1. Transitioning to a world-class country Dr Roelof Botha

2. Health data – a snapshot Megatrends impacting on the global economy SAs competitiveness challenges Policies employed by advancing nations with high growth Rewards of free enterprise reforms Pockets of excellence in SA A pragmatic policy agenda for South Africa Economic growth prospects – gradual improvement Overview of themes – getting SA to the elusive high road scenario

3. The Southern African economy Prospects for sustained growth Global health trends – a snapshot

4. Structural increase in household expenditure on health (SA) Index; 1997 = 100 Health Total

5. Health expenditure as % of totals – government & households (SA) % Government Households

6. Composition of government expenditure (functional classification) FY 2013/14 (Rb) Total R 1.1 trillion

7. Composition of household consumption expenditure in South Africa 2012 (R billion) Total 1,9 trillion

8. Life expectancy at birth 2011 – selected African countries Years

9. Life expectancy at birth 2011 – selected countries Years

10. Health expenditure as % of GDP – selected countries %

11. Megatrends & the emergence of multiple superpowers

12. The World Economic League 1st Division High Income Countries 2nd Division Emerging Market Economies 3rd Division Potential Emerging Markets 4th Division (a) Small Economies (b) Failed states Recommended route of progress (higher per capita income)

13. Megatrends en route to 2020 (selection) World population exceeds 7.6 billion Increased urbanisation, ageing rises Life expectancy increases to 71 years Further spread of democracy Rising per capita incomes New applications for nano-technology Further progress with bio-technology Computers will be 200 times faster Increased focus on renewable energy Emergence of multiple superpowers

14. World outlook beyond 2010 Social: Your phone will tell you when you are in love Social: Complete surveillance through nano-devices Demographics: World population to reach 9.2 billion by 2050 Demographics: Africas population to outstrip Chinas in 2030 Business: Development of a digital, virtual, universal currency Business: Thought recognition as everyday input means Science: A robot in every home in Japan by 2015 Technology: Tomorrow's televisions will not need screens Environment: Acute water shortages affects 65% of world Science: Space solar power stations

15. No of Boeing 747s in service

16. Structural decline in global electricity intensity more pronounced in South Africa (Terrawatt-hours per $billion GDP ) World SA

17. Share of global GDP (PPP) of emerging markets & developing economies %

18. Sizeable gap between the GDP growth performance of advanced & emerging economies (Source: IMF) % (real) Emerging markets Advanced

19. Top-ten economies in the world (BRICS = $14.4 trillion; 20% of world total) Source: IMF $trillion

20. Regional composition of world population 2011 (BRICS = 42% of world total) (Source: UNDP) Total 6.9 billion

21. Forecast increase in the worlds population 2010 to 2030 (Source : UNDP ) Million (Total 1.4bn)

22. Emerging markets – top-ten populations (total 3.85 billion) million

23. Most populous developing countries & SADC population Million

24. Emerging markets – top-ten economies (total $18.9 trillion) $trillion

25. Emerging markets – 2 nd top-ten economies (total $2.8 trillion) $bn

26. SADC share of world reserves for selected metals & minerals (2009) %

27. South Africas key c ompetitiveness challenges

28. Sharp contrast between the GDP growth paths of Zambia and Zimbabwe (nationalisation in action) $ billion Zambia Zimbabwe

29. South Africas lowest ranked global competitiveness indicators (out of 144 countries) Cooperation in labour-employer relations144 Hiring & firing practices143 HIV prevalence141 Quality of the educational system140 Flexibility of wage determination140 Pay & productivity134 Business costs of crime & violence134 Life expectancy133 Business impact of tuberculosis132 Burden of government regulation123

30. Factors contributing to the relatively low Quality of Life index score (recent MasterCard survey) 65% of SAs 256 state entities fail audit procedure Country-wide escalation of social unrest since 2008 Several local authorities have become semi-dysfunctional Lack of road maintenance causes 1,700 deaths in 4 years 10,000 officials involved with wasteful expenditure of R20 billion Cost of rehabilitating public health estimated at R57 billion Cost of corruption to the economy estimated at R40 billion Electricity supply remains precarious Rigid labour legislation deters foreign direct investment

31. Structural decline in the share of agriculture in total fixed capital stock %

32. Structural decline in the ratio of agriculture exports to imports %

33. Employment in agriculture in South Africa (forecast for 2013) 000

34. Indices of labour productivity & unit labour costs in manufacturing (2000 = 100) Index Labour costs Productivity

35. The recession is over – prepare for higher growth Dr Roelof Botha Policies implemented by winning countries Policies implemented by winning countries

