Growth and solidarity are the pillars on which to rebuild the economy
Growth and solidarity. These are the twin pillars on which our post-Covid society will be built. A reconstruction and development plan (RDP) of sorts, this time with a greater appreciation of what our state can and can’t deliver.
Growth, because we know that if we can’t grow output over the next two to three years we face the real prospect of a sovereign default. Solidarity, because more than ever before our future survival — not to mention prosperity — will depend on lifting the whole society and not just a few. If Covid teaches nothing else, it demonstrates that until we are all protected none of us is protected.
Growth is possible, despite the obstacles, despite the times, despite the weakness of our state. There is low-hanging fruit, there are clear opportunities and some are substantial. A couple require little more than the stroke of a pen. Like we did with the RDP, we need to identify these, focus on them, resolve them.
Solidarity is possible. We have seen this in people’s reaction during the course of the pandemic. Not only through the Solidarity Fund — itself a substantial achievement — but through the actions of so many ordinary South Africans who have rallied to support their employees or extended families. Just as the RDP drew on a sense of a common future, so the pandemic creates an appreciation that anyone left standing has a debt to those around us. A debt that can be paid through sharing of opportunities and resources.
Where will growth come from? Where can our economy expand? Where can we generate new economic activity that can create jobs and — crucially — pay taxes? The last thing we need is another grand plan. But we do need a change of approach, a sense of urgency, a commitment to the importance of investment. We need to focus on a few growth-enhancing prospects and move from there.
The economy has been badly battered, especially in relation to employment. But there a few bright stars that have shone even under lockdown, and others that might shine if we can create the conditions. Current stars include:
- Platinum group metals, which have soared despite lockdown and so much else. This has sustained many thousands of jobs and paid substantial taxes. Although the industry is shifting to greater automation, sustained higher prices mean a number of new mines will become viable — these could be among the largest capital projects in the country over the next few years.
- Agriculture has performed well almost across the board, and offers significant opportunity. The agriculture minister has taken the bull by the horns and shown that the sector can advance substantially, especially with real co-operation between black and white farmers.
- Retailers have mostly shown remarkable resilience and an ability to adapt to changing circumstances. Along with our logistics sector they provide an economic backbone from small towns to townships to suburbs, throughout the country.
To rebuild our economy we need much more. Potential sources of growth — many of which are held back by government policy or the inability to carry out complex administrative tasks — include:
- Offshore gas, now that we know there are substantial reserves of gas off the SA coast. This is surely the greatest opportunity of a generation. Inexplicably, the sector is being held back by the state’s inability to produce a regulatory framework for the upstream gas sector. This is stroke-of-a-pen stuff and needs urgent focus.
- Servicing the growing Mozambican economy. Although there are terrible problems at present, the economy on our doorstep is set to grow in leaps and bounds due to the development of huge gas fields. If the armed conflict in the north can be contained our neighbour will need everything from skills to steel to poultry. And the African Continental Free Trade Agreement creates opportunities throughout the continent. We must not leave these opportunities to others.
- Meat exports have expanded in recent years and could really take off. But the department of agriculture needs to be strengthened. Proper attention must be paid to the complex certification systems that depend largely on the office of the state vet (a key economic enabler despite its modest name) and other parts of government. We have excellent trade access to Europe, but poultry and other meat exports are held back by our inability to meet phytosanitary requirements.
- Title deeds for RDP houses. Millions of households — yes, millions — have received RDP houses for free over the last 20 years. Despite problems of location and quality, this represents a huge transfer of assets to the poorest households. Except that almost none of them have title deeds, which means though they provide shelter they are not yet an economic asset. Providing the title deeds involves solving complex administrative problems, but with effort and focus it could change the lives of a generation of South Africans.
Beyond the specifics, we must develop a growth orientation, a determination to attract and sustain investment. We must reject the politics of corruption.
Where will solidarity come from? The vaccine, for starters. Every person of means must help ensure that everyone else is vaccinated. Most of the task falls to the state, but there is much we can do to help.
Growth and solidarity. Rebuilding the economy. This is where we have to focus our energy. With the right approach, it can be done.
• Bethlehem is an investment executive at Hosken Consolidated Investments, where she focuses on renewable energy, inner city housing and commercial property. She is a member of the boards of the Industrial Development Corporation and Sedibelo Platinum. She writes in her personal capacity.
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