Former president Thabo Mbeki was lambasted for his “two economies” speech, but he was correct. The writer says he also did not do enough to ensure that the divide between these economies is addressed. File Photo: SAPA
Former president Thabo Mbeki was lambasted for his “two economies” speech, but he was correct. The writer says he also did not do enough to ensure that the divide between these economies is addressed. File Photo: SAPA
Governor of the SA Reserve Bank, Lesetja Kganyago. The writer says The SA Reserve Bank also leaves the currency exposed to market speculation and as a result, the rand fluctuates with ease, negatively impacting the lives of ordinary citizens. Photo: Thobile Mathonsi/African News Agency (ANA)
Governor of the SA Reserve Bank, Lesetja Kganyago. The writer says The SA Reserve Bank also leaves the currency exposed to market speculation and as a result, the rand fluctuates with ease, negatively impacting the lives of ordinary citizens. Photo: Thobile Mathonsi/African News Agency (ANA)

JOHANNESBURG – I am more than convinced that our actions and indifferent interpretation of information presented to us as “verified” exacerbate problems in society rather than reduce or solve them. With the opinion soon to be advanced here, I could be provoking unnecessary criticism and unfortunate comments.

A few years ago former president Thabo Mbeki was lambasted for his “two economies” speech, but he was correct. However, he also did not do enough to ensure that the divide between these economies is addressed.

Please allow me to explain what I mean before pulling your teeth in dismay or anger.

My view is that the way to explain the notion of two economies or societies in South Africa may be simplified using political and economic concepts – otherwise it may be difficult to understand.

First and foremost, StatsSA releases figures on the national population, which presently show that there are 55 million people living in South Africa today. Whether this data includes naturalised persons and or illegal immigrants is not the focus of the discussion. Furthermore, the information also indicates how many people are eligible to vote, namely 18 and older.

So far, it looks like data from StatsSA and Home Affairs’ population register is understandable and tends to treat South Africa as a single country. There is also no doubt that everyone who carries a green ID (and now a fancy smart card) is eligible to vote and can, therefore, be regarded as a South African citizen.

But the public information is not always without shortcomings. Population data is much more credible and easy to follow. This is not to say that sometimes it does happen a person may be said to be dead or divorced while he is still alive. These incidents are a lot fewer, if any, these days.

The situation isn’t as straightforward and simple when it comes to most economic data. Economic data appears to be generated by people who believe that South Africa is made up of more than one society.

Think about economic activity in the form the gross domestic product (GDP) and Employment – this data tends to focus on the previously white-only areas and their contribution to the economy.

Upon seeing the GDP and unemployment figures, one would swear that the black population doesn’t engage in any economic activity. A narrative of “parasitic behaviour” of the black majority is sustained using data that should be giving us an idea how our country is doing in relation to others, and of course in improving the quality of life for its citizens.

Put in simple terms, economic data treats a large section of the population as “invisible citizens”.

A few years ago, Nigeria in 2014 realised this glaring omission and rebased its economy to include many sectors of the population that had been previously neglected in GDP calculations. Nollywood is worth as much as Hollywood or Nollywood and Nigerians state it as a fact. This change in methodology in calculating made Nigeria to be Africa’s largest economy in Africa.

Many people were angered by Nigeria’s sudden 89 percent rise of its GDP. Nigeria’s National Bureau of Statistics rebased the GDP from about $270 billion (R3.9 trillion) to $510bn for 2013. In a second, South Africa was displaced from the pole position it had held for many years to number two.

The idea behind this is simple economic data is as credible as the one who produces it. Also, the free market economy obsessed with figures. It is not so much about whether the rebasing of the economy changed the material condition of Nigerians. Nigeria felt good themselves because for once a positive story was told.

I have to admit that I am not a fan of quantitative economic data because it works on averages and is like a miniskirt – it “shows a lot of things but does not show what is essential”. The argument here is not on statistics and its methologies but how it these can be used to manipulate opinion.

Currently, South Africa’s unemployment rate is said to be at 27 percent and rising. This makes South Africa a country with a huge problem more than many others. Countries of similar development and below present reasonable figures as far as unemployment rates are concerned.

