4 August 2014
South Africa’s prosperity is increasingly intertwined with that of the continent as a whole, Finance Minister Nhlanhla Nene said on Friday, noting that the rest of Africa accounted for over 15% of South Africa’s dividend receipts and over 20% of its exports in 2013.
“Indeed, the narrowing of the current account deficit is due, in part, to the strong growth in dividends that our dynamic companies are receiving from their investments around the world, but particularly Africa,” Nene said during a lecture at Fort Hare University in the Eastern Cape.
With economic growth in sub-Saharan Africa expected to exceed 6% in 2014, and with Africa’s share of global foreign investment rising, South Africa is well positioned as a hub for international companies looking to expand into Africa.
Nene said the government supported the expansion of South African firms into the rest of Africa, as this bolstered the continent’s growth prospects and fed back into the country. “It will provide tax revenue, profits and dividends into the receiving country and to South Africa.”
He said South Africa offered a number of natural advantages as an African hub, including advanced financial, regulatory, tax and accounting standards, a modern telecommunications network, extensive economic infrastructure, and direct air connections to most major cities on the continent and abroad.
While Nigeria’s economy had overtaken South Africa’s in overall size terms, South Africa remained far ahead in terms of per capita gross domestic droduct (GDP), or GDP relative to size of population.
“Their success is fantastic for us. It brings new trade opportunities for our firms, opens up new markets, and contributes to the growth of the African economy.”
To continue to attract big firms to the country, “we must take clear steps to improve the investment climate,” Nene said, adding the National Development Plan (NDP) was clear in its vision of modernising the country’s tax policy, creating more competition for goods and services, and establishing policy certainty and investment protection.
“South Africa must stay ahead. We must work harder and smarter. We cannot rely on the star companies of yesterday if we want to win tomorrow,” Nene said.
“Our compatriots in Africa have raised their game. They are implementing economic reforms, building infrastructure, educating their people, and building winning nations.”