Citigroup Inc. said South Africa’s economic future is at risk if companies don’t help implement a growth plan devised by an advisory panel led by former Finance Minister Trevor Manuel.
The National Development Plan sets out goals for investment in roads and rail, health, education and other services to boost growth in Africa’s biggest economy. The plan also targets cutting unemployment to 14 percent by 2020 and 6 percent by 2030, from 24.9 percent at the end of last year.
“If we don’t start rolling it out now, we’ll be severely compromised,” Donna Oosthuyse, Citigroup country officer for South Africa, said in an interview today from Johannesburg. “Business needs to step up and engage constructively and government needs to listen.”
President Jacob Zuma said in his state-of-the-nation address last month that the 20-year plan is the only way to create jobs and improve living standards. While Finance Minister Pravin Gordhan has endorsed the plan, the three biggest ratings companies all downgraded South Africa since September on concern over a slowing economy and rising spending pressures.
“There has been a need for everyone to align behind an economic policy -- the last time that happened was 2010,” said Oosthuyse, adding that South African markets were subdued because of the “uncertainties.” “Since then, there’s not really been a consensus between government, business and civil society.”
The rand has weakened more than 16 percent over the past 12 months, the worst performer among 16 major currencies tracked by Bloomberg. South Africa posted a record trade deficit in January and on March 12 reported a fourth-quarter current account deficit that was near a four-year high.
“There is a lot of concern about the ability of South Africa to deal with its twin deficits given its social constraints,” Oosthuyse said. “The real concern in South Africa is what’s going to happen in terms of policy and the implementation of the plan.”
Citigroup, the third-largest U.S. bank by assets, has been operating in South Africa for 18 years.