OPINION | No miracle recovery in sight for SA economy
This will be the year of politics in SA. This week, President Cyril Ramaphosa will deliver his State of the Nation Address.
There will be much heat and noise generated by that annual event, lately characterised by shouting, heckling and violence in the chamber. The budget will be delivered at the end of the month and after that campaigning for the national and provincial elections will ramp up.
Yet this should not be the year of politics. It should be the year of economics. Our house is burning. I am surprised that not many people are pointing to Cyril Ramaphosa and reminding him, for the millionth time, that “it’s the economy, stupid”.
The World Bank forecasts SA’s economic growth will improve to 1.3% in 2019 from an estimated 0.9% in 2018. This new forecast is down from its June 2018 estimate of 1.8% growth.
The bank forecasts a GDP growth rate of 3.4% in sub-Saharan Africa for 2019.
You can see where I am going with this, of course. We are sub-par. We are useless.
As if that’s not enough, things are not set for some sort of remarkable recovery.
The bank projected SA’s economic growth at 1.7% in 2020. There are a few optimists still lurking about. Goldman Sachs’ Colin Coleman said last October that his bank expected SA’s economy to grow almost 3% in 2019.
His prediction, wrote Reuters, was “more optimistic than the view held by economists polled by Reuters last month [September], who saw Africa’s most industrialised economy growing 1.7% in 2019 after sluggish growth of 0.8% this year”.
These numbers are an absolute disaster. This means that the millions of unemployed out there will remain unemployed. That means many will remain in the grip of poverty. That means that our inequality will continue to grow. That means that more will be joining the queue for social welfare.
The poor economy is a national crisis.
February marks exactly 12 months since Ramaphosa became president of the Republic of SA. There is no dispute that his in-tray was over flowing.
The Zuma years were more than wasted. They were a devastation, as we are learning every day now from the Zondo Commission of Inquiry and other probes of bodies such as the SA Revenue Services and the Public Investment Corporation show.
Yet there are some things Ramaphosa could have done and has not done.
First, there are some very clear areas where he could have focused a little bit more attention.
The first is the continued impulse by government to treat the extremely bloated and inefficient civil service and the corrupt state-owned enterprise complex with kid gloves.
Eskom, South African Airways, the SA Broadcasting Corporation – among many others – are essentially run like Zimbabwe. They are petty cash for the ANC and its leaders who, through tenders, are milking them dry.
The civil service? In his medium-term budget policy statement in 2018, finance minister Tito Mboweni warned that the public sector wage bill had exceeded expectations with above inflation increases and this had put further pressure on the country’s already struggling fiscus.
He said 2018’s agreement with unions had caused the fiscus a R30.2bn shortfall.
That’s just the way our government rolls, you see. Every demand public sector unions make is immediately granted.
Every demand that badly-run state-owned run entities make is immediately granted.
Just look at how, over the past 20 years, an entity like SAA has essentially just gulped down taxpayer millions with the government’s help.
I don’t underestimate Ramaphosa’s challenges. The trade unions helped him to power. He has to play politics with them.
The ANC’s fragile coalitions – with a Jacob Zuma split always looming – demand that he play politics within his party too.
This is no excuse, however, for the jaw-dropping policy incoherence and uncertainty that has emanated from the ANC and has hampered business confidence and growth.
The likes of Zuma and Mzwandile Masina, the intellectually-challenged Ekurhuleni mayor, often spout policy ideas they neither know nor fully understand. Reserve Bank nationalisation? Expropriation of land? Find a straight answer from the ANC and I’ll give you a medal.
Then, of course, amidst this uncertainty, we keep hopping on expensive flights to Davos to tell people we are open for business. Really?
What Ramaphosa needs to do this month is ease tourism and travel regulations in reality because people are still being stopped from travelling to SA because of this major and mighty folly by the former, unmissed, home affairs minister Malusi Gigaba.
Ramaphosa needs to confront state-owned enterprises. He needs to do, not just say. The reason why that expression “it’s the economy, stupid” has stuck around for so long is because, like most clichés, it’s true...