Game changers needed to achieve true economic reform
For some time South Africa has been adopting economic plans promising to grow the economy by not less than 6%.
That target is yet to be achieved sustainably over at least a decade and many blame this on poor execution, but is that the only problem?
We have been shy to speak boldly about structural economic reforms, which still bear apartheid architecture.
The ANC government has made strides to transform the economy, but little has been achieved. As a result economic transformation has become a dominant discourse as many South Africans are still excluded from mainstream economy.
Covid-19 presents us with a plethora of challenges, chief among them the looming, unavoidable job losses
Corruption, racism and incompetence have played a huge role in our economic woes. Joblessness, poverty and hunger have become synonymous with many households in SA.
As we cast our eyes towards the post Covid-19 era, many opportunities must be pursued. I propose some of the game changers which SA must focus on:
- Import substitutes: We should come to a stage where we reduce our imports considerably and increase our exports. This is only possible through industrialisation and increasing value adding, manufacturing and agro-processing capabilities. For this strategy to work, protectionist policies are required. We must only import what we cannot produce locally.
- Value chain analysis and integration: Whatever we produce we should add value to until the consumption stage. I still don’t understand why are we not processing our minerals. We should look at our production potential, make an assessment order and exploit our competitive advantage. SA must stop being a net exporter of raw materials.
- Localisation: For a long time we have been consuming goods from outside our borders and locally produced items battling to command space within the local market. There is what I refer to as low hanging fruits. All schools, hospitals, and correctional services centres should be supplied by local farmers. There should be deliberate aggressive marketing strategies that will be targeted at promoting local goods, and legislation should be enacted to advance this agenda.
- Industrialisation: “One district one factory” should be our slogan and this can go a long way towards changing the country’s fortunes. A socioeconomic assessment should be done for every district in an attempt to establish potential industries which can strive in that locality. These should be labour-intensive industries, which will create millions of jobs, and in turn alleviate poverty and stimulate growth. Government should set aside funding dedicated to establishing these factories jointly with private partners.
- Resuscitation of vocational institutions: Post-1994 we have witnessed a consistent decline in the supply of artisans in the country. This can be attributed to the challenges these vocational institutions are facing. It boggles the mind why vocational colleges would offer office management or accounting instead of focusing more on artisanal skills. These institutions should strategically partner with government and business to produce the required skilled force for the maintenance of roads, buildings, and government fleets.
- Access to finance by SMMEs: The backbone of any economy is in the SMMs sector. No economy can grow if this sector is neglected. The SMME sector in the country already makes a significant contribution to job creation. One of the notable predicaments this sector faces is financial exclusion. For an SMME to be financed for both Capex and Opex requirements, a plethora of requirements must be met, which is often difficult for a small black businesses.
Covid-19 presents us with a plethora of challenges, chief among them the looming, unavoidable job losses, contraction of the economy, the ever-increasing budget deficit and the shrinking Sars revenue.
We therefore need a new compact on rebalancing the structural defects in our economy; a strategy that would benefit everyone.
Sigqibo Mfuywa is a PhD candidate at Unisa. He writes in his personal capacity.