Africa Economy: President Zuma vows to market S. Africa as preferred destination for investments

South African President Jacob Zuma vowed Thursday to market the country as a preferred destination for investments despite a series of challenges.

South Africa may face challenges, but its positive attributes far outweigh those challenges, Zuma said in his State of the Nationa Address (SONA) in Parliament.

"It is about doing things differently and also acting on what may not have been acted upon quickly before," Zuma said.

This requires a common narrative from all of South Africans as business, labour and government, he added.

"If there are any disagreements or problems between us, we should solve them before they escalate. This is necessary for the common good of our country," Zuma said.

South Africa's economy has been facing difficulties since the financial crisis in 2008, said Zuma.

"Our reality right now is that global growth still remains muted. Financial markets have become volatile. Currencies of emerging markets have become weak and they fluctuate widely," said the president.

The prices of gold, platinum, coal and other minerals that South Africa sells to the rest of the world have dropped significantly and continue to be low, he said.

Zuma acknowledged that South Africa would not be able to achieve the five-percent growth by 2019, a target set by the government before.

"Given the economic conditions I have painted earlier on, it is clear that we will not achieve that growth target at the time we had hoped to achieve it.

"The tough global and domestic conditions should propel us to redouble our efforts, working together as all sectors. In this regard, it is important to act decisively to remove domestic constraints to growth," said the president.

The IMF and the World Bank predict that the South African economy will grow by less than one percent this year. The lower economic growth outcomes and outlook suggest that revenue collection will be lower than previously expected.

Importantly, South Africa seems to be at risk of losing its investment grade status from ratings agencies. If that happens, it will become more expensive for the country to borrow money from abroad to finance its programmes of building a better life for all especially the poor, Zuma said.

International rating agency Standard & Poor's has warned that any deviation from the South African fiscal policy could lead to a credit downgrade.

After downgrading by Fitch, Standard & Poor's and Moody's, South Africa's credit rating stands at BBB- and Baa3 (a rating equivalent), respectively. That means the country is at very real risk of becoming a junk country, which has substantial implications for investment

"The situation requires an effective turnaround plan from us," Zuma said.

The government is developing a One Stop Shop/Invest SA initiative to signal that South Africa is truly open for business, said Zuma.

"We will fast-track the implementation of this service, in partnership with the private sector," he said.

Zuma said South Africa is proud of its Top 10 ranking in the World Economic Forum competitiveness report with respect to financial services.

"Maintaining and indeed improving our ranking is important to our competitiveness as a country," he said.

It is also fundamental to South Africa's ambition to become a financial centre for Africa, Zuma said.

The banks, through the Banking Association of South Africa, are to launch a project aimed at establishing a centre of excellence for financial services and leadership training, according to Zuma.

"This will ensure that as a country we can attract, nurture, develop and retain the best talent in financial services in our country and across our continent," he said. Endit