Independent Online

Friday, May 20, 2022

Like us on FacebookFollow us on TwitterView weather by locationView market indicators

Welcome 2022 as things look rosier on the economic front

Durban Chamber of Commerce chief executive officer, Palesa Phili, believes government needs to restore law and order and ensure regulations are adhered to.

Durban Chamber of Commerce chief executive officer, Palesa Phili, believes government needs to restore law and order and ensure regulations are adhered to.

Published Dec 31, 2021

Share

Restoring trust and business confidence needs to urgently start if we want to rebuild the economy shattered by lockdown restrictions and load shedding.

This can only happen if the public and private sectors work together, while in-fighting within the ANC needs to be urgently dealt with, according to business sector analysts.

Story continues below Advertisement

Ahead of the start of the new year, the Durban Chamber of Commerce chief executive officer, Palesa Phili said that 2021 had “undoubtedly been a tough year”, with the on-going Covid pandemic having dealt “a shock to the ecosystem and a massive blow to the economy as a whole”, which was exacerbated by the July unrest and riots.

“As organised business, we believe that government needs to restore law and order and ensure that regulations are adhered to. We need the public sector to work in close collaboration with the private business sector to develop innovative solutions geared towards the sustainability of our businesses, thus keeping the economy stable.

“The Chamber is optimistic about the year ahead; we are of the firm belief that every difficult situation has taught us tough lessons, that have been difficult but which have forced us to think differently.

Story continues below Advertisement

“The government needs to work with the private sector to restore trust and business confidence to both national and international investors. ”We are committed to combating the Covid-19 pandemic, but we are also committed to helping South Africa return to normality and speed up economic recovery through getting vaccinated,” said Phili.

She said the N3 road blockades and July riots caused “huge disruption in the value champion ecosystem” as well as having created havoc in the logistics sector, while for stable power generation, she said the public and private sector could look at funding avenues for SMME’s towards the purchase of solar panels or generators.

Economists meanwhile are predicting that 2022 will not be a rosy one.

Story continues below Advertisement

They said that GDP growth will be about half of the nearly 5% the country achieved in 2021, and in spite of South Africa’s dire unemployment situation, there will be no job creation spike.

A critical factor which continues to keep the economy hamstrung, according to economists, was the factionalism and in-fighting within the ANC, which will prevent the party from making bold economic policy changes to pull the country out of the financial quagmire it found itself in.

“Another messy year lies ahead,” was what Daniel Silke, the director of Political Futures Consultancy, has forecast for 2022.

Story continues below Advertisement

With the ANC’s national elective conference set for December 2022, where President Cyril Ramaphosa would make his bid for another term in office, Silke believed it was highly unlikely risks like changing economic policies would be taken.

“The party is presently navel gazing. This will leave us plodding along as we have in the past, unable to grow the economy, create new jobs, and leaving more citizens relying on State handouts, instead of finding new areas of independent growth.”

Silke said the parlous condition of the ANC, the Covid-19 pandemic and the country’s crumbling infrastructure, especially Eskom’s power cuts, will continue to stifle economic growth.

Silke suggested freeing up the economy and engaging more meaningfully with the private sector were some of the other ways the government could stimulate economic growth.

“We need to deregulate some of the overly regulated aspects of the economy and get the State out of many of the enterprises that have largely mismanaged,” he said.

Economist Dawie Roodt predicted a gloomy 2022, saying the negative trajectory could be altered if the government took some bold decisions to enhance economic growth.

“There are plenty of things that can be done; unfortunately the government has placed themselves in a corner that it is going to be extremely difficult to come out of.”

Roodt said the main contributors to the country’s GDP growing to about 5% in 2021 was the devastating effects of Covid-19 on the economy in 2020 and commodity prices were stronger.

But he expects commodity prices to dip significantly in the new year, which will lend itself to slow economic growth. He also singled out Eskom’s poor delivery and Covid-19 to add to the country's financial woes.

One of the areas of concern for Roodt was the 30 million people who depended on the State for an income.

“The State’s finances have become completely unsustainable and the income of 30 million will fall over the next three years and they are going to become very angry.

“Another problem is the forthcoming elections. Politicians don’t like to cut state spending.”

Roodt said the country’s decision makers needed to seriously look into these issues and also adopt more market friendly policies to promote trade and investment.

Alan Mukoki, CEO at the South African Chamber of Commerce and Industry said trade conditions had been interrupted in July, but that stability had since returned.

He said conditions had been positive since October, however, jobs in the trade environment remained tight and negative. He said they had expectations of improved conditions in the next six months.

“Positive expectations for all elements of trade continue, inflationary pressures have eased slightly on the cost and demand side.

“The application of law and order over particularly the holiday period and the breakdown of municipal service delivery remains a cause of concern. The volatility of the rand exchange rate, higher interest rates, input cost rises and pressure on profit margins were complicating factors. The high unemployment rate and the effect on household income are especially affecting retail trade in marginal areas,” said Mukoki.

With the festive season in full swing, the tourism and hospitality industry said green shoots for a better 2022 were already showing, with reports of pre-pandemic figures being experienced during the festive season.

This despite, red list bans being imposed on South Africa following the emergence of the Omicron variant at the beginning of December, which dealt a hard body blow to the industry as the festive season got underway.

FEDHASA National chair Rosemary Anderson said this week that with regard to accommodation occupancy, “We’ve had good reports coming in with some very good figures, pre-pandemic figures and this has been mirrored by the restaurants”.

Calling for the curfew to be lifted, which had a damaging impact on an industry which is a major contributor to the national GDP, she said, “We are in a different place now to where we were a year go, when we did not have vaccines as the main weapons in our arson and we are also experiencing a new Covid variant where the number of cases are not translating into hospitalisations to the same extent they were with other variants.

“We need to look at things with fresh eyes. Our government needs to now start creating certainty, so travellers can make travel commitments going forward with confidence that restrictions will not be imposed again. Uncertainty and lack of confidence are our biggest deterrents to tourism and hospitality,” said Anderson.

She added that creating visa free travel could also boost the market and create jobs, saying Chinese travellers topped the US as the largest number of international travellers worldwide.

“That is a huge market we can tap, besides other markets too. Tourism is one of the keys to solving our horrendous unemployment problem, we just need government to listen to us and where together, we can implement suggestions with speed.”

FEDHASA East Coast chair, Brett Tungay said revenue for hotels, resorts and restaurants had been good so far with many holidaymakers making their way to the coast for the season.

“Uncertainty is the biggest killer,” said Tungay, adding that the curfew needed to be lifted and that the July riots had the biggest impact on tourism in KZN, when the industry came to a halt for three months before an uptick in September, as the dust settled in the wake of the unrest.

Independent on Saturday and Sunday Tribune

Share