Former finance minister Trevor Manuel has given a scathing diagnosis of the contributing factors to South Africa’s economic moribund and, to a larger extent, the whole of Africa’s growth and development.
Manuel, the chairman of Old Mutual, yesterday, said there were only four things that were stifling economic growth in Africa which had to do with the infrastructure decay, debt entrapment, weak institutions and bad policies.
Speaking at the 10th Southern Africa Europe CEO Dialogue in Johannesburg, Manuel said the biggest challenge for Africa was that the five largest economies in the sub-Saharan African region - South Africa, Nigeria, Kenya, Ethiopia, and Angola - were “in a slump”.
“Our big challenge and what's holding us back as South Africa is the rate at which our infrastructure is deteriorating. We will not grow unless we fix Eskom and electricity, unless we bring in renewables at a much faster rate than we are doing at the moment, along with green hydrogen and a number of other opportunities,” Manuel said.
The second issue, Manuel said, was that a large majority of African countries were still eligible for World Bank loans on either the International Development Association, but at least 55% of either countries were debt-stressed.
“And as inflation has kicked up in the rest of the world as interest rates have heightened, many countries on this continent now face dire straits. And respective debt and the debt service costs in aggregate across the continent is now 31%,” he said.
Manuel said that the third challenge was that Africa likes to believe that it was capable of emulating the great games of the European Union, however but did not have the heart to develop its own nations.
“The third challenge that confronts us as Africans and one that we must step up to the plate for is that our pan-Africanist institutions are weak. Very little that we do to actually develop common purpose, and, it’s to our eternal shame that even the headquarters of the African Union is paid for by a foreign country,” Manuel said.
“Our countries don't contribute to the development of Africa. And if we don't do it, nobody else would on a sustainable basis. We as Africans have an enormous responsibility. We know what we should be able to teach, but we're not getting there.
Lastly, Manuel said the fourth issue was that African countries do not measure economic growth in what happens in the lives of people in terms of the quality of life and poverty reduction.
“A number of Africans who drowned in the Mediterranean are competent, bright strong Africans trying to get off the continent, out of existence elsewhere. It's a failure of policy on the earth,” he said.
Honorary professor at the Nelson Mandela School of Governance at the University of Cape Town Carlos Lopes also reiterated that Africa’s prospects remained dire as only 17% of African countries have their national accounts up to date.
Lopes said this meant most countries do not know the structure and size of their economies, with at least 40% of Africans not having a civil registration or IDs and 90% of land in Africa is not properly registered.
“The priorities of our governments are not right,” Lopes said.
“We have been infused with the idea that small is beautiful, micro-credit is fantastic and you don't need to challenge the formal sector. We are not going to develop that way.”