Economic growth, from which all things flow, is all SA needs
Ideal long-term growth would be about 7%, a level that has globally and empirically demonstrated able to extricating generations out of poverty
In the aftermath of a brilliantly focused and thankfully short inaugural speech, and the spectacular SA Air Force display, it is worth noting that President Cyril Ramaphosa is inheriting an economy that grew at a paltry 0.8% in 2018. Add to that mix the International Monetary Fund’s (IMF) projection of a generally weak global economic expansion and the picture becomes as clear as mud.
It is in this context that the newly mandated administration of Ramaphosa must shoulder the burden of previously dashed hopes of millions of South Africans for an economy that can lift many out of poverty while affording others the opportunities to realise their entrepreneurial and career dreams.
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The president is definitely aware of the magnitude of the task lying ahead: “Let us forge a compact for growth and economic opportunity, for productive lands and viable communities, for knowledge, for innovation, and for services that are affordable, accessible and sustainable,” implored newly inaugurated president as he unveiled a new dawn with a fresh mandate.
His is not an easy responsibility; he said as much: “We are aware of the debilitating legacy of our past, nor [sic] the many difficulties of the present. To achieve the SA we want will demand an extraordinary feat of human endeavour. The road ahead will be difficult. We will have to use our courage, wisdom and perseverance to achieve the SA we want. It will require an ambition that is rare.”
Let there be no ambiguity regarding the fact that only a sustainable, high-growth economy can meet those expectations. It simply cannot be over-emphasised how important economic growth is; it is critically important.
Simply put, economic growth is the single most important phenomenon known to have historically lifted humanity en masse out of the drudgery of poverty
The now shelved, dust-gathering and forgotten “Growth Report” of the Commission on Growth and Development captures this importance a lot more pointedly: “Growth is not an end in itself, but it makes it possible to achieve other important objectives of individuals and societies.”
The report proceeds to take the view that “Growth is a necessary, if not sufficient, condition for broader development, enlarging the scope for individuals to be productive and creative”. In other words, economic growth is so pivotal that all other development objectives — such as building a society that has a high quality of life, is educated, healthy and gainfully employed — are simply not feasible without adequate and consistent growth. Simply put, economic growth is the single most important phenomenon known to have historically lifted humanity en masse out of the drudgery of poverty.
Every generation has, as a matter of necessity transformed the natural assets, as well as improved man-made ones bequeathed by previous generations, to higher levels of productivity to improve their quality of life. The alternative is a life that is simply unbearably purposeless.
The more pervasive and intractable the social and development challenges facing society, the higher and more consistent the levels of growth required to leapfrog society out of a state of underdevelopment into a generally higher quality of life. That would be the case in relation to SA’s triple challenges of poverty, unemployment and inequality. Mediocre growth levels below even a mere 2% (0.8% for 2018, remember) such as the SA economy has been churning out recently will simply not do.
Whereas a return to the presumed long-term growth level of 3.5% would seem a lofty goal that would, admittedly, afford the country a breather, the ideal long-term growth would be in the ball-park region of 7%; a level that globally has historically and empirically demonstrated the ability to extricate entire generations out of poverty and underdevelopment.
Despite the current pedestrian growth levels in SA, sustainable, high growth is possible and can be explained, not as a miracle but because of deliberate policy choices. Such a high growth path requires bold, growth-focused policy choices.
It behoves leaders at various levels of the public and private sector, including those whose responsibilities are not overtly economic, to have adequate appreciation of the nature of economic growth. This should enhance an appreciation of the impact of their policy stances and programmes on the development prospects of society.
Counter-intuitively, economic growth is, in fact, not the exclusive province of economists. By its very nature, growth is a multi-disciplinary, multi-dimensional and multi-sectoral phenomenon. Everybody in society has a role to play in growing the economy. Now is the time to craft an integrated growth strategy that does not simply tinker with peripheral, short-term market reforms but seeks to fundamentally change the structure of the economy and reposition it for high growth and development in the long term.
Legacy beckons Mr President.
• Matlala is a development economist and development finance practitioner focused on project and infrastructure finance; and a former political officer of Umkhonto we Sizwe.