With the cost of living skyrocketing, consumers are about to be hit by another electricity price hike if Eskom gets its way. This is despite persistent load-shedding that has had a damaging effect on SA’s long-term economic growth and small business development.
Not surprisingly, as a result of the uncertain growth outlook, energy insecurity and our appetite for bailing out irredeemable state-owned enterprises, the World Bank has cut SA’s growth forecast to below 1% for 2020. This downward revision is indicative of an economy that has deteriorated, with SA’s credit rating now on the skids towards junk status.
The outlook seems even more dire, with faint hopes for the socioeconomic transformation project. Looming retrenchments are a direct result of low levels of economic activity and restrained consumer spending stifling growth.
Massmart has announced that it will close 34 stores, with about 1,500 employees facing retrenchment. Critics of Massmart say it didn’t favour local suppliers, which are the lifeblood of many communities, and failed to live up to the conditions of its acquisition by US heavyweight Walmart.
There’s a lesson to be learnt here: some acquisitions by foreign companies are not what they seem to be. Most importantly, such investments are short-lived and cannot be relied upon to address economic restraints and unemployment in the long term.
Perhaps it is time for government to review and designate portfolio investment for local players to have real sway over foreign interests. With this type of approach, aided by the development finance institutions, the broadening of economic participation will be realised to improve the growth performance of regional economies and sustain jobs.
This will go a long way towards igniting the economy, with fewer surprises in tough times.
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