It looks like SA may be turning the corner because National Treasury – read Finance Minister Pravin Gordhan – says there are “green shoots” starting to grow in the economy.
This is absolutely fantastic news, given that gross domestic product growth will hit a measly 0.5 percent this year, before moving to a sluggish 2.2 percent in 2018.
That, it goes without saying, is nowhere near the gains we need to ensure equitable and inclusive employment is a reality. Nor is it near what the National Development Plan would have us reach, so that its laudable goals are met in 2030.
The NDP’s goals include unemployment and poverty being “eliminated” by 2030. With the official unemployment rate – a figure that excludes those who have given up and taken to hawking USB phone chargers on street corners – remaining stubbornly above 25 percent, we really need some magic in our economy.
Incidentally, the NDP’s economic growth target is 5.4 percent. I reckon that’s a bit optimistic, to speak in litotes.
Gordhan, however, certainly seemed far more enthusiastic when he penned the Medium-Term Budget Policy Statement for the mini budget some time ago than currently I am. That time probably predates his being charged by the National Prosecuting Authority with fraud.
How can I be so sure he penned it? Gordhan has a certain style of talking that comes across when he writes. The document reads the same as his speeches. I’ve sat in enough budgets to be able to pick up on his idiolect.
Slow wins
In the almost 50-page Policy Statement, Gordhan says factors, such as additional sources of electricity being connected to the grid, would help boost economic growth.
In addition, the apparent easing of the drought – the worst in local recorded history – will also help ease some of the limitations on economic growth. This is certainly welcome news, because the cost of basic food has increased 15 percent thanks to the lack of enough rain. And we’re running out of water.
Gordhan also noted inflation has moderated, and is now expected to hover at around 6 percent over the next while. In addition, strife between labour and big business is easing, and companies are slowly starting to invest in the economy. (Although this isn’t fast enough for organised labour, which wants the R600 billion the private sector is sitting on plugged into the economy now so jobs can be created.)
However, said Gordhan, these positive indicators have yet to filter through to revenue collection and SA’s fiscal limits have been reached. As a result, government departments will continue to tighten belts, and more revenue needs to be collected through tax.
What we need, the minister said, is a huge amount more of private sector investment; and government is willing to step up to the plate to help make that happen faster.
Looking inward
Gordhan highlighted what some of us have suspected for quite some time: despite fragile international markets, a commodities rout, the Brexit fallout and many other things we can do nothing about, the main problem is at home.
The minister said the main limitations to faster growth are within the domestic market, and include infrastructure bottlenecks, low levels of competition in certain markets, a volatile labour relations environment, regulatory constraints and red tape, inefficiencies in state-owned enterprises, and uncertainties in the policy environment.
So, his plan is to do something to sort all of that out. And implement reforms that will see business being able to do what it believes it does best: make job-creating profits, which will attract foreign investment into SA, and boost economic growth.
So, government will focus on implementing the 9-point plan announced last February, which it hopes will bolster growth to reach the targets set out in the National Development Plan, which aims to drastically reduce unemployment and poverty.
Among government’s interventions are to address issues with the Mineral and Petroleum Resources Development Amendment Bill, immigration reforms to speed up visa processing, improve certainty over the national broadband rollout, reduce legislative and regulatory duplication and foster better labour relations. All these interventions also fall under the ambit of building a cohesive society in which everyone works together.
There are, however, a few problems with this narrative. Such as, why the heck did we wait so long when these issues have been a thorn in the side of businesses large and small for so long, and they form part of an oft-heard government rhetoric?
Is it too little too late?
Maybe. Maybe not. We may actually have enough time to get things right, although we’ll need to move with haste if we want to meet the NDP goals.
So, a distracted minister – who was apparently still writing up his speech during the 11am media briefing on Wednesday – is the last thing we need.
I’ve covered many budgets, and the speech always arrives later than us journalists in lock up would like, especially in October, but it has never, ever landed as late as when the minister is meant to take to the podium and say those words that free us from lock up.
This is, as my colleague said, is “most peculiar”.
I can only hope that the pending fraud case – to be heard November 2 – has not distracted Gordhan from getting the country in shape before a December ratings review.
One hopes the ray of sunshine Gordhan referred to is not blocked out by a devastating storm.
IOL
* Nicola Mawson is the online editor of Business Report. Follow her on Twitter @NicolaMawson or Business Report @busrep.