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UCT Graduate School of Business

Erwin declares exciting times ahead for SA economy

Wed, 15 Nov 2006 15:00

Erwin outlined government plans for infrastructure spending over the next three years but cautioned that there are key challenges - including the lack of managerial know-how and skills - that the country will have to overcome if it is to reap the benefits of increased spending.

In the 2006 Budget, government announced that it expected to spend about R370 billion on infrastructure over a three-year period. And in the October mid-term budget, Trevor Manuel added that this was set to grow by about 15% a year, to reach about R150 billion a year by 2010.

According to Erwin, the bulk of that expenditure will be in three major areas: power capacity, transport and telecommunications, and, will take place across all three tiers of government – local, provincial and national. Investments will range from smaller projects at local level such as building roads or clinics to major projects such as constructing the Pebble Bed Modular Reactor (PBMR) demonstration plant and developing significant broadband capacity in the country.

“The impact of this investment on the relevant sectors is big. It represents gigantically exciting possibilities for the country economically,” said Erwin.

Erwin urged business to familiarise themselves with the details of government plans so that they could themselves plan accordingly and play their part in the anticipated growth.

“When looking at what government is going to spend and what the private sector might do in its turn – you can't just look at the headlines- you have to look deeper,” said Erwin. “The information is there. South Africa is very transparent. We now have detailed plans for up to three years ahead which the private sector can access. We have to break the habit of thinking government is something strange and only business does things right,” he said.

In moving forward, Erwin said that both business and government would need to bear in mind that capital equipment is rapidly becoming more expensive as resources are in short supply and that this, if not managed correctly, could derail planned investments.

Lack of skills and capacity – particularly at managerial level – also poses a challenge and remains one of the major stumbling blocks to economic growth.

Erwin said that the South African business community in particular has a significant role to play in skills development.

“It is not government's role to train people,” he said. “That is business' role. Government needs to provide the conditions to enable that training, but ultimately the responsibility must rest with business,” he said.

“We need a mindshift. It is crucial that every CEO understands the importance of training and train for the future.

“It’s time to wake up and do things. What an exciting time! Yes we have got problems, but really this is the time for movement and negative mindsets will come in second,” he said.