South Africa’s greylisting by the Financial Action Task Force (FATF), a global money laundering and terrorist financing watchdog, would stifle the country’s ability to do business globally, especially with EU members, says Youth Employment Service (YES) CEO Ravi Naidoo.
YES is a business-led collaboration that seeks groundbreaking ways, through innovation and technological best practice, to reignite the economy and give youth a dignified first chance.
Naidoo said that the greylisting, together with load shedding, would unfortunately also affect job creation.
He said studies showed that greylisting negatively affected capital flows into countries, with consequent effects on economic activity, growth and employment levels.
In response to a Business Report media enquiry, Naidoo said that the single biggest way to create jobs was to increase the country’s rate of economic growth.
“We have to enable businesses to grow and be profitable. However, this requires an environment in which businesses are confident to make long-term job-creating investments and greylisting will directly impact the levels of investment into our country,” Naidoo said.
He said that when it came to fixing the greylisting problem and ensuring South Africa exited it, the country could learn from Mauritius, who were able to have their listing lifted within two years by getting key stakeholders to work together.
“Interestingly, many of the challenges we face as a nation, like youth unemployment, also require collaboration. So, essentially, the solution we require to address greylisting is the same solution we need to address unemployment: sustained collaboration between key stakeholders,” Naidoo said.
According to Statistics South Africa’s (StatsSA) Quarterly Labour Force Survey, South Africa’s unemployment rate eased to 32.7% in the fourth quarter of 2022, the lowest since the first quarter of 2021, from 32.9% in the prior period.
The number of unemployed persons rose by 28 000 to 7.753 million, the employed increased by 169 000 to 15.934 million and the labour force went up by 197 000 to 23.688 million.
Among sectors, finance (+103 000), private households (+54 000), trade (+52 000) and transport (+43 000) posted the largest job gains, while community and social services (-122 000) and construction and agriculture (-12 000 each) shed jobs.
The expanded definition of unemployment, which includes those discouraged from seeking work, was 42.6% in the fourth quarter, down from 43.1% in the third quarter. Meanwhile, the youth unemployment rate, measuring job-seekers between 15 and 24 years old, rose to 61% in the last quarter of last year, up from an over two-year low of 59.6% in the previous period.
NYDA CEO, Waseem Carrim described the greylisting as disappointing for an economy of South Africa’s size and scale. “At a time when the economy is battling challenges on multiple fronts, it is another unnecessary blow,” Carrim said.
The local youth agency said the South African economy was facing multiple overlapping crises including the economic fallout associated with Covid-19, persistent electricity outages, high inflation, food insecurity, high oil prices and growing inequality.
It said that throughout all of these crises, young men and women continue to be hardest hit - triply exposed by being in jobs that are most exposed to financial shocks, being least covered by social protections such as the Unemployment Insurance Fund (UIF), and facing additional burdens of household duties and unpaid care work that exacerbated economic poverty with time-poverty.
“These factors compound, severely impacting their ability to look for work. The greylisting adds to the multiple overlapping crises and deters much needed local and foreign investment which is needed to grow the economy and create jobs at scale.”
Carrim said economists have reflected that South Africa has taken a number of steps already to avoid greylisting and that if the country continued down this path, it could exit greylisting in 18 months.
“We must continue with structural reforms to fix the economy in areas such as energy, water, ease of doing business and reducing basic education drop-out rate. We must build on the positive work that has been started in Operation Vulindlela. In the interim, public employment programs and the repurposing of the Social Relief of Distress grant are effective mechanisms to cushion the economic challenges being faced,” he said.
Reacting to President Cyril Ramaphosa’s State of the Nation Address last month, Onyi Nwaneri, CEO of Afrika Tikkun Services (ATS), a division of Afrika Tikkun specialising in recruitment, training, placement, and corporate transformation, said increasing the number of employed people, especially young South Africans, was one of the keys to driving development.
Even so, Nwaneri said, there has been a pattern of the government saying the right things when it comes to providing this kind of support, but then for some or other reason, it often ends up not being able to fully realise its promises.
She said the country’s inability to provide a constant supply of electricity was such an example. Nwaneri said ATS has seen first-hand how job seekers struggle to get placed.
“SMMES have taken the brunt of power utility Eskom’s inability to supply electricity, as they have been unable to operate as a result of the blackouts. The impact of the blackouts on SMMES is not only detrimental to these businesses, but also severely caps job growth,” she said.
“Skills development initiatives have also been seriously affected as blackouts stall training programmes and make online learning almost impossible. For organisations like ATS, they have had to spend huge amounts of scarce funds on generator and diesel costs,” she said.
BUSINESS REPORT