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Country analysis > South Africa Last update: 2020-11-27  
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Growth and development summit agreement - 7 June 2003

 
SECTION 3: ADDRESSING THE INVESTMENT CHALLENGE

  1. Introduction

    1. The constituencies recognise that aggregate levels of fixed direct investment are a crucial driver of growth and that the current levels are insufficient to achieve the desired growth and employment rates. Investment in productive assets and services, especially in labour-absorbing sectors, and investment in social and economic infrastructure, remain at levels well below what our society needs. The current investment rate, at around 15% of the GDP, is too low. Significantly increasing the levels of investment remains a key objective in the years ahead. The constituencies are committed to pursuing strategies and measures that will contribute to raising the level of investment so as to ensure dynamic growth and address unemployment.


    2. Savings are also at levels that will not allow for the necessary level of investment to be achieved without relying on foreign sources of capital.


    3. Contractual savings can be increased through the extension of pension and provident funds to more employees. In order to give effect to this, constituencies will engage on the potential for establishing national pension and provident funds within sectors of the economy, after the GDS. This will be considered within the broader context of pension reform to ensure the comprehensiveness of the changes.


    4. The constituencies agree to encourage investors, including businesses (local, foreign, public and private), retirement funds, the life assurance industry, government, labour, and community organisations to work towards investing 5% of their investible income in appropriate financial instruments.


    5. In order to create effective vehicles to achieve the goal above, it is necessary to use or to create where they do not exist, the appropriate financial instruments and mechanisms.


    6. The constituencies recognise that detailed work needs to be undertaken to finalise the instruments and mechanisms indicated in point 3.1.4. above, and commit to engaging in dialogue with respect to these details in Nedlac with a view to finalising these discussions before the end of 2003.


    7. The financial sector is currently in the process of finalising a charter for the financial sector, with all other stakeholders in this sector. Among other measures, the charter will commit the financial sector to substantial lending in areas of low-income housing, small enterprise and co-operative development, agricultural development and infrastructure development, as well as access to financial services and empowerment financing.


    8. The competitive advantage that underpins investment in industry and job creation depends in part on pricing and quality of raw materials, transport, energy, communications and other services, research and technology development and support, and other aspects of the business environment. Drawing on the progress made in improving the investment environment and diversifying industrial and trade activities in the past decade, a focused review of opportunities for productivity enhancement, reducing the costs of certain of these factors and improving the quality of investment opportunities will be undertaken. The constituencies therefore agree to review:

      1. Administered prices
      2. Import-parity pricing


  2. Pension and provident funds

    1. Constituencies support the need for capacity building of employee representatives on Boards of Trustees, in order to enhance decision-making with regard to the proposed extension of investment instruments.


    2. The constituencies agree that Nedlac should host a conference of the trustees of pension and provident funds before the end of 2004 to discuss the various challenges facing the funds, devise training and capacity building programmes for trustees, and develop guidelines on corporate governance, fiduciary responsibility, investment sustainability and social responsibility.


  3. Housing

    1. To achieve the objectives on affordable housing set out in paragraph 5.1.1(f), constituencies agree that there is a need to investigate ways to improve access to land and the approach to funding, for housing.


    2. Constituencies agree that the share of low-income housing financed by private sector mortgages must increase.


  4. Financial Sector Summit

    Constituencies recommit to the implementation of agreements reached at the Financial Sector Summit.


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