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SA's economic growth linked to regional economy

by Michael Appel
on 22 Apr 2008
BuaNews Online
BuaNews Online

The success of South Africa's economy is interlinked with that of the region, in particular the Southern African Development Community's (SADCs) economy.

"Poor neighbours work against the principle of regional integration, and it undermines stability in both South Africa and the idea of regional integration within SADC," said Chief Executive Officer of Business Unity South Africa (BUSA) Jerry Vilakazi.

"Also, political stability is a key fundamental for economic growth and stability," said Mr Vilakazi on Tuesday.

Therefore, BUSA has called for the immediate release of outstanding results in Zimbabwe's presidential election that took place on 29 March 2008.

The longer the presidential election's results are withheld, the more South Africa's economy is being undermined and the more the almost non-existent economy of Zimbabwe is being damaged, he said.

"In the long run, the situation in Zimbabwe is undermining the integration of regional organisations, SADC in particular," said the CEO.

The potential of the SADC region in terms of trade and market opportunity is immense, with SADC possessing a market of some 300 million people, compared to South Africa's 40 million plus.

Therefore, Mr Vilakazi said, when BUSA talks about a market, they are not just talking about the 45 million market in South Africa, but the 300 million people in the region.

The key to growing the economy of the region he said is to ensure there is a political and investment climate conducive for big business, and Small Medium and Micro Enterprises (SMMEs) in particular.

Mr Vilakzi said SMMEs are the key to economic growth in the 21st Century, adding that "the development of a thriving SMMEs sector in our economy is one of the key focus areas of BUSA."

With regard to the proposed electricity tariff increase by the state electricity utility, Eskom, he said BUSA has made a submission to the National Energy Regulator of South Africa (Nersa), to ask them to allow greater time for submissions from organisations and the public.

"This electricity crisis has become a national crisis," said Mr Vilakazi, adding he hopes Nersa will realise that they must allow sufficient time for consultation before going ahead with a decision.

According to Eskom, the proposed tariff hike is required to fuel the power utility's capital expenditure (Capex) projects to help them finance additional power stations, helping to relieve electricity supply constraints.

Economists widely believe, the proposed electricity tariff increase, coupled with the effects of load-shedding and the weakening Rand will further fuel inflationary pressures in the economy.

BUSA Director for Economic Policy Simi Siwisa told reporters: "we are concerned that the interest rate hike [used by the Reserve Bank] as an instrument to target inflation is not working because consumer spending has slowed, but inflation continues to rise."

With regard to the long weekend next week on 2 May 2008, Mr Vilakazi said BUSA is concerned about the impact the two day working week will have on the economy, calling next week a "dead week" for business. - BuaNews


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