to south african investors and companies. the hesitant recovery in the global economy, and particularly in europe, is negatively affecting south africa ’ s growth performance. the south african economy grew by just 1. 9 per cent in 2013, far below potential of around 3. 5 per cent. although the reserve bank projects an improved growth rate of 2. 8 percent growth for this year, it is still too low to make a meaningful dent in our unemployment rate. demand for our main exports is growing slowly and trading conditions for most firms remain difficult. in addition to global factors, south africa ’ s economic growth is also being adversely affected by a number of domestic factors including electricity supply constraints, strike action in key export sectors and infrastructure bottlenecks. in addition, the economy is constrained by persistent shortages of skilled labour that lowers our growth potential. for monetary policy, the present environment presents a dilemma of slowing growth on the one hand, but rising inflation on the other. given the fragile growth environment, the reserve bank has been more tolerant of inflation at the upper end of the target range for some time. however, the recent marked deterioration of our inflation forecast led the monetary policy committee to raise interest rates for the first time in six years. notwithstanding this increase, monetary policy remains accommodative, and the mpc will continue to focus on its core mandate of price stability, but with due regard to the impact of its actions on economic activity. economic growth needs to be driven by real investment, and currently growth in private sector investment has been relatively subdued. government ’ s massive infrastructure programme is essential to eliminate bottlenecks and shortages, thereby contributing to raising long term growth and productivity in the economy. the implementation of the national development plan will also support growth and investment as it is focused on raising our capabilities as a country and investing in our human resources. over the next two decades, south africa needs to raise its productivity levels, boost exports and ensure that not only do we significantly raise the rate of economic growth, but that it is also more inclusive. there are three core challenges that today ’ s world faces : food, water and energy. to briefly expand on just one aspect : by 2050, the world will need to produce about 80 percent more food than today to satisfy growing populations and rising food consumption. africa contains the largest proportion of underutilised arable land on the planet. this provides a huge opportunity for investment, not just in agriculture but in agroprocessing,

a challenge given that the vast majority of south africans experienced a history of inferior quality education. the efforts of this university bears testimony to efforts to broaden access to quality education. notwithstanding the progress, greater efforts are needed to address the legacy of our past. even though our economy has improved significantly from twenty years ago, the recent period has been difficult. the world is in its sixth year of economic crisis. while most countries are out of recession, the crisis itself has not ended. measures taken to address the unfolding crisis had unintended consequences resulting in a constant mutation – for instance from a sub - prime crisis in the us affecting home owners and lenders to a systemic banking crisis ; from a systemic banking crisis to a fiscal deficit and sovereign debt crisis in many countries in europe ; from a wave of significant capital inflows and appreciating currencies in emerging economies to where more recently emerging markets have had to deal with a reversal of these flows and depreciating currencies, at a time when many of them are also facing rising inflation and slowing growth. what is consistent through this period is that growth is slower than historical averages, unemployment is higher and in particular youth unemployment, globally, is a major challenge standing at over 50 percent in a number of countries, including our own. the international bis central bankers ’ speeches labour organisation projects that unemployment levels are only likely to reach pre - crisis levels by 2017, a full ten years from the start of the crisis. ten years is a long time in the life of any person. the effects in terms of human suffering, reduced household savings, long term unemployment, skills atrophy and lost investment are likely to endure for an even longer period. the us economic recovery is still fragile and risks remain. the recovery in the us, still the largest economy in the world, is a positive factor for the rest of the world. however, partly as a consequence of higher growth, the reduction in their quantitative easing programme, whereby the fed is reducing its asset purchasing programme by us $ 10bn per month, is having detrimental effects on many emerging markets and an unsettling effect on financial markets globally. growth rates have slowed in major emerging markets such as china, india and brazil. many developing countries, from turkey to venezuela, are battling both domestic economic challenges and capital outflows. however, africa remains a bright spot in the world economy with sub - saharan african growth at over 5 per cent a year, providing significant opportunities