South Africa’s economic woes could deepen as the world grapples the Covid-19 coronavirus pandemic.
This year has been arguably the most extraordinary period this century by far. When planning for the new year last December, most of us made financial and academic resolutions, little did we know that we would be forced to stay indoors.
While South Africa’s current debt to GPD ration was not convincing enough that the country would reduce its debt and grow its economy, government was left with no choice but to borrow more than R200 billion from the World Bank and the IMF.
Most economic activities were forced to stop amid the novel pandemic and the economy is predicted to hit its worst ever decline. Struggling national carrier, SAA is unsurprisingly one of the first big corporates that could face permanent closure.
While retrenchments are looming at SAA, some economists predict that South Africa could hit the 50% unemployment rate in the first quarter of the next year.
So why do we need to change?
Statistics SA suggests that more than half (55.5%) of the population lives below the upper-bound poverty line (R1 227 per person per month). A 2018 World Bank report reveals that 1% of South Africans own 70.9% of the country’s wealth, while the bottom 60% only controls 7% of its assets.
With the SA Food Sovereignty Campaign stating that 12 million people go to bed hungry and 53% of the nation’s inhabitants experiencing food insecurities, it is clear that it’s not just working for us.
The continuing national lockdown is necessary to help contain the spread of Covid-19 and ultimately save lives but the deep rooted economic struggles of the poor and middle class are projected to worsen. Currently at 29%, experts warn than the unemployment rate could rise to 50%, which could severely deepen poverty.
How can we change?
While ordinary South Africans are promised jobs before any political elections, the tangible results are still not clear enough. While the deep rooted inequality is not anything to be proud of, delivering jobs is not as easy as making promises.
Some politicians and political parties subscribe to the notion of taking from the rich and giving to the poor. While that might sound like a quick and simple idea, the sustainability of such an economic move could be disastrous for an emerging market.
A more collaborative and African approach should be looked at. Ubuntu, a quality that includes the essential human virtues, companion and humility, should be the primary pillar behind this new restructure.
What is the value of the economy when most people are poor? What is the importance of government when it cannot provide opportunities for more than half of the citizens?
South African businesses, government, professionals and civil society at large owe the country a more collaborative approach that would innovatively open up economic opportunities and expand the existing value chains.
All unused land, whether privately-owned or owned by government, should be made available for use by those with the ideas, skills and expertise to be productive. If people can have access to the means of production at little to no cost, they should be given an opportunity to utilise those means and work on a repayment structure when the businesses start being productive.
Chronic poverty has for long been one of the biggest challenges facing a lot of South Africans, there are a large number of people with ideas or skills to provide for an average of 15 people.
If these people can be supported, not just financially but most importantly with a means of trade and more relaxed policies, they can ultimately improve the financial woes in the next few years.
There is evidence that focusing more on international trade and depending on big corporates does not improve our poverty statistics, it only creates more money for the elite few.
* Ledwaba is a business developer and freelance facilitator focusing on small, medium and micro enterprises development