By Bonang Mohale
Twenty-nine years into democracy, the South African economy is being transformed by, among others, continuing uncertainty for policymakers, businesses and households as persistent headwinds buffet the global economy.
While there are signs of nascent optimism, the banking disruption of March 2023 has caused tremors in the global outlook.
What with the reshaping of global supply chains – the changing face of globalisation; the technological breakthroughs such as the coming of age of generative artificial intelligence (AI), compounded by economic and geopolitical disruptions and growing social and environmental pressures.
Social justice, service delivery, good governance, law and order and safety and security – are the most basic cornerstones of democracy. Yet, we are learning to live with betrayed expectations where many still live under plastic covers in utter poverty, children still die in pit latrine toilets in mud schools, and there are more people unemployed than those who have jobs.
Very few businesses can survive persistent loadshedding with increasing frequency and severity.
South Africa’s prognosis is a story of great pain for its people. Its economic future is looking bleak – this due to state capture, corruption, self-serving cartels, maladministration, poor leadership and poor governance, among others.
Businesses are crumbling and capital is become scarce. Lay-offs are skyrocketing, and we are on the precipice of large-scale social unrest. We are irreversibly becoming an irrelevant country even though we were once a darling of the world.
South Africa has experienced the largest decline in reading achievement. The latest news on the literary front is that the number of Grade 4 children who cannot read in any language has increased to 81% in 2021. This year Brazil, a country we often compare ourselves with because we have the same GDP per capita (~$7,000/capita), participated with high levels of inequality, yet the average score in Brazil was 419 points in 2021 compared with South Africa’s 288 points.
The Auditor General’s last report paints a bleak picture of the 257 municipalities. Only 38 have achieved clean audit outcomes. The top five best performing councils could balance their revenue collection, pay their debt, deliver services, and invest in infrastructure, while maintaining sound financial records and have well-entrenched financial policies. Their budgets are based on sound long-term financial strategies.
What we do not need right now is the allegations of having sold arms to Russia, where the National Conventional Arms Control Committee has “no record” of an approved arms sale to Russia. Exacerbated by the fact that of the Brics countries in the UN, only South Africa (and Russia) voted against declaring Russia the aggressor, increasing our geopolitical risk and thereby risking losing our position as a credible player in international trade.
The European Union (EU) is by far South Africa’s biggest trading partner with $27-billion exports to the EU and $27.6-billion imports from the EU. The next is the US with $10.4-billion exports representing about 9% of total exports (vs $283-million to Russia representing about 0.2% of total exports) to the US and $8.3-billion imports representing about 7.3% of total imports (vs $550-million from Russia representing about 0.5% of total imports) from the US.
South Africa is the largest beneficiary of the US’s Africa Growth and Opportunity Act (AGOA) – exporting $15-billion of goods – minerals, agricultural products, wines and services. Out of $8.5-billion exports to the US in 2018, only 3% of products were subject to import duties, with the balance being exempt. We have more than 600 American companies employing more than 230 000 people (some being led by South Africans) and contributing 10% of South Africa’s GDP. With over 70% of our vehicle exports destined for Europe, the last thing we need is potential sanctions.
Fortunately, all our problems are well understood and well-articulated. What we need right now is to end loadshedding fast, root out and defeat state and corporate capture, grow the economy to create jobs for the masses. This requires bold leadership.
Future historians may well look back on what both Mama Charlotte Mannya-Maxeke reminded us of – that “this work is not for ourselves” and Fr Trevor Huddleston praying, “God bless Africa, guard her people, guide her leaders and give her peace” as we prepare to take our power back.
- Mohale is the president of Business Unity South Africa (BUSA), author of the best-selling books, “Lift As You Rise” and “Behold The Turtle”
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