Deloitte Gearing for Growth seminars; also featuring the Future of the Western Cape economy

Deloitte Gearing for Growth seminars; also featuring the Future of the Western Cape economy
19th July 2018 Comments Off on Deloitte Gearing for Growth seminars; also featuring the Future of the Western Cape economy Articles,Communications,News Leon van Wyk

Deloitte Gearing for Growth seminars; also featuring the Future of the Western Cape economy

Deloitte has recently held a number of Gearing for Growth seminars enable the sharing of intellectual capital, while proposing best practice ideas and insights to support renewed growth of the South African economy. While poverty, inequality and unemployment are key challenges in the economy, there is still disagreement surrounding the necessary steps that need to be taken to rectify these issues.

The realities of labour, capital and global competition may conspire against us achieving this recipe of inclusive growth. How do policy-makers and business combine efforts to consider and pursue the elusive trinity of (re) industrialisation, productivity and employment creation?

Outcomes of the report

South Africa’s key challenges to achieving economic development include poverty, inequality and unemployment. The balance of payment deficit, the decline in economic growth and the high increase in the unemployment rates are structural issues that need to be addressed.

Countries with high Gini coefficients (i.e. most inequality) tend to have low manufacturing value add (MVA) as a share of GDP, and the countries with higher MVA have lower Gini coefficients. This suggests that in order to reduce inequality, South Africa needs to revisit its industrial policy.

Manufacturing is often seen as mechanism for inclusive growth as it has historically been an important source of well-paying employment for workers without high education levels, allowing them to enter the middle class. However, in the future, manufacturing is unlikely to perform the same role as it has in the past.

Future of the Western Cape economy: Industry or Services?

The Western Cape (WC) is Africa’s seventh largest economy, resulting in raising SA’s growth rate and reducing unemployment. The WC is proving to be a magnet for attracting talent from across the continent and the world. The services industry makes up 75% of the WC economy (73% of the labour force) while manufacturing has decreased to 15%. Agriculture is less than 5% of the economy but shows great potential.

Most African markets are growing their GDP above 5% per annum. Africa’s population is likely to reach 2,4 billion by 2050 surpassing India and China’s population. This will increase the demand for consumer goods. In 2014, Africa became a bigger export market for the WC than Europe. Agriculture can benefit from such export potential. Seven of the WC’s top ten export products are from the agricultural sector. Food and agriculture comprises 30% of the province’s total exports.

Tourism is growing through the Cape Town Air Access Project where 1,5m extra two-way international seats have been added to passenger traffic through Cape Town International Airport.

The synergies of economic activity have seen agricultural produce being turned into agri-processing; with advances in agri-tech (e.g. use of drones in agriculture); and also in artificial intelligence through the fourth industrial revolution.

https://www2.deloitte.com/za/en/pages/deloitte-africa/articles/gearing-for-growth-achieving-the-elusive-trinity0.html?id=za:2el:3VS:4GFGS:5eng:6oth:20180615:GFGS

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Leon van Wyk The InvestGardenRoute platform has been established by Leon van Wyk, a chartered accountant by training. His experience in accounting, financial management, strategy, management, corporate finance advisory and economic development consultancy stretches over three decades.