Can South Africa return to a path of economic stability?

2018-12-12 22:09

Against a backdrop of muted economic growth and uncertainty around the upcoming national election, it remains to be seen whether South Africa can return to a path of stability and growth.

This was the sentiment from a panel of prominent South Africans from business, academia and the media who convened at the Gordon Institute of Business Science to consider what the year ahead may hold.

An economic turning point?

“We need to see the beginnings of real change in 2019. We want to see a turning point,” Konrad Reuss, Standard and Poor’s Global Ratings managing director for Africa, said.

The country would need profound and lasting change in order for the rating agency to consider a revision of its foreign and local currency credit ratings, he added.

While S&P has kept South Africa’s outlook at “stable,” continued weaknesses were evident in persistently low economic growth and sizable contingent liabilities, which weigh on the country’s fiscal prospects and debt burden.

“In the recent Medium Term Budget Policy Statement we saw an acknowledgement of flat lining trends, a mild recovery in growth and recognition that something is wrong with State-Owned Enterprises. In all of these aspects we need to see change,” Reuss said.

Xhanti Payi, economist and director at Nascence Advisory and Research, said large infrastructure projects could boost economic growth.

“We need to allow people to be participants and get engaged so as to have growth first, then investment will follow. We have to look for a different way of doing things.”

Bobby Godsell, former chair of Business Leadership SA and former chairman of Eskom, said the parastatal - which is under severe financial strain as it struggles to service its R400bn debt - used to be a brilliant national asset but had gone through two periods of policy sabotage. However, “Eskom can be fixed and it will be fixed,” he insisted.

National elections and the political landscape

Global politics had been characterised during the past year by the rise of identity politics and growing populism.

Politics are “astonishingly broken,” Godsell said, adding that “we are already paying the price of political uncertainty with fragile economic growth. South Africa must get its act together as we face one of the most hostile global environments I can remember.”

Ebrahim Fakir, director of programmes at the Auwal Socio-Economic Research Institute, explained there were multiple scenarios for South Africa’s 2019 national election.

“I am not convinced that you can put a policy trajectory onto the [Cyril] Ramaphosa administration, it will rather simply be a period of stabilisation,” he said.

In the run up to the polls, Fakir said South Africans should be increasingly vigilant against fake news: “There is going to be a lot more heat before there is any light”.

Fakir described the country’s three main political parties as “useless” and said South Africans were faced with a dilemma to choose the least worst to vote for.

“The ANC is completely fractured, and while there are some ethical leaders left, there is also push back from every corner against Ramaphosa,” he said. The EFF are factionalised into three groups: Those who want to go back to the ANC, those who want to adopt an attitude of wait-and-see and the small minority within the party who genuinely believe that it is an alternative project.

The DA is “rudderless, leaderless and undergoing a massive identity crisis.”

The only party that can promote stability in the short term is the ANC, and “that’s if Ramaphosa’s party allows him to,” Fakir said.

“We are moving clumsily and reluctantly into an age of coalition politics,” Godsell argued, and proposed a cross party coalition of the “rational centre” of the DA and ANC.

“On tough policy issues we need the best in the two parties working together,” he said.

Reuss said South Africa had a weak social contract and a contestation for resources.

“The next logical step would be confrontation. How much time do we have left to avoid this?” he asked.

“There is a conflagration going on, every day. South Africa experiences 800 protests a year,” Fakir countered. He said not all service delivery protests were about service delivery, but rather the fact that the interface between local government and the people had broken down.

“There are far too many people in the country, such as coalface public servants and teachers, who simply don’t do what they are supposed to do every day.”

Andile Khumalo, chief executive of The Brodkast Group and former managing director of radio station Power FM, said South Africa lacked adequate leadership whether it was in the sphere of politics or business.

“If you fail us, we are going to remind you. South Africans are a lot smarter than our politicians often think, and we show that every day when we talk on social media,” he said.

“Having more South Africans connected to the internet is the most positive thing that can happen to our country,’ he added.

Leadership requirements for 2019

South Africa didn’t necessarily have an absence of ethical leadership, Godsell argued, but these leaders were not always in the spotlight.

“We need to give them space, and to encourage and applaud them.”

Monhla Hlahla, director of companies and chairperson of both Royal Bafokeng Holdings and Denel, said the solution to the country’s problems rests with all of us: “It is not true that decisions can only happen if they are made by politicians. We all need to do our part, where we are, to turn things around. There is hope in this country, and there is hope for this economy because we are here.”

* City Press is a media partner of the Gibs forums.

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September 15 2019