Business leaders hope president will not waver
Business leaders have urged President Cyril Ramaphosa to follow through on his promise to implement the long-waited structural reforms to set the country on a growth path after the Covid-19 crisis.
The president and Finance Minister Tito Mboweni said South Africa will use the aftermath of the Covid-19 pandemic to engineer a new economy.
FNB chief economist Mamello Matikinca-Ngwenya said business keenly awaits the details of the phased reopening of the economy after the nationwide lockdown, which will shine further light on which sub-sectors will be resuming production.
“More importantly, we wait for the announcement of phase 3, which will focus on structural reforms to accompany these interventions. If done well, this may improve our potential GDP, and help boost the medium- to long-term growth trajectory,” Matikinca-Ngwenya said.
Rating agency Moody’s downgraded South Africa’s credit rating to junk status last month and cited structurally weak growth, limited capacity to stimulate the economy and government debt as key reasons behind its decision.
Annabel Bishop from Investec said South Africa has lacked meaningful growth- enhancing reforms in the past decade tharesult in a substantial, sustained turnaround in economic activity.
“There needs to be an enormous reduction in the regulatory burden in SA to spark growth, red tape needs to be cut by over a third as per National Treasury’s growth plan,” Bishop said.
“Unified political will for the structural reforms of National Treasury’s growth plan is needed. “Government and regulatory efficiency need to improve substantially to lift the ease of doing business, with government departments quickening delivery time in issuing compliance certificates, clearing their backlogs and activity aiding businesses in compliance.”
Mboweni said phase 3 of government’s Covid-19 recovery plan is pivotal in positioning the economy for structurally higher growth.
“This virus will be beaten. But we must make sure that when we beat it, we do not compromise our long-run sustainability,” Mboweni said.
“In particular, as we come out of the coronavirus crisis, we must work quickly to implement our structural reforms to get the economy moving. Virus or no virus, the economy has been growing too slowly for too long.”
