PHILIPPE BURGER: Building an economy, building hope
Government needs to see the private sector as a true partner, whose expertise and capital can leverage its plans
Many South Africans watched in disbelief last week as KwaZulu-Natal and Gauteng descended into looting, chaos and destruction after Jacob Zuma’s imprisonment. Though probably instigated by disgruntled pro-Zuma supporters, it is clear that the protests very quickly spun out of control.
In newspapers the question was repeatedly asked: did we see the hungry poor looting for food, or the opportunistic middle-class turning up in cars and bakkies to grab big-screen TVs and fridges? While images and videos clearly show that the latter were present in large numbers, the sight of other people — including gogos — ransack supermarkets and run off on foot with loaves of bread and bags of maize meal point to the former. In short, if people had jobs and hope that their lives will improve I doubt we would have seen such anarchy.
With official unemployment above 30% and the broad unemployment rate, which includes discouraged work-seekers, in excess of 40%, it was only a matter of time before protests and unrest occurred. Zuma’s imprisonment was surely incidental. If it hadn’t been that it would have been something else triggering the chaos.
Covid-19 also aggravated the situation, with 1.4-million people losing their jobs as a result of lockdown measures. In addition, the R350 Covid relief grant expired at the end of April, leaving many with less food on the table.
A number of people argue that in light of what has happened we should bring back the relief grant, and government may now not have much choice given the lingering effect of 16 months of Covid restrictions on levels of unemployment and poverty. It will simply have to rearrange its budget to do so. However, we can’t stop at grants.
Even though a grant puts a bit of food in your stomach, it does not give you hope that the future will look better than today. It’s that bleak-looking future, that sense of nothing to lose, that fuels the looting and gives unsavoury politicians leverage for their selfish interests. Contrast this behaviour with that of taxi drivers, who came out to protect malls and chase away looters. They did so because they have something to lose, a stake in the economy to protect.
We need to ensure that every South African has a stake in the economy. That way people will have a sense of belonging, they will have options and agency, and they will have resources to improve their lives. They will have hope that the future looks better than the present. A person with a stake in the system is unlikely to break that system.
We therefore need to seriously reconsider our policies, speed up much-needed change and start building a believable message of hope — hope stemming from real concern for the plight of the poor and serious implementation of policy. To help the poor we need to create jobs, and for that we need investment.
Analysis of economic data shows that for every percentage point rise in private investment as percentage of GDP we lift GDP growth by a third of a percentage point. And, on average, for every percentage point that GDP grows employment increases by 1%. In recent years private investment has averaged a mere 12% of GDP. If we can lift it to 15%, or even to 18%, GDP can grow by an extra one or two percentage points. It might not sound much, but after a decade or two it makes a big difference.
However, for this to happen the government will have to see the private sector as a true partner, whose expertise and capital can leverage the state’s plans. With such an approach it would, for instance, not be necessary for government to own and run an airline — a private operator will fill the gap in the market with its own capital, saving government billions of rand. And the government would long ago have let the private sector play a key role in the generation of electricity, instead of resisting change and only belatedly agreeing to lift the cap on private generation capacity from 1MW to 100MW.
The type and location of investment is also important. Data from the Council for Scientific & Industrial Research shows that SA’s urban population will have increased to between 50-million and 52-million by 2035 . That is an increase of 12-million to 14-million compared with 2018.
We must use the opportunity to build green industries. It will save money and build a better environment. In short, as a growth strategy we need a green, urban-driven investment strategy that caters for SA’s burgeoning urban population.
That way we can build communities where people have a stake in the economy, where they have jobs and businesses, escape poverty and have hope that their and their children’s futures will improve.
• Prof Burger is pro-vice-chancellor: poverty, inequality & economic development at the University of the Free State.
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