When US President Barack Obama took office on January 20, 2008, he inherited an economy that was falling apart at the seams. At the time, the US economy was deep in recession and was said to be losing approximately 800 000 jobs per month. It was clear that action was required, and required fast, with the American people looking to their newly elected president for leadership and decisive action.
On February 17, 2009, less than one month after he took office, Obama signed into law the American Recovery and Reinvestment Act of 2009 (Arra), commonly referred to as the Stimulus or The Recovery Act. In that specific situation and time period, a stimulus package of that nature was precisely what was required, and the president’s action yielded positive results year after year.
Five years after Arra was passed, the White House released a report assessing its effectiveness. According to Time magazine’s Michael Grunwald, Arra increased the country’s gross domestic product (GDP) by approximately 2 to 2.5 percentage points between 2009 and 2011, while adding about 6 million “job years” – that is a full-time job for a full year – by the end of 2012.
In short, Obama succeeded in turning around the fortunes of a once dire US economy.
It is neither the nature nor the content of Obama’s stimulus package that is of comparable value to South Africa in 2016, but rather the leadership and action taken by President Obama in a time when one thing was clear – something had to be done about the economic climate, and done fast. President Obama ensured that fixing and strengthening the US economy was his number one priority.
Fast forward to South Africa, 2016. It is no secret that our economy’s current state of turmoil is the single greatest barrier to achieving a better and brighter future for every South African. Without a strong and growing economy, real jobs cannot be created for the millions of South Africans who cannot find work, and many are left trapped in a life of poverty.
State of turmoil
Just this past week, the rand continued its downward spiral and fluctuated wildly around a trajectory that seems set to reach R20 to the dollar mark a lot sooner than any of us expected. Unemployment is peaking at almost 35 percent, and international investors are fleeing our borders in their numbers. Due to the paltry state of the rand, fuel prices are set to soar, affecting both private individuals and commercial players alike.
This is partly due to global factors beyond our control, but to the extent that we can act, we must do so immediately and decisively, with the singular aim of building resilience in our economy. Just like President Obama acted with haste and precision, so too must the ANC government.
Yet, amid the mayhem, the national government is seemingly unwilling to act. President Jacob Zuma’s ANC simply has no plan for the economy. The president has taken no action, but for his decision to fire a competent finance minister for doing his job, which effectively put into motion a string of disastrous consequences from which our economy is set to suffer for the foreseeable future. On the number one issue facing our country and its future – number one is motionless. A vivid illustration of the president’s laissez faire attitude towards our economy is the handling, or mishandling, of the current drought crisis.
South Africa is in the middle of the worst drought in more than two decades, threatening both food security and hundreds of thousands of jobs. The agriculture sector is suffering heavily, with the latest GDP figures indicating that the sector contracted by more than 12 percent quarter on quarter and 16.2 percent year on year. Yet we have seen no decisive action from Zuma. How could he act to mitigate the consequences of the drought?
Firstly, the president could call the drought what it is – a national disaster – and declare it so in terms of the National Disaster Management Act.
He could establish a national task team comprising of private sector, experts and government to systematically co-ordinate a disaster alleviation plan. He could request that Parliament, the legislative arm of the government, establishes an ad hoc committee to deal with the drought. He could begin engaging with both the business and the banking sector – publicly – and not behind closed doors in order to discuss innovative financial stimulus packages and partnerships to assist struggling farmers.
Or, he could do nothing.
With every passing day, it seems President Zuma much prefers to live in denial. In November, he told Parliament that the drought was not a national disaster, and seemingly brushed it off as a trivial issue.
He continues to conveniently use “weakening global economic conditions” beyond our control as the solitary cause of our economic woes. Yet it seems everyone else is doing just fine, barring South Africa. Earlier this month the World Bank projected sub-Saharan Africa to grow at a healthy 4.2 percent in 2016, and global growth for 2016 to be 2.9 percent. South Africa’s economy on the other hand is projected to see a dismal 0.7 percent growth, according to an IMF forecast.
When the president fails to act in times of trouble, we all suffer. The proverbial writing has been on the wall for some time now. It is time President Zuma takes real and decisive action in order to revitalise our economy.
* Mmusi Maimane MP is the leader of the Democratic Alliance.
** The views expressed here do not necessarily reflect those of Independent Media.
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