The South African economy has been on a clear downward trend since 2009 and at this stage it is getting worse faster, and the ordinary citizen is in financial trouble. More than 6.1-million long-term unemployed and it is getting worse.
The website tradingeconomics.com states: “GDP growth rate in South Africa averaged 0.61% from 1993 until 2023, reaching an all-time high of 13.70% in the third quarter of 2020 and a record low of -17% in the second quarter of 2020.”
No province or district in South Africa has been able to maintain the National Development Plan stipulated target of 5.4% GDP growth since 2012. Lamenting these statistics will not help but implementing sound economic strategies matters more.
One area of improvement is the diversification of local economies such the entire Kenneth Kaunda District and many old mining towns, the Vaal , Free State Gold Fields and so on. The so-called ghost towns need attention, certain provinces are depopulating, and the Eastern Cape is a prime example.
Economic diversification entails making sure the artisans, supervisors and managers who have been employed in dying economic sectors are mobilised intentionally into new high-value industries that serve the provincial, national and African markets as well as exports into Western and Eastern Europe, Latin America, Asia and Middle East.
Skills and infrastructure must be repurposed to serve many new industries such as high-value manufacturing, deploying and maintaining solar power plants, creating agricultural implements for African conditions, robotics and so on.
Our innovation system needs to be more well-funded, integrated and Pan African in outlook so that new science is converted into competitive products and new businesses run by South Africans and expanding across Africa in win-win partnerships.
“The institutions that create new products and methods that need at least 30% budget increase per year are ARC, CSIR, Necsa, Armscor, Denel, Biovac, ProductivitySA and all our universities that have credible research and innovation units with commercialisation focus.
New jobs are created by new innovative fast-growing businesses not by old businesses. Old businesses can be invited in as financial investors in new fast-growing business and in waves of second phase entrepreneurship. That aggressive innovation on its own must create 800 000 to 1.2-million new jobs a year.
That would still mean another 1-million to 1.3-million new jobs must be created by existing businesses every year to get to about 2 million to 2.5-million new jobs a year. That will eradicate total unemployment and long-term unemployment within 5 to 10 years in South Africa.
On the technology and R&D side, South Africa has a solid history in nuclear, Sasol fuels, brewing-SAB Miller, Armscor, medical-heart surgery, fertilisers, vaccines and many more. That aspect needs aggressive investment led by the state because it is high risk – the National Party government did that successfully before.The third area of aggressive investment is agriculture in all its value chains. South Africa must be self-sufficient in its staple foods such as mealies, sorghum, beans, beef, lamb, chevron, pork, chicken, morogo, etc.
As an example, the Transkei area is slightly larger than the Netherlands, an agricultural superpower. Transkei has some of the best soils and rains in the country but remains an agricultural desert. There is a need to benchmark decisively and increase productivity per hectare to compete with the top agricultural nations on earth inclusive of adopting the most advanced technologies and methods.
This would unlock tourism, agricultural logistics, water industry (the region has 25% of the undeveloped fresh water supplies of South Africa) , agro-processing, food self-sufficiency and agricultural exports.
Well-run municipalities with ready-to-use infrastructure for businesses and other institutions are a true magnet for investors, including local, national and African investors.
Many African and Asian entrepreneurs can be attracted to situate their businesses in the country if we have investment-friendly municipalities. We must have top quality leaders with credible qualifications and experience in economics, engineering, accounting, finance as well as all the technical disciplines and so on. Our state at national, provincial, and local spheres must be technocratic and meritocratic implementing evidence-based strategies, policies and programmes.
- Swana is a political and economic analyst, an academic and a member of the 70s Group
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