June 21, 2006
By Anish Abraham
A BUSINESS barometer reflecting economic progress across Gauteng - an exciting first for South Africa - has just been launched.
"It represents another first for our province as the country's first provincial business barometer, which reflects a wide range of economic factors," said Premier Mbhazima Shilowa at the launch of the Gauteng Business Barometer in Johannesburg on 20 June.
"It will give us an important insight into the workings of the Gauteng economy and will be of value to both the private and public sector," he added.
Addressing the guests at the launch, Shilowa said that the Gauteng Business Barometer reflected one of the main strengths of the province - its ability to innovate and to apply knowledge to create new products and services.
He remarked that the sustained high levels of economic growth in Gauteng were largely attributable to policies and strategies implemented by government.
"Our track record of consistent delivery and steady progress in fulfilling our commitments is unquestionable."
As part of its Human Resource Strategy, the provincial government is in the process of creating a database of required skills in Gauteng, which will be based on information supplied by various companies. Lists of necessary skills will then be provided to tertiary education institutions.
The province has also started shifting away from its traditional income sources of extraction and export of primary products towards a tertiary sector economy. According to Stats SA, primary industries as a percentage of gross domestic product dropped from 4,6% to 2,3% between 1996 and 2004, while the tertiary sector increased from 58,4% to 62,3%.
"Much of this is attributable to the growth in finance, real estate and business services, which increased from 16,1% to 21,4%," Shilowa said.
The Gauteng Business Barometer
According to T-Sec economist Mike Schussler, the barometer is a measure of economic growth and the business mood in the province. This is achieved through measuring business activity as well as economic stresses, such as unemployment and inflation, on a monthly basis.
Created by Gauteng Business, a fortnightly provincial newspaper focusing on SMEs, Schussler and Standard Bank, the barometer uses the Business Activity Index and the Economic Stress Index as main sources.
Measuring Gauteng's eoncomic success: Standard Bank's chief economist Goolam Ballim, Gauteng's premier Mbhazima Shilowa, Mike Schussler, economist at T-Sec; and Roy Ross, director of distribution and wealth at Standard Bank
The barometer takes into account several factors, including property transfers, new vehicle sales, fuel sales, electricity consumption, volume of share trades on the JSE, unemployment statistics, tourism data and civil debt judgments.
Apart from the comprehensive barometer, industry-specific indices will also be published, including mining, manufacturing, construction, services, wholesale and retail, finance, real estate and business services, and transport.
The barometer's present graph illustrates that the province is entering a phase of consolidation following tremendous growth since early 2003. In May, the barometer registered at 149 points, a 5,4% drop from an all-time high of 158 points recorded in February.
"Overall, the index has dropped from the highs of February, but Gauteng's economy remains strong and should still experience excellent growth in 2006," Schussler said.
Putting Gauteng's importance into context, Standard Bank chief economist Goolam Ballim said it was the largest province in terms of wealth creation, almost twice the size of its two closest competitors - KwaZulu Natal and the Western Cape.
"Gauteng is knowledge-centric, technology-centric and is at the forefront of the South African economy," Ballim added.
He said that while the JSE was currently in decline, the value of wealth created over the past one and a half years, at almost R1-trillion, was extraordinary, while credit demand was also at record levels.
Confidence in the country has also been steadily increasing, with foreigners being net buyers of R150-billion worth of local stocks since January 2004, as opposed to being net buyers of R100-billion worth of stocks over the preceding five-year period.
"This has lead to rand strength, which also helps reduce inflation. Of course these investments can be retracted, but we do not foresee any dire situations," he said.
Both Ballim and Schussler were optimistic that Gauteng's target of achieving an economic growth rate of 8% by 2014 was achievable, though much depended on investment in productive assets.
The province aims to achieve this through targeting specific growth sectors, such as smart industries, including Information Communication Technology and pharmaceuticals; trade and services, including finance and film; tourism; manufacturing, including steel related industries, automotive parts and components, beer and malt; and agriculture, including agro-processing and bio-technology.
A stimulus to the process is the government's R370-billion infrastructure spending programme, and Ballim said public sector investment will start to exceed private sector investment for the first time since the 1960s.
"We have to be optimistic. Currently there is lot of investment into our airports, roads and other infrastructure. I think the challenge will not be as to whether we can reach that growth rate, but rather to sustain it," said Shilowa.
Commending the work already done, the premier also called for greater co-operation between the public and private sectors, especially in the area of public-private partnerships.
Using the Maropeng Centre at the Cradle of Humankind as an example, he said his government was more committed to creating such nodes of activity, before handing it over to the private sector.
"We also have the Gautrain. It is no more a matter of trying to get the private sector to invest; it is about what level the private sector should be involved in the projects," he said.
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