36. Privatisation Market-related & productivity-related wage determination Lower direct tax rates Pro-active export promotion Lower import duties Separation of judicial & executive powers Public/private partnerships Vigilant stance towards preventing undue corruption Effective performance monitoring in the public sector Deregulation & other measures to encourage SMMEs Post-1980 reforms - high growth economies

37. Adequate expenditure on R&D Strategic industry status afforded to agriculture Guaranteed property rights (intellectual & physical) Prudent & transparent fiscal policy Emphasis on primary education Improved access to affordable health care Pro-active monetary policy Expansion & maintenance of infrastructure Cooperation between government, labour & business Expansion & diversification of international trade Post-1980 reforms - high growth economies (continued)

38. Fiscal stability & expanding tax base Improvement of global competitiveness Relatively low inflation Enhanced food security Balance of payments stability Increased levels of FDI inflows Sustained economic growth & employment creation Higher national skills base Increased longevity Relatively high level of socio-political stability Rewards of consolidating the tenets underpinning free enterprise and democracy (Selection)

39. Progress with the transition – slow, but visible

40. Towards a radical transformation of institutionalised society in South Africa (* denotes qualified success) Pre-1994Post-1994 Exclusive Adversarial Labour vs. capital International isolation Patronising Neglect of common place Hierarchial Subordination of law to state Violation of human rights Inclusive* Co-operative* Labour plus capital* International assistance Empowering/enabling Illumination of common place Networking Law above the state Manifestation of human rights

41. 3 million RDP houses 1000 new health clinics Access to clean water for 10 million people New sanitation facilities for 7 million people 4.5 million new electricity connections Free education Redistribution of 3 million hectares of land Primary School Nutrition Programme for 5 million children 15 million new social grant beneficiaries (BIG?) Progress with meeting basic needs

42. South Africas highest ranked global competitiveness indicators (out of 144 countries) Regulation of securities exchange1 Auditing & reporting standards1 Efficacy of corporate boards1 Soundness of banks2 Availability of financial services2 Effectiveness of anti-monopoly policy6 Reliance on professional management13 Quality of air transport infrastructure15 Quality of management schools15 Efficiency of legal framework16

43. SA facts & figures - a random selection 11th largest emerging market in the world Worlds largest paper manufacturer (Sappi) Worlds 2nd largest beer brewer (SAB) Sole producer of MB Class C RHD vehicles First-ranked world floral kingdom Top global ranking for a secondary capital market (JSE) No 2 global competitiveness ranking for soundness of banks First heart transplant in the world World leader in liquid fuel technology Worlds most progressive democratic constitution

44. % SA budget deficit/GDP ratio & forecasts – fiscal years ended 31 March (Source: National Treasury)

45. Real effective exchange rate of the rand Index, 2000 = 100)

46. R billion Balance of payments – current & financial account (including unrecorded transactions) (Source: SARB) Financial account Current account

47. Capital expenditure by public sector returns to growth mode (after an absence of 3 decades) Capex/GDP % Private sector Public sector

48. A pragmatic policy agenda Introduction of a basic income grant (BIG) Combating of corruption & vigilance with tender procedures Management training for public service Incentives for entrepreneurship & SMMEs Task teams to restore functionality of Municipalities Implementation of youth wage subsidy Restructuring of SETAs Multi-tiered system of labour regulations Fast-tracking of infrastructure spending Public/private partnerships (govt/business/labour Codesa)

49. The recession is over – prepare for higher growth Dr Roelof Botha Conclusion - consolidation of economic recovery Conclusion - consolidation of economic recovery

50. GDP growth estimates for 2012 and forecasts for 2013 – world & key regions (Source: IMF) % (real)

51. Real retail trade sales (index, 2008 = 100) Index

52. Household debt to disposable income in South Africa %

53. Debt service cost to disposable income of households in South Africa %

54. Household debt as % of GDP – selected high income countries & BRICS %

55. Real growth trends for the components of domestic expenditure (Sources: SARB, own calculations) Index; 2000 = 100 Capital formation Household consumption Govt. consumption

56. Convergence of consumer & producer inflation to within the Reserve Banks target range of 3% to 6% % PPI CPI

57. Lowest prime rate in 40 years enhances household spending power %

58. Formal sector employment – progress after recession, but now stuttering 000

59. Economy has now grown in real terms for 15 successive quarters Real annualised GDP growth (%)

60. Modest real GDP growth forecast for 2013 %

61. New record high for JSE all share index (Alsi) Index (000)

62. New record high for real disposable income per capita of households (at constant 2011 prices) R 000