region. a memorandum of understanding ( mou ) on macroeconomic convergence has also been agreed to by sadc member states. this mou forces members to pursue economic policies that would ensure macroeconomic stability. for example, by 2008, sadc member states are required to have single digit cpi inflation rates ; ensure that the nominal value of public and publicly guaranteed debt, as a ratio of gdp, does not exceed 60 percent ; ensure that the public budget deficit as a ratio of gdp does not exceed 5 percent ; and have sustainable current account deficits – meaning 3 percent of gdp or less. in addition, africa has embraced the new partnership for africa's development ( nepad ) to confront the challenges facing the continent. it is a strategic development plan that addresses the economic, political and dimensions of africa's future development. nepad is a clear demonstration of the willingness of the continent to take responsibility for its own actions and for its future. it is a new start for africa to meet the millennium development goals and targets. crucially, the vision and way forward include, building political consensus and the necessary institutions as well as determining the pace of implementation of the programme. nepad aims to reduce poverty by significantly increasing economic growth throughout the continent. it is within this context that small and medium enterprises can emerge and flourish and support african economic development, employment creation and poverty reduction. however, we must remember that the global environment of the 21st century is an important determinant of industrial and economic success. globalisation demands improved competitiveness. increased competition presents new challenges and opportunities for african enterprises. as the world economy is being deregulated and liberalised, enterprises that are competitive in national markets have to be competitive in world markets as well. a pre - requisite for survival and success requires a winning combination of competitive strengths. 5. conclusion there is little doubt, then, that there have been major changes in economic policy in many african countries in the recent past. many of these changes have been advocated in support of the african renaissance. these changes have entailed a transition towards more open, market - oriented regimes. on the political front, there has been a move towards multi - party democracy, and high priority being given to issues of governance and transparency in the policymaking process. the foundation is being laid. we now have to ensure that the policy intentions are realised. while the road to success may not guarantee a smooth ride, it is imperative that we ensure that it is not a long one

0 per cent to 2, 5 per cent. although china is not an important destination for our manufacturing exports, it remains our main trading partner, mainly as a destination for our commodities. china also has an important impact on global commodity price trends, and the recent weakness in a number of commodity prices has been ascribed to the slowdown in that country. while the crisis has curtailed domestic growth, it is not the only contributory factor. after all, our emerging market peers have faced the same challenging environment and yet outperformed south africa in the post - crisis period. the world economic forum ( wef ) global competitiveness report paints a mixed picture of how south africa stands up to international comparison. it shows that, with respect to the financial sector, we are up there with the best. south africa was ranked first out of 148 countries for regulation of securities exchanges ; first for strength of auditing and reporting standards ; first for efficacy of corporate boards and the protection of minority shareholders ’ interests ; second for financing through local equity markets ; and third for overall financial market development. this reflects well on the sector, and also on the quality of the professionals that make up that sector, including accountants, economists, etc. many of you here this evening are part of that sector. what is important to bear in mind is that, while there is recognition of the excellence of south africa ’ s financial sector, and it is a critically important asset for the country and our future development, it must serve the needs of the real economy. south africa cannot simply aspire to be a world leader in the financial sector. we need to encourage more productive real sector investment and employment and, crucially, encourage exports, given our dependence on imports of capital goods. unfortunately, according to the wef, we are have slipped in the overall competitiveness ranking from 40th bis central bankers ’ speeches to 53rd, and we have been surpassed by mauritius as the most competitive country in africa. for years we have been somewhat complacent about being the biggest economy in africa. with the current growth rates, we could be overtaken by nigeria within a decade. we fare even worse when it comes to labour relations where we are ranked worst in the survey of 148 countries. this declining competitiveness is reflected in south africa ’ s widening current account deficit at 6, 5 per cent of gdp in the second quarter of this year, driven to an important degree by a weak export performance, which can only be partly explained by