SA must surf the wave of global recovery
Rebound calls for fiscal discipline and policies rooted in the country’s realities
Like a surfer paddling towards a wave, SA is trying to catch the economic swell of a global economy set to expand at a fast post-recession clip.
Locally, business confidence is beginning to return despite ongoing disappointment with endemic corruption, crippling load-shedding and vaccine rollout delays.
With a strengthening currency, rising minerals prices and a buoyant stock market — bolstered by news of decisive reforms that will lead to a “new era” for the electricity sector as red tape for private generation is cut — the country is holding its breath, waiting to catch the wave heading for inclusive economic recovery.
Though the global rebound presents an opportunity for SA, policy-making must continue to be rooted in the country’s realities. There are no quick fixes for an economy that is lagging its peers on so many fronts. Measured against other emerging nations, SA is experiencing only a mild bounce and exports have failed to follow the “V-shape” recovery of foreign demand.
The country’s per-capita GDP growth is also treading water, sitting at the same level as 2006. The government’s large social welfare programme, which reaches about 17-million beneficiaries, is very strong but risks becoming unsustainable. The social protection system cannot be a substitute for growth and will need to be more innovative. More jobs are needed to create a lasting impact on the day-to-day lives of millions of ordinary people.
The Inclusive Society Institute has been brainstorming solutions with pundits from around the world. From Japan to South Korea and Germany, experts have weighed in on what SA could do to place it on a path of sustained growth. In its latest report, the institute draws on the expertise of international organisations including the Organisation for Economic Co-operation & Development and the World Bank.
Providing insight on best practice, sharing comparative data and offering recommendations, economists from these institutions have offered their views and insights on what they believe should be done to put the economy onto a new, more dynamic trajectory.
This “brains trust” has suggested that priorities include rebalancing the fiscal status quo, equipping the current and future workforce with the correct skills, encouraging employment, and fostering a green energy transformation that would not only clean up the air, but act as a shot of adrenaline to the entire economy.
The recent announcement that businesses will be allowed to generate up to 100MW of power without having to first undergo the lengthy process of applying for a licence has raised new hope that life can return to the economy. Mines, farms, factories and shopping centres will be among those able to install their own embedded electricity generation and then distribute and sell their excess power via the grid.
A stable supply of electricity is at the centre of achieving higher economic growth. There are also vast opportunities for aligning industrial development and green economy policies.
Higher energy investment will make a substantial difference to the country. Overall, however, infrastructure expenditure has been on the decrease and must be revitalised. infrastructure investment also must be smartly designed and must make greater use of public-private partnerships.
The stabilisation of public debt should be better designed to ensure there is sufficient finance available for infrastructure development. Instead of pursuing an “active” scenario of debt management, which aims to ensure national debt peaks in 2023, a more “passive” alternative could be considered over a longer period, freeing up finances to be used strictly for much-needed infrastructure maintenance and development.
Embracing digital transformation is another area brimming with opportunity. Though increased digitisation and automation will displace certain jobs, it will result in the birth of many new ones and promises to leave SA consumers and small businesses in a better position than they are now, with the country’s comparatively slow and costly data access.
To fully capitalise on the advantages of this new age, challenges relating to inclusive access to data and much-needed 5G infrastructure have to be dealt with. Technology and a push for digital efficiency will require a rethink of the skills and policies needed to equip the future workforce.
The recipe is relatively simple when you have success stories from around the world on which to draw, though they will need to be tweaked to suit SA’s specific circumstances.
What we need is political will, political leadership and a private sector that is inspired enough by the vision of opportunity, reform and growth to put its considerable weight and expertise into the effort. Together, we can build a better future.
• Swanepoel is CEO of the Inclusive Society Institute (ISI). This is an extract from a report after dialogue with the Organisation for Economic Co-operation & Development and the World Bank. The dialogue was part of the ISI’s project aimed at developing a blueprint for SA’s economic rejuvenation
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