Export-led Growth Will Benefit the Economy

By Daniel Thöle

Published in Business Day, Johannesburg on March 6, 2002

While the Myburgh commission of inquiry into the rand’s losses may be helping the currency keep its head above water, at least two business leaders think that a weak currency does more good than harm.

They say SA should rather focus on taking advantage of the benefits of a weaker currency, than focusing on reasons for its decline, which has already been touted as a “pointless exercise”.

Johannesburg Chamber of Commerce and Industry (JCCI) president Ronnie Ntuli and Jon Huggett, vice-president of consultancy firm Bain & Company, said yesterday government should not be trying to maintain a strong exchange rate.

Aside from concerns about inflation and higher interest rates, Huggett and Ntuli warn attempts to help the rand favour short-term consumption, and compromise long-term growth.

“There has been huge pressure on government to tighten exchange controls and thereby keep the exchange rate high,” they said.

But, they say, a highly valued currency will not help South Africans looking for jobs, or the economic prosperity of the country. “It will favour instead the wealthy minority that spend a lot on imports.”

Ntuli and Huggett believe that those businesses which succeed in the uncertain conditions SA is experiencing are those which invest in their businesses, positioning themselves to outperform their more hesitant competitors.

“SA companies can outperform international and local competitors if they focus on products than can be marketed abroad,” they said.

Wine exports have increased sixfold in the last 10 years, and have a strong base to grow further, and other sectors, like vehicles, have shown long term growth and could be set for more.