SA economy trapped in deepening crisis - Mbeki

Johannesburg – Despite all its commendable strengths, the National Development Plan (NDP) remains a vision which needs to be supplemented with a more detailed plan, according to former president Thabo Mbeki.

Mbeki was speaking at the Sunday Times Top 100 Companies Awards ceremony held in Sandton on Tuesday night. He explained that South Africa is engulfed in a crisis and needs a proper economic plan to “extricate” itself from it.

“The hard reality we face today is that our economy is trapped in deepening economic crisis. What was (an) age of hope has turned (and) is now an age of despair,” he said.

“We need to agree upon and implement a plan to achieve the objectives of the NDP.”

He explained that governing authorities are not actively discharging their responsibilities to achieve a better life for all citizens.

“Economic growth rates are far too low. Levels of unemployment are too high. And the level of inequality is too high,” he said.

“South African growth is too low to raise average living standards. This is deeply problematic.” 

The cost of “insufficient action” by authorities has reached a critical point, said Mbeki.

A “fresh and energetic” review of South Africa’s policies followed by action is required, because the present growth trajectory is not good enough.

Need to accelerate NDP 

The NDP highlights key measures of economic success. This includes an average gross domestic product growth rate of over 5%.

By 2030 the GDP per capita level should be twice the present number. Export growth should accelerate and income levels rise above the poverty line, for all. Inequality and unemployment levels should also be reduced.

“The challenge we face is that we must develop a plan and programme to realise these goals,” he said.

Government should lead the conversation to accelerate the implementation of the NDP, he said.

“The time is right for a national conversation to map out the way forward for South Africa and to provide people with a greater opportunity for a better life.”

For some time the private sector appears to have embarked on an “investment strike”, he said.

This has come as a result of the deterioration of the political climate.

Corporates in South Africa are not positive about future growth prospects, he added.

“Investment in business has stagnated. Business confidence languishes below its lowest levels in almost four years,” he said.

“President Jacob Zuma’s administration is struggling to reignite the economy, expanding at a slow pace since the 2009 recession.”

Part of the solution involves government and business overcoming the “deep suspicion” of each other, which is not sustainable.

“Without general cooperation between government business and labour, we are condemned to failure.”

Allegations of state capture have raised concerns around the stewardship of capital and whether it is indeed being used to support society.

“We must build bridges and find common ground, on the basis of respect and trust.”

Business and government should agree on the implementation of a plan to realise the objectives of the NDP, he explained.

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