Beyond impotence and gloom: SA’s economic and political future

2019-10-10 01:50

Many South Africans are finding the country’s continued economic malaise and increasing levels of social unrest and violence overwhelming.

As a result, they have feelings of frustration, gloom and impotence, Gideon Pogrund, Head of the GIBS Ethics and Governance Think Tank told a recent forum.

However, “these feelings are dangerous,” he argued.

“While optimism is the belief that things will get better, hope is the belief that we can make them better. The one is passive and the other active,” he explained.

Economic outlook

Colin Coleman, CEO of Goldman Sachs sub-Saharan Africa said while there is evidence of green shoots in the economy, especially in sectors such as mining, “South Africa needs to act quickly to get our house in order and move forward decisively” if the country is to break out of its no growth trap and win back business and investor confidence.

CEO of Business Leadership South Africa, Busisiwe Mavuso, said there is a disconnect between South Africa attempting to position itself as an investment destination and the decision-making paralysis around important policy issues.

“Markets are premised on certainty, and the current lack of certainty is very problematic. There is no way we are going to unlock investment, either local or foreign, when people don’t know which direction this country is going to go. You cannot be talking prescribed assets and expect that investment is going to flow.”

The ability to make tough decisions is a function of leadership, she added, and cautioned “very soon the IMF is going to walk in and make the tough decisions for us.”

Mavuso used the continued inaction around the restructuring of state-owned enterprises as an example of this paralysis.

“We have more than 700 SOEs and we can’t play across the entire global value chain. South Africa is failing at the basics at the moment when it comes to government and the more we delay the tough decisions, the more our window of opportunity as a country is closing.”

The country needs robust growth in order to expand the tax base and reduce reliance on social grants, she added.

Thandeka Gqubule, economics editor of the SABC, said no country had been able to recover from a recessionary environment without lowering its cost of capital or issuing a meaningful fiscal stimulation package.

“The government can reduce the cost of capital urgently to give the economy a breather, and give our manufacturing and export sectors a boost,” she recommended.

Coleman said while lowering the cost of capital was one of the fiscal and monetary weapons at our disposal, cutting expenditure in the form of the public sector wage bill was an urgent priority.

“Only 10% of South Africa’s debt is issued in foreign currency, which will help us to absorb any potential shock, but there is not much room to raise further capital. We have to cut back on wasteful and inefficient expenditure, and cut the public service and force them to be more efficient.”

He said the medium-term budget policy statement, due to be delivered by the minister of finance on October 30, will be a critical message to the world about the country’s fiscal health.

Inequality and social unrest

“There is no excuse for poverty and unemployment in this country; we suffer from an overdose of greed in South Africa,” Paul Verryn, bishop of the central district for the Methodist Church of Southern Africa told the forum.

From an economic point of view, he argued that very little has shifted since 1994, and “it is not going to shift if we don’t think right out of the box. We don’t need history to tell us, if we carry on with this trajectory, we will have a civil war.”

Mavuso said the correlation between high unemployment and social unrest had been proven, and the general consensus is that the biggest ticking time bomb is unemployment.

“It is a recipe for disaster. It is about the haves and the have-nots, and not about black and white anymore. The fight is going to quickly be brought to our Sandton doorstep.”

“We lack empathy as a society, and we are going to be forced to sit up and pay attention to that which we have chosen to ignore if we don’t change the social and economic patterns of this country,” she added.

Back to basics

Mavuso called for a return to basics and an analysis of the role of government in society: “Government exists to make a conducive environment. Conditions for people to prosper are not God-given, but are rather created. We need intentional participation in the economy and macro economic policy to change its structure. Jobs are an output, or a consequence of a conducive environment in which business can prosper.

“These tough decisions that are going to have to be taken by government, as the role of government is to make these decisions and not to try and please everyone,” she concluded.

“We are a profoundly damaged nation,” Verryn said.

“Our anger and vitriol comes out in violence again women, children and foreign nationals. We must all ask ourselves how we can become active agents for the healing of this country, as we really are on a tipping point.

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