SA should focus on markets of tomorrow, says World Economic Forum
SA needs more trustworthy institutions and a better long-term vision, says World Economic Forum (WEF) MD Saadia Zahidi.
Zahidi’s comments come as SA tries to turn the tide on corruption, which has weakened institutions such as the SA Revenue Service as well as state-owned enterprises and hollowed-out state capacity. The country also found itself embroiled in allegations of corruption relating to Covid-19 tenders. These scandals have damaged SA’s reputation while President Cyril Ramaphosa has made attracting foreign investment a key part of his agenda.
Speaking during a virtual media briefing to release the WEF’s “Global Competitiveness Report Special Edition 2020: How Countries are Performing on the Road to Recovery” on Wednesday, Zahidi said countries with advanced digital economies, strong social safety nets and robust health-care systems have best managed the Covid-19 impact.
Responding to questions from Business Day on the WEF’s concerns for the SA economy, which the Reserve Bank forecasts to contract 8% in 2020, Zahidi said the country should invest more in the “markets of tomorrow”. These related to green technology, artificial intelligence and data-driven markets, all of which would help in the development of better social safety nets and health-care systems to respond to Covid-19.
Zahidi said SA should focus on skills development and “on having more trustworthy institutions as well as better long-term vision within the government”.
“But certainly one [area] that stands out as a positive is around future taxation. SA has done fairly well in the area of rethinking the balance of taxation between labour and capital and rethinking how progressive taxation needs to be”.
According to the WEF report, the economic and health crisis triggered by Covid-19 was expected to push between 88-million and 115-million more people into extreme poverty in 2020.
“When looking at working hour losses experienced by the global economy, 245-million full-time jobs are expected to be lost globally by the end of 2020, which amounts to a loss of the productive capacity of 8.6% of the global workforce,” the report says.
Its Global Competitiveness Index rankings have been suspended “due to extraordinary response measures taken by governments following the global pandemic outbreak and economic recession”.
Covid-19 has disrupted global trade and supply chains and put financial markets into a tailspin. SA has lost 2.2-million jobs and is battling an unemployment rate of 30.8%.
A total of 37 countries were surveyed in the WEF report against 11 priorities to gauge their preparedness for economic recovery and transformation, with the score ranging from 0-100, with 100 being the best possible outcome.
On the priority of ensuring public institutions embed strong governance principles, build a long-term vision and establish trust by serving their citizens, SA scored 53.9, higher than its Brics counterparts Brazil (45.3), Russia (42.8) and India (49.4). China, the world’s second-biggest economy, scored 64.3.
On upgrading infrastructure to accelerate energy transition and broaden access to electricity and information and communication technology, SA scored 63.8, while Russia was bottom of the list with 57.2.
On shifting to more progressive taxation, SA was top of the list with 65.2. However, the country scored 31.7 on the priority of incentivising and expanding investments in research, innovation and invention that can create new markets of tomorrow.
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