“Mozambique”, Mervin Gumede noted in the Cape Times on Thursday, 9 February, was “once one of the world’s fastest-growing economies."
Unfortunately, it “has now plunged into economic and political crises simultaneously and risks falling back into civil war”.
He observed, furthermore, that “last week, it became the first African country to default on dollar bonds since Ivory Coast in 2011”.
At the same time, Zimbabwe is experiencing a financial meltdown.
The dire financial problems of Mozambique and Zimbabwe almost inevitably become our country’s problem as desperate people migrate south to earn an income.
Countrywide, the service industry is overwhelmingly staffed by Zimbabweans and Minister of Home Afffairs Malusi Gigaba is seriously concerned about the shrinking job opportunities for South Africans. The problem is already becoming quite intractable because it is economically and politically intertwined.
Is our country, however, in a sound enough financial situation to sustain the pressures being exerted on our economy from within and outside?
Nearly 40% of South Africans are jobless and the rate among young people is even higher.
Politically, South Africa has been unwilling to deal with President Robert Mugabe and dodgy election outcomes. Economically, money that should have gone into creating jobs went elsewhere. Something will have to give.
Whereas the national debt in 2008 was R627 billion or 22% of GDP, it is now R2.23 trillion or 45.7% of GDP. It has more than doubled during the Zuma administration.
The total tax revenue in 2008 was R625bn and more or less equal to our national debt at that time. Now it is R1.16 trillion and our national debt should have been about R1.2 trillion at the most. Unfortunately it is very close to double that. The debt is growing at a faster pace than revenue.
This is alarming.
Debt service cost to government was R57bn in 2008. Today, it is R147bn. In preparing his budget, Pravin Gordhan will, in terms of the constitution, first have to make provision for paying R147bn in interest. Debt service costs will therefore be one of the highest expenditure amounts listed in the budget.
If the Zuma administration had used its heavy borrowings of the past eight years on the infrastructure side, not on the consumption side, our country would have seen economic growth and increased government revenue. Unfortunately, the money is gone and the debt will continue to soar.
As our own financial problems mount and as these are exacerbated by the pressures from the north of us, government services will shrink alarmingly, taxes will increase rapidly and overburdened taxpayers will increasingly have to fork out still more for private health care, private education and private security. The government is already shirking its responsibility as we witnessed in the sorry saga of nearly 100 psychiatric patients dying horrible deaths in Gauteng.
If we as citizens remain passive and undemonstrative about the deteriorating situation and if any downgrades occur in the course of the year, we too will be plunged into an economic and political crisis from which we may never recover. It is time to show concern while a small window of opportunity remains. This is a matter for all of us and for decades to come.
Citizen activism is needed to ensure that taxpayers get their due and are not lumped with larger tax bills for diminishing services.