Mexico and India, for example, have single digit figures of unemployment. Also many countries across the continent, including Nigeria, claim to have lower unemployment compared with South Africa. This is despite the fact that their citizens run away to search for better life elsewhere, including South Africa and Europe, due to lack of economic opportunities.

In addition, South Africa has a growth rate of below 3 percent and this has been the case for many years now. This isn’t helped by the monetary policy environment that always wants to portray a gloomy figure by constantly increasing interest rates at each and every given opportunity.

Governor of the SA Reserve Bank, Lesetja Kganyago. The writer says The SA Reserve Bank also leaves the currency exposed to market speculation and as a result, the rand fluctuates with ease, negatively impacting the lives of ordinary citizens. Photo: Thobile Mathonsi/African News Agency (ANA)
Governor of the SA Reserve Bank, Lesetja Kganyago. The writer says The SA Reserve Bank also leaves the currency exposed to market speculation and as a result, the rand fluctuates with ease, negatively impacting the lives of ordinary citizens. Photo: Thobile Mathonsi/African News Agency (ANA)

The SA Reserve Bank also leaves the currency exposed to market speculation, and there is no attempt to “catch” its decline through direct interventions or measures in order to manipulate the rand in the same way China protects the yuan. As a result, the rand fluctuates with ease and negatively impacts the lives of ordinary citizens.

When employment is calculated in South Africa the focus is on the so-called formal economy in air-conditioned buildings and the public service. But unemployment is based on the total figure of the entire population.

A large number of vibrant economic sectors mainly based in townships and rural areas such as the taxi industry are completely excluded to calculate both the GDP and employment. But we would rather recognise Uber because it comes from abroad.

My view is that there is absolutely nothing wrong with active policy measures and using different approaches to give the economy some credibility. All countries in the world tightly manage information to make sure that their economies are not perceived as weak or struggling. The reason for this to avoid political mess.

However, in South Africa’s case, there is a strong belief that “markets” are honest and always act in our country’s best interests. Unfortunately, that is not the case.

I am in no way suggesting that there is no unemployment or that the tax base is not broadening enough to support the distressed fiscus which every day is expected to carry even more desperate South Africans. I do not want to create an impression that there are no problems in South Africa.

Nonetheless, the point put forward is that by avoiding alarmist and overly sensational economic data and stories, South Africa can surely contain so much damage created by the less politically aware statisticians and economists.

South Africa is a country in perpetual despair because we hardly understand the rules of the game.

Both the US and China are said to be the largest economies in the world. These two countries will make you believe that they are little heavens on earth and are without problems. All of us believe them, the information they release on crime, economy and social issues is sanitised to manage damaging perceptions.

In South Africa the opposite happens, not too many positive stories or information are shared. And there is a fixation with creating gloom. Sadly, the ANC has been a bystander and watches as the bashing goes unchecked.

The good story is that South Africa has low corruption, little crime, unemployment of 5.2 percent, the rand is nine units to the US Dollar, inflation is 3.7 percent, and most importantly the economy is growing at 4.4 percent. The GDP is larger than that of Nigeria and Egypt by far.

For as long as we say and confirm this through data from StatsSA, the Reserve Bank, Standard Bank, etc there will be a feel-good sensation among citizens. For example, Bafana Bafana will start winning games and South African economic fortunes will start to go up.

I am aware that after reading this article, you will think that Goebels is back from the dead. But the truth is we definitely need to feel good about ourselves. Sad stories are now way too exhausting and many people are tired from waking up to negative reports on a daily basis.

I hope the Reserve Bank governor and the rest of the monetary policy team will read this article and decide on the type of perception they want to create about South Africa’s economy and people. Life is too hard, a drop in interest rates by 200 basis points will go a long way…

Where would you rather be? At Nord taxi rank or fiddling an Uber app? All is in the perception.

Siyabonga Hadebe is executive manager at South Africa’s Department of Labour responsible for the management of international relations portfolio for the Department. His views do not represent his employer.

The views expressed here are not necessarily those of Independent Media.

Follow Business Report on Instagram here

- BUSINESS REPORT