South Africa’s economy has been on life support for some time, with growth contracting over the past four quarters. This has, in no small measure, been exacerbated by the Covid-19 coronavirus pandemic, which almost brought the global economy to a standstill.
The SA Reserve Bank stepped up and expanded monetary policy by slashing interest rates; banks allowed payment holidays; the temporary employer-employee relief scheme went some way towards mitigating salary and business losses; welfare cheques were issued; and the UIF shored up its reserves to pay out almost R30 billion. Treasury asked for and was granted loans by the International Monetary Fund and the World Bank to buffer the fallout.
Make no mistake, though, the country’s finances are far from secure. Unemployment is projected to rise to a staggering 50%. With annual growth projected to contract by up to 8% and tax revenue expected to be R300 billion behind target, government, labour and business are scrambling to forge an economic recovery plan with little but crumbs in the cupboard.
An economic “reset” is needed and wanted.
You could be forgiven for rolling your eyes. Economic recovery and growth plans have been part and parcel of our lives for the longest time, yet little seems to have changed. We still have the highest Gini coefficient in the world, unemployment has remained stubbornly high, corruption has deepened and service delivery has all but collapsed in most metropolitan areas.
The latest draft, and we have to stress it’s a draft, of Nedlac’s economic recovery plan seems little more than a rehash of previous documents.
While mass infrastructure development programmes look good on paper, history has shown that these are drawn-out, runover costs and often don’t deliver the goods. These are not the kinds of jobs the country needs. We don’t need piece jobs; we need industrial development and expansion. Selling 5G broadband spectrum is a low hanging revenue-generating fruit – its auction is long overdue – but we also need tech and innovation hubs, education, and a drive to thrive.
Forgive the cynicism, but if the governing party is incapable of ending cronyism and corruption, any attempt to reform and recover the economy will fail.