S. Africa’s manufacturing sector ‘coping’: Gordhan

Finance Minister Pravin Gordhan said yesterday.
“Over the past six to nine months it has risen, but it faces many pressures,” Gordhan told reporters in Johannesburg. “They seem to be coping but government needs to do more to support it.”
Gordhan said the main challenges for the sector, which accounts for 16 percent of output in Africa’s largest economy, stemmed from the strength of the rand and the impact of the eurozone debt crisis on European economic growth.
One third of South Africa’s exports are to Europe. Data released this week showed that growth in manufacturing output quickened slightly to 0,6 percent year-on-year in volume terms in May, compared with 0,2 percent in April.
However, analysts said the expansion remained relatively sluggish after a 2009 recession, and backed the case for the central bank delaying the start of monetary tightening.
Meanwhile, the nationalisation of South Africa’s mines needs to be debated and not dismissed, the head of Africa’s top gold miner said yesterday as he warned about the damage such move could have on the country’s economy.
In a letter published in Business Day financial daily, Mark Cutifani, the chief executive officer of AngloGold Ashanti, said the push for nationalisation of South Africa’s mines, led by the Youth League of the ruling African National Congress, was motivated by “something else” than a call for greater social change.
“Surely nationalisation cannot mean what it might be taken literally to mean: the acquisition by the state, with or without compensation, of all the country’s mining assets,” he wrote.
“If compensation is paid, it would destroy South Africa’s fiscal stability.”
If companies were not compensated, it would destroy the finances of many average South Africans who would had invested in companies either directly or via pension funds.
Much of the political impetus behind Youth League leader Julius Malema stems from the failure of post-apartheid affirmative action, or “empowerment”, to spread wealth and control of the economy beyond whites and a small black elite.
Malema’s rhetoric about nationalisation and seizure of white-owned farms has unsettled domestic and international investors.
Cutifani said that while the industry may have failed to meet some of the transformation targets and more needed to be done, much had been achieved to spread wealth and benefit previously disadvantaged black South Africans.
He said he supported the state-owned mining company created earlier this year, which some said should be the extent of state involvement in the industry.
“The state-owned mining company offers further opportunities. We offer all reasonable support,” he said. – Reuters.