Opinion: Economic state of South Africa
Business Leadership South Africa is adamant that the country can make major strides in 2017 to address the triple challenges of unemployment, poverty and inequality. But this is only possible if we build on our successful cooperation in 2016 and work together.
At the start of 2016 South Africa was in a perilous state. Under the auspices of the State President; the Deputy President and Finance Minister worked with business and labour leaders to make real, substantive progress in some key areas. They include the introduction of a National Minimum Wage to improve the lives of the working poor, the introduction of labour reforms to help stabilise the labour environment and promote investor confidence, the establishment of a R1.5bn small business fund to promote small businesses and create jobs, and the planning of the ambitious private sector Youth Employment Services (YES) campaign to give 1 million economically marginalised young people job experience.
Government, business and labour leaders embarked on global roadshows and meetings with investors and ratings agencies to build confidence and encourage investment.
Business, labour and civil society are also working closely in the National Education Collaboration Trust to find joint solutions to improve basic education, and in the National Education Crisis Forum to find a resolution to the universities crisis.
This is not to disregard real differences and indeed conflicts that exist between the sectors of our society on many issues. BLSA has been vocal on some of these issues, including the governance of SOEs, the need for certainty and confidence in the mining sector, and the need to sign the FICA amendment into law. On these and other issues there will continue to be robust public and private debate and engagement. This is healthy in a constitutional democracy.
However, we are seeing the “green shoots” of improved working relations in 2016. Against the predictions of many sceptics we managed to maintain our credit rating and began to rebuild confidence, both at home and abroad. At Davos in January South Africa was held out as an example to other emerging markets, referring in particular to our strong and respected economic governance institutions, financial markets and banking sector, but also to the joint initiatives between government and business. Credit needs to be given to the President and government in ensuring the stability of our economic governance institutions and creating an enabling environment for the engagements of 2016. This was a key factor for investors and the ratings agencies.
But the light at the end of the tunnel remains faint. Vast numbers of South Africans are unemployed and live in poverty, and we have a struggling economy that does not give us the platform to address these issues. If we do not act, we face economic decline, capital flight and a collapsing currency. These will lead inexorably to rising unemployment, rising prices, the curtailing of social grants and contracting social services. This downward spiral would reverse the gains we have made since 1994 and the social consequences would be calamitous.
BLSA believes that the economy needs to be transformed to make the country prosper and to ensure that it works for all South Africans. This is the challenge of “inclusive growth”, which is the foremost priority of BLSA. It is also the basis of the National Development Plan (NDP), which remains our “North Star”.
An inclusive economy is only possible with a thriving economy. This enables us to employ more people, grow the national budget, improve education, build infrastructure and deliver services. As we have seen, a thriving economy requires cooperation, joint problem solving, certainty, predictability and a rational and consultative approach to policy-making.
But a thriving economy is not enough. We also need an economy that works for all. It needs to work for the millions who can’t find work and for the working poor who struggle to make ends meet. It also needs to be an economy that addresses our historic racial imbalances. We need an economy where all South Africans can build a better life for themselves and their families.
This year all South Africans and all sectors of society must pull together to continue to build the foundations for “inclusive growth”. This requires a major, national, war-like effort. Failure is not an option. BLSA is committed to actively play its part, with government, labour, civil society and citizens, to build on the successes of 2016 and advance the goal of inclusive growth.