AN ECONOMY FOR ALL SOUTH AFRICANS

What would an economy that works for all South Africans look like?

After a decade of slow growth and poor governance, the ills that plague the economy are easy to discern. It is not difficult to recite the litany of woes and missteps that have kept the economy stagnant over that period.

After President Ramaphosa took over the mantle of leadership early in 2018, business and consumer confidence rose. The change in leadership provided hope that the economic climate would improve. Indeed, government has tackled a number of pressing issues with vigour.

Some of the policy and regulatory issues that have dampened the environment for growth – in fields ranging from mining, energy, tourism and telecommunications –are being tackled. A new Mining Charter has been released. There is constructive debate over the newly released Integrated Resource Plan. Regulations on visas have been amended. The policy framework for the release of high-demand spectrum is being laid out, and an inquiry into the cost to communicate is under way. New leadership has come in at various state-owned enterprises. The framework agreement arising out of the Jobs Summit signifies the desire of business, labour and government to work together to tackle unemployment. Private investment is also set to emerge from the slump of the recent past, with some significant investment pledges announced at the Investment Conference held in October last year.

Yet this newfound sense of direction and energy risks being overwhelmed by the effects of the past. In the first two quarters of last year, the economy suffered a contraction. This came about as the result of a confluence of factors, with the prospects of emerging markets under scrutiny as crises unfolded in peer countries such as Turkey and Argentina. The failure to stage a decisive recovery from the Great Recession means that our economy lacks the resilience to weather high oil prices, brewing trade wars and negative global sentiment.

The negative macro-economic trends that played out in the second and third quarter of 2018 add to the odious economy legacy that keeps potential growth low. The structural underpinnings of the economy, with its high levels of concentration, inequality and exclusion constrain growth.

In the face of the foregoing analysis, there is a tendency for the difficulties to overwhelm the progress that is underway.

At times like this, it is important to step back and turn to a constructive lens through which to assess the economy. We will never have the luxury of a blank state. That being said, we need to develop a shared understanding of the principles on which to build the South African economy of the future. The Constitution provides the vision of a society that progressively gives all South Africans the opportunity to live with dignity, in good health, and with access to education, sanitation and housing. This instructs us to build an inclusive economy. Global economic history teaches us that an economy that creates value in extractive and exclusionary ways breeds social instability, destroys the planet and steals from future generations.

In responding to short-term challenges while developing a long-term growth strategy, social partners – including business – need to keep the end-state in mind. In reading all the voluminous body of texts attempting to influence the economy’s trajectory, from the Constitution and the National Development Plan to the national budget, monetary policy statements and company annual reports, one sees the common thread of a nation aspiring to sustainable, inclusive growth. This end-state eludes us for many reasons, including those related to implementation and co-ordination. One of the greatest achievements that can come from this era of change is to reaffirm our commitment to a just and prosperous economy and to pursue, relentlessly, priority initiatives that enable investment and create jobs. In so doing, we will turn that commitment into a reality.

Trudi Makhaya

Advisory Board Member: KASI Insight Presidential Economic Adviser