Picture: 123RF/xtockimages
Picture: 123RF/xtockimages

It feels like 1995 all over again, with SA scraping its way into the Rugby World Cup final. Now, as then, we have a chance of bringing the trophy home.

It was also in 1995 that we came to terms with our desperate economic situation and embarked on difficult reforms that were to drive us to 5.5% economic growth by 2007, trebling the size of the economy since 1994.

In both contexts, the nation was mobilised behind the goal.

Now we face a similar opportunity: first, with Tito Mboweni’s medium-term budget policy statement (MTBPS) delivered on Wednesday; and then with Siya Kolisi on Saturday. And SA is hungry for victory on both fronts.

For the finance minister, the key challenge is to show that the government can navigate SA out of its economic crisis.

The hope is that the MTBPS will prove to be a realistic package, a tool to mobilise South Africans around programmes that will likely require short-term pain for long-term, sustainable and inclusive growth.

After all, it is precisely because of government inaction that the critical economic metrics are moving in the wrong direction. A bad debt situation has deteriorated further, revenue collection is dropping, economic growth is stalling and being outpaced by population growth of 1.5%.

This means South Africans are getting poorer every day, while tough decisions are being postponed. With uncontrolled public spending arising from demands for bailouts from state-owned entities, overpriced contracts with private sector providers and an excessive public sector wage bill, this debt situation stands to worsen.

Economic growth requires investment. Contrary to popular belief, state investment in productive assets has been negative and outpaced by that of the private sector. Clearly, a highly indebted state with high debt servicing costs will be constrained in its ability to invest in the economy. The answer lies in unlocking private sector investment through economic reform.

The answer lies in unlocking private sector investment through economic reform

Society is waiting for clarity, and the various social partners will have their say at a meeting between the National Economic Development & Labour Council (Nedlac) executive committee and Mboweni early in November.

Given the challenges, a social compact will be critical to delivering on the MTBPS’s possibilities.

A tough journey lies ahead. Are Nedlac and its social partners ready to provide mature leadership?

When the presidential working group on employment (PWGE) meets next week, it will hopefully be armed with a clear understanding from the MTBPS that a shrinking economy sheds jobs, and that a deteriorating fiscal position destroys both employment prospects and the economy.

At this forum we have, in unison, demanded urgent government action. But this is easier said than done. After all, it is likely to result in more social tension — with populists ready to take advantage.

The National Treasury’s policy statement, now endorsed by the president, was perhaps the first sign that a decisive government is emerging. It improves the prospect of crowding in investments.

It starts with a strong, unambiguous and decisive tone set by a democratically mandated government. If the MTBPS is seen as having failed to do this, SA will be in an even worse crisis. If it is seen as having failed to force itself on the agenda of next week’s PWGE, it will be a dismal setback.

At the October PWGE, the president took charge, showing progress on visa reforms, the improvement of water-licensing management, delivery of telecoms spectrum, export tax reform and energy reforms, culminating in the release of the Integrated Resource Plan (IRP).

At the November PWGE, the president will need to take charge again. We will need to see a government that is clear, decisive and committed to building partnerships through realistic social compacts.

The IRP is a good example of this. It is a consensus document forged through discussions at Nedlac, with the government, labour, business and civil society all involved in its formulation.

The IRP builds on the success of other social compact end products emerging from Nedlac, such as the national minimum wage and labour relations amendments, and proves that social compacting is the way to go if we want to find acceptable solutions to SA’s macroeconomic challenges.

Now we need to see the same sense of purpose, and collectively focus on the next big challenge: compacting around the MTBPS. For all our sakes.

Pityana is president of Business Unity SA