SA enters era of growth

Gouws says: "We have entered a new era of lower inflation and higher economic growth. Growth is being driven by fixed investment which is one of the most positive indicators of a healthy economy."

Business confidence, he claimed, was at a 23-year high: "We are seeing the longest recorded economic upswing that will move along a fairly horizontal band underpinning the private sector investment we are experiencing."

The data also indicates that in terms of job creation, South Africa is breaking into positive terrain.
Gouws notes that the strong growth rate displayed by consumer spending would slow down during 2006: "The consumer confidence index indicates historic highs, and it is this confidence that is driving spending."

He cautioned, however, that much of this spending is funded by credit and will be one of the factors expected to slow down consumer spending.

Interest rates might possibly experience a slight rise in 2006: "We do not expect the rand to rise more and there will be no repeat of major import price windfalls."

The recent strength of the Rand is attributed to the Dollar (US) weakness and will continue to level out with considerably less volatility Gouws claims.

Global oil prices and a more competitive Rand would lead to higher domestic fuel prices. However he stressed that the Reserve Bank had stated clearly that it was committed to ensure that gains against inflation would not be forfeited and that its monetary policy would not allow fuel prices to develop into an inflationary spiral.

Other factors to consider were rising building costs - at 17% considerably above average inflation of 4,8% - and above inflation wage settlements: "These could percolate through to other aspects of the economy."

This positive economic growth could be further promoted by positive BEE policies, according to Dr Danisa Baloyi, business development specialist: "There are compelling arguments as well as strong business cases for BEE - we need to produce skilled, informed citizens who are productive and able to afford goods and services offered by the retail sector.

"Skills development is one of the pillars of BEE since an empowered people is a productive people. More effort needs to be focused here."

She continued that equity was a big issue for debate since people could not understand why an owner of a business should give up equity. She said that it was a business imperative and necessary for the economy to reflect demographics: "Ownership must broaden to widen access to opportunities and resources."

Productivity would remain at a low level if people within an organisation felt that they did not enjoy equal opportunities for promotion and development: "Communication is also important to promote excellence. People should be able to advance up the ladder regardless of race or gender. This puts the stamp of meritocracy on promotion. I also believe that companies should encourage mentoring as a basis for empowerment within organisations."

Baloyi stressed the importance of enterprise development, saying that South Africa would not emerge from the "two economies" mould if there were no opportunities for people to create their own wealth. She urged companies to skill entrepreneurs by, for example twinning with smaller companies to provide them with access to information, expertise and opportunities.

Baloyi also felt that companies were perhaps neglecting the impact of HIV/AIDS on business owners: "There should be programmes in place to ensure that businesses whose owners have died as a result of the disease do not fail."