Forget politics – these are the basics needed to resuscitate economic growth

Published Jul 3, 2024


Dr Zizamele Cebekhulu-Makhaza

The formation of a new coalition government marks the start of a new chapter for South Africa. But even as political parties jostle for power, the reality is that no matter who leads us forward, there is only one real solution to re-energising socio-economic growth and development: industrialisation. And this, in turn, hinges on making informed, pragmatic energy decisions, and sustainable infrastructure development.

These are the fundamentals that are ultimately needed to stimulate investment, grow businesses, and accelerate employment. But instead, by neglecting these pillars, South Africa’s economy has faltered and stagnated for decades, entrenching poverty, inequality, and unemployment.

So, as we look ahead to the next five years, we must not allow ourselves to become distracted by politics – these are the three real metrics that should be used to evaluate the seventh administration’s performance.

Looking to China’s example

China stands out as a case in point demonstrating the impact of industrialisation. Now a global giant, the Chinese economy was likewise stagnant until the late 1970s, when it implemented new economic reforms while investing in industrialisation, infrastructure, and education. In response, this saw an exponential increase in productivity and output, supporting local manufacturing while driving export growth.

The results were remarkable. Experts calculate that over the course of the next 40 years, its Gross Domestic Product (GDP) effectively doubled every eight years. By the late 1990s, per capita income had nearly quadrupled, and by 2020, some 800 million of its people had been freed from poverty.

Today, in terms of purchasing power parity (PPP) exchange rates, or how far consumers’ money stretches, China’s economy is more than 20% larger than even the United States of America (USA).

Industrialisation generates jobs, income, wealth, and shared prosperity. In other words, industrialisation is the key ingredient needed to grow South Africa's ‘pie’ or economy at a rate fast enough to satisfy our developmental needs.

Energy essential to power industrialisation

To fuel industrialisation, however, we need a reliable supply of energy, which is where current policies seem to be faltering. Energy infrastructure is vital if we are to bring an end to load shedding and provide sufficient capacity to power economic growth. But, while the need is urgent, solar energy is a quick-fix for households and small businesses – not energy-intensive industries.

Solar power, despite its environmental benefits, simply cannot meet the demands of heavy machinery and large-scale manufacturing processes. As such, we cannot afford to continue overemphasising solar power. A diversified energy mix is crucial, including coal and nuclear power in addition to renewable sources.

Coal power is a cornerstone of our current energy framework. Not only is coal an abundant and relatively inexpensive resource, but coal plants are also responsible for many thousands of jobs and livelihoods. The idea of a sudden shift away from coal is therefore impractical, and could have devastating impacts on workers and their families. What is needed instead is a gradual transition that includes comprehensive support for workers and communities reliant on the coal industry.

Although concerns about corruption and safety have seen it become sidelined, nuclear energy must also be reconsidered as a viable option to improve our baseload supply. With the construction of just two nuclear plants alone, South Africa could potentially power the entire country, significantly reducing the strain on our national grid.

Corruption is certainly an issue that must be addressed head on. But while the risks associated with such megaprojects are unfortunately very real, these must be managed with strict oversight and governance rather than throwing the baby out with the bath water.

Additionally, strict agreements must be put in place to ensure that nuclear infrastructure is eventually transferred to local control after a set number of years, and that the necessary processes are followed to prevent past mistakes such as receiving unreadable instructions in German.

The role of infrastructure

Our energy infrastructure is not the only infrastructure that has suffered underinvestment. Local infrastructure generally has become dilapidated, presenting a major obstacle to business. So, our focus cannot be limited to rolling out new infrastructure. Maintenance must also be prioritised for a more sustainable approach to infrastructure.

Poor maintenance is glaring in rural areas where new electricity and water systems have been installed, but lack of upkeep has quickly rendered these services useless. Basic maintenance – fixing potholes, maintaining water pipes, and ensuring consistent power supply – is crucial to restoring public confidence, attracting the right investors, and encouraging economic activity.

Reviving our railways is also critical. The current volume of traffic and trucks on our roads is simply unsustainable, causing severe congestion in urban centres and accelerating road decay across the country. An efficient railway system would alleviate the pressure being placed on our roads, reduce transport costs, and enhance the overall efficiency of logistics systems for the smoother transportation of goods.

Likewise, amidst soaring costs of living, the development of efficient public transportation systems is another area where government intervention is urgently required. Reliable and affordable public transport would significantly reduce the burden of transport costs on workers and households.

Ultimately, dreams of smart cities and a future driven by electric vehicles are admirable. But they remain simply dreams without the foundational infrastructure and energy in place.

Creating jobs and lifting our own people out of poverty demands a back-to-basics approach. The recent election results may have shaped our political landscape and narrative, but the real work will lie in getting these basics right if government is to successfully steer South Africa towards a brighter future.

Cebekhulu-Makhaza is the Chairperson of PGC and the POPCRU Trust