7 game-changers for the path to economic recovery
The ‘Absa Business Day Supplier Development Dialogue’ series was hosted online on May 26 2020
The Covid-19 pandemic is the biggest disruption to the global economy and has forever changed the business landscape. Experts agree that a global recession is imminent and is due to last for a while. Even the world’s healthiest economies now face negative growth rates, and developing economies find they lack the financial resources to accelerate recoveries.
SA, in particular, is already experiencing a recession due to pre-existing financial stressors, and the SA Reserve Bank forecasts that the economy will shrink by 7% in 2020. Bleaker estimates from Business 4 SA have said the decline could be between 10% and 16.7%, depending on how quickly SA’s economy reopens.
So, what does our economic future look like in the face of Covid-19? This was debated by leading specialists Hilary Joffe, contributing editor of the Business Times and Sunday Times; Mariëtte du Toit-Helmbold, chief destineer of Destinate; Jacob Maphuta, chief director of broad-based BEE of the department of trade & industry; and Gaylor Montmasson-Clair, senior economist of trade & industrial policy strategies, at the Absa Business Day Supplier Development Dialogue series hosted on May 26 2020, in partnership with Fetola, Cold Press Media and Arena Holdings.
Panellists agreed that our growth outlook shows a decline and that SA will come out of the Covid-19 crisis poorer, with much sharper inequality and unemployment, and public finances depleted, leaving us reliant on limited resources to support the social needs of society.
“There is no precedent for the recession and we won’t get back to where we were before 2023. Our future economic prospects depend largely on how quickly we come out of lockdown, how we navigate our way out, how much damage is permanent and capacity lost, and essentially on our ability to recover,” said Joffe.
“Recovery will also depend on how much attention we give to policy and fiscal reforms we have spoken about for so long. The government must create an enabling environment to unblock blockages that don’t make us competitive, to foster a conducive environment for business and the private sector to invest, innovate and thrive, and to support and reignite growth.
The collective sense was that the crisis yields unique opportunities. “The positive thing about the crisis is that it has brought us closer together — across sectors to focus more sharply on some of the things that need reprioritizing,” said Maphutha.
Montmasson-Clair advocated for a paradigm shift in favour of a green and just economic recovery strategy and a need to start setting up capacity and systems to build a more resilient economy and “build back better” in the post-pandemic future.
The seven potential game-changers for our path to recovery identified by panellists included:
Collaboration: building partnerships and platforms for co-operation between the government, small business and the private sector, such as the Absa Business Day Supplier Development Awards.
Localisation: rethinking and restructuring of our value chains to maximise resources and value within SA. Localisation of production/manufacturing, vertical integration of supply chains, and linkages for rural and informal economic development.
Inclusivity: stimulating economic activities in marginalised areas and rural and township economies to address inequality, transformation and the participation of small businesses and black industrialists in the economy.
Competitive edge: being ruthlessly price efficient by reducing the cost of production, and seizing export opportunities through proactive identification of demand and market gaps to capitalise on our weak exchange rate. Link this to sustainability and “green production” to meet growing post-Covid-19 global pressure for climate-friendly production.
Smart infrastructure: building smart systems, smart grids, rail networks, smart water and sanitation systems, and networks of infrastructure systems to meet local demand and drive job creation.
Sustainability, climate resilience and low carbon production: protecting our ecological infrastructure and communities, including access to sustainable services, such as water, sanitation and public transport; low-carbon production and renewable energy technologies, which stimulate local manufacturing and the development of local supply chains.
Digital: maximising the online economy and addressing the digital divide with rapid deployment of broadband to stimulate innovation and growth, capacitate emerging businesses and fast-track equal opportunities.
Moderator Catherine Wijnberg, CEO of Fetola, highlighted that while there is no silver bullet and that we can’t afford to go back to business as usual, the crisis presents an opportunity for us to create a different future. Key would be to build trust, be agile, efficient and effective. “This is our recovery!”
Due to lockdown restrictions, the highly anticipated Absa Business Day Supplier Development Awards now take place on September 9 2020 in Johannesburg.
Visit www.sdawards.co.za for more information.
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