WHAT was the promise of the Budget Speech by Finance Minister Enoch Godongwana? Every speech by any public figure, civil servants and rank and file regarding the challenges of South Africa is about poverty, unemployment and inequality. This even has a nickname and is fondly referred to as the triple challenge.
The National Development Plan starts with this triple challenge and argues for resolving it, so that by 2030 South Africa’s unemployment rate can be reduced to 6 percent. The glamorous attires that accompany the addresses of the State of the Nation (Sona) are ironically dressed in the triple challenge mantra of poverty, inequality and unemployment. Godongwana decisively walked away from this mantra, and hung his insignia hat on debt.
Historically in all the Sonas poverty, inequality and unemployment have prominence. I have looked at five of the Sonas and the 2018 Sona led with the mention of poverty 11 times, while the total mention of the triple challenges in 2018 was 19 times – the highest ever.
In 2019, the total score of the triple challenges was 16 and by 2020 familiarity with the triple challenges perhaps was setting in and the mention was dropped to nine times. By 2021, fatigue had anchored itself and the triple challenge was mentioned eight times. But in 2022, the president was emboldened and the triple challenges again dominated the agenda, and mentioned 14 times. But only to have his minister pour cold water on these triple challenges.
In this regard he mentioned poverty and inequality only once each, and never ever mentioned unemployment. Psychologists and marketers say repetition makes the message sink. I am sure the same logic applies to ministers of finance because debt was mentioned 11 times. That shows what the concern of the minister is. It is not the triple challenge of poverty, inequality and unemployment but debt is the concern of policy. There is overwhelming evidence of this point.
The president on the other hand in his Sona did not mention debt, that is as in debt to GDP ratio, but he mentioned it in the context of owing a debt of gratitude. So, what do we make of the four concerns of unemployment, inequality, poverty and debt from the highest corridors of power? Does this illustrate policy incoherence or is it just style?
To get real insight into this choreography of political economy from quantified evidence, we need to look at the table that accompanies the Budget Speech, which is just two simple tables that summarise the speech and this covers macro-economic indicators. Absent in the list of these tables as regards the triple challenges are inequality and poverty. And only unemployment is quantified. Would it be that the Treasury could not model these variables? Or did they leave them deliberately, and left them for the narrative? It is difficult to speculate.
Reading from the table, Godongwana’s speech could have copied from former Russian president Boris Yeltsin, who when asked what the next year would be like after taking over from Mikhail Gorbaschev, said, “This current year is certainly better than next year.”
Godongwana should have read his speech from the two tables and said, “My fellow South Africans, we are heading into a Gwara-Gwara scenario.”
To put this in context, the Gwara Gwara scenario, from the Indlulamithi SA Scenarios 2030 project, imagines South Africa as a demoralised land of disorder and decay with slow economic growth, periods of deep recession, unemployment that never falls below 25 percent and income inequality that exceeds even the high levels of the 2010s.
Godongwana would then continue with his speech, “Let me tell you why. My crystal ball shows me that not only is the unemployment rate of 36 percent the highest in the history of the country, I promise you through this Budget it will reach 38 percent by 2026, which is in four years’ time.
“Not only that the news is bad, but the economic growth story as measured by gross domestic product will at that time be 1.2 percent. The only thing that looks up is the debt to GDP ratio, which will drop to 75 percent. This high level of unemployment and low growth is the price we pay for debt reduction.
“My macro-economic model was not able to measure inequality and poverty. But I leave that to yourselves – after all, take it from me, the poor you will always have, so the good book said and it is not in my power to fight the spirituals. Like Yeltsin said, the two tables say it all, this year is better than the next four years. Thank you for your attention,” he would have said.
Yet, I contend there are many heterodox economists with better and different policies that can surely reverse this Gwara-Gwara scenario facing South Africa, and a Naile Walk can get the country going. Even in this perilous economic situation the country now finds itself in, this still remains possible, according to the Indlulamithi Scenarios.
A Naile Walk is a scenario where South Africa sees growing social cohesion, economic expansion, and a renewed spirit of constitutionalism.
Dr Pali Lehohla is the former statistician-general of South Africa and former head of Statistics South Africa. Meet him @Palilj01 and at www.pie.org.za.
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