Cape Town – Finance Minister Pravin Gordhan acknowledged at a lunch attended by mining stakeholders that government should do more to create policy certainty in South Africa.
Speaking at a lunch hosted by law firm ENSafrica on the sidelines of the 2017 Mining Indaba, Gordhan said he hopes he can continue to deliver macroeconomic stability in the country.
“All I can say to you is that I’ll be among those who would look for a speedy resolution to some of the issues the mining industry is confronted with.”
Several stakeholders attending this year’s Mining Indaba in Cape Town have appealed to South Africa’s policymakers to provide regulatory certainty by finalising amendments to the Mineral and Petroleum Resources Development Act (MPRDA) and the mining charter.
Mines Minister Mosebenzi Zwane said in his opening address on Monday that the MPRDA is expected to be finalised in June this year, while the final mining charter would be gazetted as soon as next month.
At the ENSafrica lunch, Gordhan told the audience that South Africa has a lot going for it.
“Today we can boast a sound set of institutions. We have a robust legal framework that ensures the private and public sector will get best possible deal in litigation.
“We have deep capital markets. Our fiscal approach is to such an extent that 90% of our borrowing is in rand and a maximum of 10% of our borrowing is in foreign currency. Our debt is therefore mostly borrowed from our own capital markets.”
Gordhan admitted though that South Africa’s state-owned enterprises need urgent reform in the areas of financial management and strategic direction.
“South Africa has also inherited structural problems. And during the course of this year and years to come you’ll hear a lot about transformation in South Africa. Some will call it radical, others will call it less radical. But the essence is our own history and history of sanctions against South Africa resulted in many parts of our economy becoming too concentrated.”
Much more emphasis will therefore be placed on inclusive economic growth for South Africa in the future, he said.
A word on mining
With regard to the mining industry, Gordhan said a different course needs to be developed for the sector in the 21st century, although he also acknowledged mining faces “many vicissitudes”.
“The effects of the recession haven’t really been worked out of the system, and are still causing fluctuations in the demand, price and therefore also in production.”
These fluctuations not only have an impact on mining companies, but also on the macroeconomic environment of countries. “And it certainly impacts on the investment decisions of the private sector and government’s decisions in terms of infrastructure development.”
Gordhan said government finds itself under increasing pressure from its citizens for better services and social safety nets. “Therefore tax compliance comes to the fore. Hopefully we can have constructive conversations on how we can get a social contract going so that the right level of tax compliance becomes part of our DNA.”
He expects concerns around illicit flows, base erosion and profit shifting to intensify in future.
“We need to readdress the question of tax compliance and illicit flows – not only in mining, but elsewhere,” Gordhan said.Read Fin24's top stories trending on Twitter: Fin24’s top stories