Go broad...

Speaking at a conference in Gauteng recently about broad-based empowerment, Dr Iraj Abedian, from Pan African Investment and Research Services, says that BEE is not a luxury for the country – it is a necessity.

He was discussing the global perspective of the impact of empowerment on the local economy, saying that there was a level of sceptism, and this was understandable.

Abedian maintains that the more effective and broad-based BEE is, the lower the risk to the investment environment, although poverty alleviation remains the over-arching challenge to the country, coupled with high levels of unemployment.

Employment is critical to the empowerment drive, and while our structural unemployment remains at such high levels the country is hamstrung. In spite of this the country’s GDP is rising, despite the fact that 30% of the possible working population is not contributing.

Added to which the country’s global relative risk has decline steadily over the last five years. The SA government bonds basis points spread has dropped from 400bps to 90bps in five years. Abedian says that currently SA government paper is oversubscribed.

South Africa is one of the few countries has consistent growth over the last 10 years, in spite of the various crises. But we haven’t finished the job yet, says Abedian.

The top three challenges remain education and human resource development, effective local government and the optimal value of the rand and monetary policy.

To go with this are three huge opportunities: nation building – given our diversity, NEPAD and sustainable development in Africa, coupled with the geo political and geological advantages we have.

He does maintain that the country has come some way to developing a broad-based middle class, and it will enhance the economic growth of the country and elongate the economic growth cycle, although there is still a huge amount of work needed on the micro-institutional level.