SA's economic woes haunt Ramaphosa as he heads to WEF
Politics / 3 September 2019, 8:24pm / Emsie Ferreira
Cape Town - South Africa on Wednesday begins hosting the 28th World Economic Forum on Africa against a backdrop of its own entrenched economic decline and a tug of war over the finance ministry's newly released blueprint for reversing the slide.
The three-day event is headlined "Shaping Inclusive Growth and Shared Futures in the Fourth Industrial Revolution". The goal is a recurrent theme in President Cyril Ramaphosa's speeches but the division on how to achieve it in a country with virtually no insulation against global economic shocks is clear in the reception given to Finance Minister Tito Mboweni's reform proposals.
"I am used to getting in trouble these days. It seems to be my daily bread," he said wearily at a WEF briefing on Monday as reporters questioned him about the 77-page policy paper released last week.
It is titled Economic Transformation, Inclusive Growth, and Competitiveness: Towards an Economic Strategy for South Africa and puts forward proposals to reduce unemployment of 29 percent, restructure state-owned enterprises so that they no longer require lifelines from the state to stay afloat and implement flexible trade and industrial policy to draw investment and boost export figures.
Specifically, Mboweni calls for better integration into regional markets to allow South Africa to benefit from the expected migration of tens of millions of manufacturing jobs from China in the next generation and for a deep restructuring of the energy sector, including the sale of Eskom's new coal fired plants.
The latter is fraught with labour implications and the Congress of South African Trade Unions responded by accusing Mboweni of exploiting the country's fiscal crisis to pursue a right-wing agenda. It demanded the withdrawal of the paper, recalling the federation's furious opposition to government's Growth, Employment and Redistribution Policy (GEAR) more than 20 years ago that robbed former president Thabo Mbeki of the support of the labour movement and later left him defenseless when Jacob Zuma sought control of the ruling African National Congress (ANC).
The ANC's top six leaders on Monday downplayed tensions, but as Ramaphosa leads a government delegation to the three-day forum, he cannot pretend that his government is making unified progress in handling the key challenges sub-Saharan Africa faces, according to WEF documents released in the run-up to the event.
WEF said this week the future of the region hinged on the ability of leaders to create sustainable employment opportunities for the region's growing labour force and gear governance policies and business practices towards ensuring the poor reap the benefits of growth.
It released a white paper titled The Sub-Saharan Africa Risks Landscape which lists unemployment as the biggest risk factor for business in the region, followed by governance and then energy, infrastructure and fiscal challenges.
“Sub-Saharan Africa is seeing social and economic growth; however it is clear that job creation needs to accelerate in order to absorb the rising labour market. Failure to tackle this will jeopardize the substantial political and societal progress that has been made in the region”, said Emilio Granados Franco, Head of Global Risks and Geopolitical Agenda at the WEF.
The white paper warns that the region's labour force is growing faster than jobs can be created, but also that the resulting focus on jobs and governance is preventing business leaders from being able to tackle longer-term challenges such as climate change and health.
It says this could be a potential blind spot in terms of long-term planning in a region where 48 percent of gross domestic product (GDP) will be vulnerable to extreme climate patterns by 2023. Again, the host country is a case in point after policy battles and corruption saw renewable energy neglected in favour of expensive and inefficient coal-based projects. And Mboweni's uphill from labour shows it will not be easy to alter course.
The forum will see the launch of the Africa Risk Resilience Platform, which is a scheme to help governments prepare for, mitigate and prevent climate- and disease-related disasters with the support of the private sector. It will gather more than 1,100 delegates from government, business and civil society.