Recovery may be slow and imperceptible but it is under way
SA’s economy is facing a number of difficult headwinds, both global and domestic. Despite this, there are emerging signs that we are well placed to survive these and build a more robust, more prosperous and more equitable economy for all our people.
We must acknowledge that South Africans face the most difficult economic conditions we have seen since the dawn of democracy in 1994. Business and consumer confidence in our economy are at their lowest point. The rising costs of fuel, food and other everyday necessities are depleting already stagnant incomes. Our energy crisis is worsening with every passing month. Unemployment remains stubbornly high, and poverty and inequality are on the march.
Also, globally the Covid-19 pandemic and other geopolitical factors have wreaked havoc with supply chains (in food, oil and gas, and industrial inputs) and undermined the established world trade order. These developments have had a disruptive effect on emerging economies such as ours.
These realities have rendered the life of the ordinary citizen far harder than it was even two years ago, let alone before the pandemic, the Russia-Ukraine war, the Sino-American trade war, and other global factors outside our immediate control.
However, it is not all gloomy on the economic front, even if it may feel so. There are green shoots of recovery for our economy, and the positive signs we are beginning to see could, if properly harnessed, lead to sustained and shared growth.
Much sooner than expected, our economy is now performing at pre-pandemic levels. We need to sustain and bolster the GDP growth we are beginning to see again. More than 370,000 jobs have been created between the last quarter of 2021 and the first quarter of this year. In 2021 we posted the largest trade surplus on record at R448bn, which was the highest since 1987.
Following sustained rises even the petrol price has come down, thus holding out the hope of relief for motorists, public transport users and businesses directly affected by fuel costs. Crude prices have now fallen to the lowest we’ve seen in years.
Of course, we should not celebrate too early. We recognise that this recovery is fragile and may be short-lived, and negatively affected by global and local events. We have no control over global oil prices, for instance.
But there are any number of interventions we can and are already making to ensure these positive trends are sustained. It is precisely these interventions that the ANC national policy conference focused on when it convened in late July.
One of the main tasks of the conference was to answer a simple question: what can we as the governing party and as a country do to engender economic recovery and dent unemployment, poverty and inequality?
One of the most critical success factors is inward investment. Despite the challenges we face we continue to attract investment into our economy. The steady flow of foreign direct investment into SA suggests that the growth potential of our economy is still recognised internationally.
Thus far, the total value of investment commitments has passed the R1.1-trillion mark. This means we are outperforming our targets, as articulated by President Cyril Ramaphosa when he launched the five-year $100bn investment drive in 2018.
Another is infrastructure. The state continues to aggressively build infrastructure as part of its ongoing commitment to improve our country’s competitiveness as an investment destination, and to create an enabling environment for growth, job creation and the eradication of poverty.
A third success factor is policy and structural reform. Through Operation Vulindlela the presidency’s structural reform initiative, the government is implementing bold and far-reaching policy and economic rehabilitation, aimed at sustainably increasing our economy’s competitiveness and growth rate.
A total of 26 reforms are being implemented across the critical network industries, such as energy, transport and logistics, water and bulk infrastructure, and telecommunications.
We have also committed ourselves to African-led growth. The only way Africa can sustain growth and economic development is by fostering intra-African trade, which will boost the continent’s trading position in global markets and supply chains.
To achieve this we have a window of opportunity offered by the recently concluded African Continental Free Trade Area agreement. This provides a solid platform for us as Africans to take full advantage of the sheer size of our population, its youthfulness, a rising and rapidly urbanising middle class as well as the abundant natural resources we have beneath the African soil.
The policy conference agreed that we must undertake extraordinary and urgent measures to accelerate inclusive growth, create employment and alleviate poverty. We call on the government to act urgently to support consumers and businesses in these difficult times.
In tackling the challenges of our economy and society we are committed to building inclusive and lasting social compacts. Social compacts with various sectors of society are critical in ensuring that we mobilise broad-based support and buy-in from all South Africans for our policy proposals, and that our policies deliver the desired results in the shortest time possible.
For social compacts to work it will require that national interest and common good should take precedence over narrow, short-term sectoral interest.
Consistent with our commitment to building a mixed economy, the conference recognised the vital role of the private sector, particularly small business and the informal sector, in creating employment and other economic opportunities.
In this regard we have proposed a range of measures to unlock the potential of businesses of all sizes to emerge, grow and thrive. These include:
- A secure, affordable, and sustainable energy supply;
- A diverse mix of energy sources and a just transition to a low carbon economy. Such an economy must guarantee energy security, protect jobs and livelihoods, and must not compromise our industrial development;
- An acceleration of the expanded infrastructure investment to provide services and unlock the growth- and employment-creating potential of our economy; and
- A need to use government and private sector procurement more effectively to advance economic transformation and empowerment of black people, women, youth, and people with disabilities.
SA’s economy is by no means in the best state it could be. That is a reality all of us can attest to. But we are not doomed; we are not destined to inevitable failure. We have the policy tools, the capacity, the human energy and the resilience to turn things around. Our challenges may be great, but they are not insurmountable.
Our divides may be deep, but they are not unbridgeable. We can do better, and we are required to do better. Let us all rise to that challenge in unison.