DUMA GQUBULE: ANC still can’t figure how to grow economy and cut unemployment

After 29 years of mismanagement the ANC has still not got its head around how to manage the economy and create jobs. From 1994 to 2022 SA’s GDP per capita increased by only 22.1%. By comparison, GDP per capita increased by 738% in China, 337% in Vietnam, 315% in Ethiopia, 285% in India and 216% in Poland over the same period, measured in local currency units.

The lesson of the past three decades is that an economy grows rapidly and creates jobs when the government increases spending on its people and infrastructure. The failure to make adequate investments in infrastructure in SA has been catastrophic, resulting in crippling electricity and water crises. 

From 1996 to 2002, under the Growth, Employment & Redistribution (Gear) policy, government consumption spending increased by 2.1% a year. From 1996 to 2001 public investment (by general government and public corporations) declined by 1.5% a year. The economy grew by 2.9% a year. The unemployment rate increased to 40.6% during the first quarter of 2003 from 33% in 1996.

From 2003 to 2008 government consumption and public investment soared by 5% and 14% a year respectively. The economy grew by 4.5% a year and created 3.1-million jobs. There was no “jobless growth” and the unemployment rate fell to 28.7%. 

From 2009 to 2022, government consumption spending increased by 1.5% a year — lower than during Gear — and public investment fell by 2.4% a year. GDP per capita declined. From the fourth quarter of 2008 to the first quarter of 2023 the labour force grew by 7.4-million and the economy created 1.4-million jobs. The number of unemployed people increased by
6-million to 11.9-million, according to Stats SA. There were unemployment rates of 47.3% for black Africans and 51% for black African women.

During Cyril Ramaphosa’s presidency the economy has created only 21,000 jobs and the number of unemployed people has increased by 2.7-million. Over the same period 476,000 young people (15—34) have lost their jobs and joined the growing queue of the unemployed. The number of unemployed young people has increased by 1.3-million to 7-million, and the unemployment rate is 56%.

On the SABC last week ANC secretary-general Fikile Mbalula blamed Covid-19 for the failure to create jobs after host Sizwe Mpofu-Walsh presented these shocking statistics. But the pandemic is not an excuse. The number of unemployed people soared by 1.6-million from the start of Ramaphosa’s presidency until the outbreak of the pandemic. The unemployment rate increased to 39.7% from 36.3%. The economy was collapsing before the pandemic and has underperformed against most IMF country groups since the end of the lockdowns.

In 2022 the SA economy grew by 2%. The world economy grew by 3.4%. Emerging and developing countries grew by 4%. In 2023 the IMF says SA will grow by 0.1%. Only Ukraine, Sri Lanka, Chile, Yemen and Equatorial Guinea will have lower growth. The IMF says 155 emerging and developing countries will grow by 3.9%. Emerging and developing Asia (30 countries) will grow by 5.3%.

Government policies to address the overlapping crises of power blackouts, nonexistent GDP growth, crumbling infrastructure and job creation have failed. For example, it has spent R50bn on the wasteful employment tax incentive, but the number of unemployed young people has increased by
2-million since it was introduced in December 2013.

SA’s economic outlook — three more years of declining GDP per capita after 15 years of no growth — is frightening. We cannot continue like this and keep recycling failed policies. GDP growth and job creation are macroeconomic policy issues. What more evidence do we need to show that the macroeconomic policies are not working and must be changed?

The government must start investing in its people and infrastructure again. The idea that there is a budget constraint and that the government cannot mobilise the resources to make these investments is absurd.   

• Gqubule is research associate at the Social Policy Initiative.