Pravin Gordhan rethinks economic transformation

Finance Minister Pravin Gordhan

In order to meet the ambitious target of developing the overall economy by seven percent per annum, Finance Minister Pravin Gordhan suggests the country will need to redefine its economic transformation strategy.

“All of us would need to redefine economic transformation. We have been in simple terms mimicking precisely what the previous elite did … all of us choose to wear precisely the same attire and drive precisely the same cars. Where is the social conscience of the new elite?” asked Gordhan, who was addressing the Investment Forum of the Association of Black Securities and Investment Professionals Student Chapter (ABSIP) at Wits University.

During the past year, the minister explained that South Africa’s GDP required a growth of seven percent to be able to really transform the overall economy. On Monday, the minister for a second time remarked that the South African economy simply cannot afford to grow somewhere between three and five percent.

“All of us need to develop a different model of growth,” he mentioned, adding the fact that this was at the same time necessary to tackle economic inequality.

 


“It truly is crucial to set in place the appropriate aspirations for South Africa as well as ensure that our economy ends up being globally competitive,” he explained to the two-day forum.

Investment was in fact of utmost importance for the purpose of economic growth and development, Gordhan suggested, adding the fact that the younger generation had a vital role to play.

“We have reached a phase in our development precisely where all of us need to make clear what we need to do,” he was quoted saying at the talks titled “Awakening Investment Potential.”

Gordhan explained that the modern world was in fact transforming and in addition beneficiaries should not necessarily simply be the elite. To be able to establish an environment for investment, a county’s savings at the same time performed a function, said the minister.

“The particular challenge is whether or not a country possesses a sufficient amount of savings … You will find significant imbalances of investment, savings and consumption. The real question is how you would rebalance. We now have a significant savings gap; we do not save adequate amounts in South Africa.”


Concerning the issue of “hot” capital inflows into South Africa, the minister explained these types of inflows had appreciated the local currency and in addition created a certain amount of instability.

There was clearly also a requirement to be able to develop an environment in which small business would most likely prosper.

Relating to the debate of nationalising the nation’s mines, Gordhan said: “It is simply not our policy as South Africa. We certainly have a vital contribution to make to develop the appropriate climate when it comes to economic growth. We will need to do what it requires to create the suitable confidence in our overall economy.”

Source: BuaNews, africa.ibtimes.com, bbc.co.uk

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