FANI TITI AND CUMESH MOODLIAR: G20 a potential breakthrough moment for SA and the continent

SA assumes the G20 presidency at an opportune time. The uncertainty that preceded the elections has given way to a more positive national mood, with tangible reasons for optimism.

The government of national unity (GNU) has begun to deliver on structural reforms to revive the economy; inflation is under control; business confidence is improving; removal from the Financial Action Task Force’s “greylist” could happen as soon as next year; and we may be on track for a rating upgrade following S&P’s recent brightening of its outlook on the country’s fiscal prospects.

But further progress in improving the daily lives of most South Africans remains a key national goal. We have yet to see the creation of jobs at scale and pervasive improvements in living standards — the just dividends of our hard-won democracy.

These benefits are contingent on an acceleration of effective measures to lift the constraints on our country’s economic growth; not just in the interest of higher GDP, but also to ensure we develop as a society that can realise and harness the potential of its people. 

SA’s G20 leadership coincides with a growing realisation, evident at this year’s World Economic Forum, that traditional metrics do not adequately measure the inclusivity and equality of economic growth.

We can therefore expect the discussions taking place on our shores to extend beyond GDP targets into less charted territory, such as equalising opportunities between nations and international collaboration in areas like technology, healthcare and education.

As host, SA is well-placed to influence these discussions and ensure the interests of the country and the African continent are given due consideration. 

We also assume the G20 presidency at a time of shifting alignments between nations, which will influence SA’s place in a changing global order. Despite the clear need for global co-operation, geopolitical uncertainty is arguably at its highest point since the end of the Cold War.

Conflicts in Eastern Europe and the Middle East, an expected new wave of trade tariffs, and heightened tensions between China and the US, will have far-reaching consequences for the global economy and our collective capacity to address shared social and environmental challenges. 

For all its attendant risks, the current moment presents a historic opportunity for SA and the continent. Established trade patterns have shifted in response to geopolitical developments and developed economies are seeking to rebalance their supply chains.

Africa is poised to play a more prominent role in this new order. Apart from its wealth of natural resources — including an abundance of wind, sunlight and critical minerals — Africa is blessed with a youthful population that represents not only a growing market, but also the future workforce that could power global economic growth into the next half century.

The UN has estimated that in 2050 one in three of the world’s young people will be in Africa. This at a time when working age populations are in steep decline in Europe, China and much of Southeast Asia. But capitalising on these natural advantages will require African countries to prioritise political and economic reforms grounded in democratic principles. These reforms would unlock access to more cost-effective investment capital and support the continent’s development agenda. 

As Africa’s most developed economy, SA has a key role to play in positioning the continent for sustainable, inclusive economic growth.

Domestically, the country is on firmer ground than a year ago. Collaborative efforts by government and business have borne fruit, most substantially on energy security, with improvements at Eskom and over 6,000MW of privately procured renewable energy set to come on stream in the next two years alone.

There are also early signs of revival in our ailing logistics and transport networks, where we have seen increases in freight rail tonnage and an easing of port congestion.

But these gains also highlight just how far we still have to go. While the national load-shedding crisis is mostly behind us for now, we are a long way from solving underlying weaknesses in productive economic infrastructure and functional public services.

Sustainable progress on energy security requires an enormous upgrade of the national transmission grid. Universal access to clean water requires large-scale and effective investments in water storage, treatment and distribution.

And government needs urgently to design bankable projects that harness private sector capital and expertise to unclog and expand our road, port and rail networks. 

We believe with accelerated efforts to address these structural constraints GDP growth upwards of 2.5%-3% per annum in the next five years is well within our grasp. Based on our model estimates, shifting GDP growth from 1% to 2% per annum for five years would create jobs for about 1-million people, and hope of a better future for millions more.

Growth of 5% per year in the same period — admittedly a stretch target — would add 2.7-million jobs. Such growth would mean higher government revenue, translating into more support for the most vulnerable in our society and enhanced capacity to improve public education and health services — prerequisites to reducing inequality in the long term.

Domestic growth would also contribute to, and benefit from, the development of other African economies. Our country can and should be a bellwether to fellow African nations, demonstrating what can be achieved in a stable democracy when the private and public sectors work together. As host of the G20 we have the chance and the obligation to showcase the continent and its vast economic potential to the world.

However, all of this is premised on stepping up the pace of structural reforms. Absent the collective will to drive inclusive economic growth, the gains of the past year will be short-lived. The long-term social cost of letting this opportunity slip through our fingers is simply too ghastly to contemplate.

With the eyes of the world upon us, let us be galvanised by the challenge Nelson Mandela set before the nation when he retired from public life in 2008: “Where there is poverty and sickness, where human beings are being oppressed, there is more work to be done. Our work is for freedom for all. After 90 years of life, it is time for new hands to lift the burdens. It is in your hands now.”

• Titi is group CEO, and Moodliar SA CEO, at Investec.