South Africa will avoid a full-blown recession because the agriculture sector is set to recover. “All is not lost,” President Cyril Ramaphosa said last night in Hangzhou in China as he wrapped up his investment drive following the Forum on China-Africa Cooperation summit earlier in the week.
Ramaphosa said at a media briefing just moments before his departure back to Johannesburg that the technical recession recorded in South Africa this week as a result of two successive quarters of economic contraction in the first half of this year was “disappointing but not disheartening”.
“Most of it was largely driven by agriculture due to late rains and late harvest and I’m sure that agriculture will recover so all is not lost.”
We must be able to ride these waves because they will keep coming. Whoever is president will find that they have to ride these waves
But the government was also not blind to challenges facing the country, he said, adding that his administration was “finalising a stimulus package that would inject impetus and growth in our economy at a number of levels”.
“We are confident that it will lift the mood in the country, the investment prospects and our gross domestic product growth.”
Ramaphosa said that South Africa, like any other country, would frequently go through “cycles of upward and downward movements [because] we are susceptible to what is happening in the world”.
He cited as examples the negative impact of interest hikes in the US on the global flight of capital, as well as the impact of the strengthening dollar on fuel prices. He said that such events were not always related to government policy.
“We must be able to ride these waves because they will keep coming. Whoever is president will find that they have to ride these waves. All we need to do is focus on the medium and long term because sometimes the short term will make us miss our steps.”
we go home filled with ideas and money for our economy
He said that on a long-term basis “we are putting in place policy positions and mechanisms that are able to stand us in good stead. We are doing everything we can to take away the constraints on investments”.
He said that investors both locally and offshore wanted policy certainty and consistency and in the absence of that they have been holding their funds in reserves “and once we clear up the policy space more investments will take place”.
“All these things happening are transitional and will pass as everything gets consolidated and we see growth in our economy,” said Ramaphosa, who took over the reins from former President Jacob Zuma before his term was expected to end sometime next year before the upcoming general elections.
“All we need to do as a nation is to keep our cool heads and carry one with the work that we have been doing and not be disheartened. This is the time when we should be pulling together,” he said.
He said his government would soon meet with business leaders across all sectors “to rally everyone together so that we pull our country out of this situation”.
“This is not the first time South Africa faces a situation like this and we pulled through so we will pull through again,” said Ramaphosa.
He said that the drive for local beneficiation was among the key discussions during the Forum on China-Africa Cooperation summit in Beijing on Monday and Tuesday, where African heads of state from 53 countries met with their China counterpart, Xi Jinping, to strengthen trade relations and cooperation.
All is not lost... South Africa's economy will rally
“The issue of beneficiation has been topical for a very long time and raised sharply in government planning. It became an important issues and handled in a positive way into our discussions with the Chinese.”
He said the Chinese were “sensitive to the trade imbalance in that we export raw material to them and import value added goods”. One area where we can balance the trade was through beneficiation of our raw materials, said Ramaphosa.
South Africa aimed for mutual investments where Chinese companies could put money into beneficiation opportunities and boost our import of more finished products to China.
He said that South Africa had homework – to “identify the type of finished products were it envisions that the Chinese could move in”.
In Hangzhou earlier on Wednesday Ramaphosa met Chinese billionaire and founder of global ecommerce giant Alibaba Group, Jack Ma, at his headquarters, where they discussed a programme to train young people in SA on e-commerce opportunities particularly in rural areas.
South Africa lobbied Ma to get involved in setting up a training centre in SA and Ramaphosa said “he is considering it favourably”.
He wanted more South African small businesses to use e-commerce to sell their products and expected that it would “lead to the creation of more small businesses like logistics and warehousing, where women and young people could play a great role and that for me is the main attraction”.
City Press learnt that the meeting, scheduled for next Thursday in Cape Town, would involve top business leaders and organised business formations.
“In the end we would also like an Alibaba type of platform in SA were small business could trade.”
Ramaphosa said his week long trip to China was an overall success even more than he had hoped as “we go home filled with ideas and money for our economy”.