President Cyril Ramaphosa’s cancellation of his trip to Davos, Switzerland, for the World Economic Forum meeting this week in the midst of SA’s burgeoning energy crisis extended his streak of missing the annual event as a sitting head of state in person for a fourth straight time.
However, business leaders said the international community was watching South Africa keenly as the government grappled with persistent load-shedding and the risk of greylisting by the Financial Action Task Force (FATF).
While Ramaphosa cancelled his attendance at Davos, finance minister Enoch Godongwana, a delegation from the National Treasury and other departments, and business leaders made their way to Swiss resort town.
And last week, a Treasury delegation led by acting director-general Ismail Momoniat travelled to Morocco to meet the FATF and brief it on the government’s interventions aimed at avoiding greylisting.
At the centre of the government’s interventions is the General Laws (Anti-Money Laundering and Fighting Terrorism Financing) Amendment Bill, which parliament passed late last year. Still, a report released in October from Business Leadership SA warned that South Africa’s chances of being greylisted were as high as 85%.
Despite multiple attempts to get the Treasury to discuss these two vital meetings, the department told Business Times it was not able to comment.
Absa welcomes the Treasury’s engagement with the Financial Action Task Force as well as the progress made in implementing the recommended FATF reforms
— Absa Group CEO Arrie Rautenbach
Absa Group CEO Arrie Rautenbach told Business Times that the representation of South Africa’s business community at WEF played a critical role in strengthening collaborative partnerships with the international community and maintaining confidence in the country.
“In addition, while immediate challenges are pressing and must be addressed, business must also stay abreast of the current significant global shifts that will inform strategies in the medium to long term to ensure that we play our role in contributing to accelerated, inclusive and sustainable economic growth,” said Rautenbach.
Rautenbach welcomed the Treasury’s participation at WEF, saying now was not the time for South Africa to retreat from the international community, especially considering the greylisting risk pertains to international standards of financial security.
“Absa welcomes the Treasury’s engagement with the Financial Action Task Force as well as the progress made in implementing the recommended FATF reforms, which are intended to strengthen measures to combat money laundering, terrorist financing and other similar threats to the financial system,” Rautenbach said.
At the annual WEF breakfast meeting of the African heads of state, Godongwana said that in the face of the global economy’s multipronged challenges, the government would work to rebuild investor confidence, mobilise investment and grow the economy.
“Through Operation Vulindlela, we are fast-tracking reforms aimed at achieving energy security, speeding up infrastructure development, food security, employment creation and the green transition,” said Godongwana.
A key objective of the meeting was to leverage the production potential of African economies through the Africa Continental Free Trade Area, and for South Africa to grow the presence of its businesses in the region.
Godongwana said the outlook for developing economies was as grim as that for larger economies, with high interest rates and debt.
“On the local front, the past few years have been challenging. Economic growth has hovered at very low levels, and business confidence and investment have been subdued. Economic activity has been disrupted by a significant increase in the frequency and intensity of load-shedding.
“Despite these challenges, real GDP increased by 1.6% in the third quarter of 2022 — well above market expectations. The economy is now back to pre-pandemic levels, with real GDP 1.2% higher than it was pre-pandemic.”
The minister said an unstable electricity supply remained a barrier to economic growth, and ending blackouts and solving the energy crisis remained priorities.
Godongwana told Reuters: “Eventually, in the next 12-18 months, we will be able to say load-shedding is a thing of the past. That is the target.”
In another blunt account, Bloomberg reported that Reserve Bank governor Lesetja Kganyago had said South Africa’s economy would continue to underperform and unemployment would continue to remain high if the government did not reform education so it equips pupils to be productive in the modern economy.
Kganyago’s remarks came after mineral resources & energy minister and ANC national chair Gwede Mantashe said the governing party agreed that the central bank’s mandate should be changed to include job creation.
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