addition, the inefficiencies in the logistics sector, as well as criminal activity, are serious obstacles to growth and doing business and must receive our urgent attention.

Ending blackouts and solving the energy crisis remains among the Government’s top priorities.

We are committed to aggressively implementing new and existing measures to reduce the frequency and severity of load-shedding, and ultimately ending it.

Conclusion

In conclusion, let me thank the private sector for being a willing partner in all the initiatives of this government to grow our economy.

As members of Team South Africa, we look upon you to partner, support, invest and collaborate with Government to ensure that domestically, we are all stakeholders for an inclusive and sustainable economy.

Marketing our country during WEF Davos is another great opportunity for our collaboration.

I look forward to engaging with you, as our Ambassadors in Davos.

Thank you.

Issued by National Treasury, 12 January 2023