Sexwale warns about the tough times ahead

Human Settlements Minister Tokyo Sexwale said South Africa could be "headed for another recession".

Sexwale told the 12th international housing and home warranty conference at Cape Town's International Convention Centre yesterday that, with South Africa's trading partners Portugal, Italy, Ireland, Greece and Spain in a "huge amount of sovereign debt", a second recession was looming.

"We hope and we pray that the world does not go back into another recession because we expected that this recession would be a 'V' or a 'U', but it is threatening to be a 'W', " said Sexwale.

A W-shaped recession, or "double-dip recession" is one in which an economy experiences a recession, comes out of it, but slides back into recession again.

The government has long maintained that South Africa is emerging from its recession, and last month Finance Minister Pravin Gordhan said there was only a 40% chance of a "double-dip recession" happening. But, according to media reports from last weekend's global finance talks in Washington, US, International Monetary Fund managing director Christine Lagarde warned that the global economy was in a "very dangerous place".

European financial websites reported yesterday that Greece is more than R3-trillion in debt, much of this owed to European banks, and will probably default on its loan payment in the next three months. The European Financial Stability Facility would then need to find a reported R17-trillion to support the governments of France, Spain, Portugal and Italy as they bailed out their own banks - or the world would face a second recession.

"It is very frightening to hear world bankers saying that the world economy has entered into a very dangerous phase," Sexwale said.

"If a bank makes that statement, you have got to sit up because banks are very, very careful in what they say."

South Africa and other developing economies were unlikely to recover from a second recession quickly, he warned.

"Long after industrialised nations in North America, the Eurozone and Asia have left the hospital, many of us will still be lingering in intensive care. There are many developing economies that will not come out of this that easily," he said.

He also warned about climate change, and said the US government had to "come on board" the global drive to combat global warming.

Calling for a minute of silence for Kenyan environmental activist and Nobel laureate Wangari Maathai, who died on Sunday morning, Sexwale said "cities are threatened".

"Cape Town may not be there in the next 100 years, Durban, cities like New York.

"If we continue to emit negative gases into the sky at this rate, the biggest impact is on human settlements. Whatever we plan, climate change may negate."

He also said the government would not be able to build free houses for the poor forever.

"There has got to be a cut-off date. We are discussing that. But you can't cut off the poor right now, particularly in the current national economic environment. We can't sustain what we are doing for a long time," he said.

The private sector would have to contribute, and that was why Sexwale would launch the "each one, settle one" campaign at the Johannesburg Stock Exchange on Thursday.

The campaign would ask "captains of industry" to "empty their pockets" to build houses, Sexwale said.