The province dragging South Africa down
Despite being the economic core of South Africa, Gauteng’s deterioration in jobs, the slow collapse of its biggest metros, and ongoing political dysfunction are dragging down otherwise positive strides for the rest of the country.
This is according to Business Leadership South Africa (BLSA) chief executive Busi Mavuso, who said that the province has been a disappointing handbrake to economic growth in South Africa.
Commenting on the outlook upgrade from S&P Global and positive strides in the country’s employment data this past week, Mavuso said there is a lot of good happening for South Africa at the moment.
“It is a testament to the success of government in regaining control over its finances during the last few years, rescuing us from the road to crisis which the Zuma administration firmly put us on.
“The primary budget surplus that government achieved in the last financial year was an important milestone, indicating that it was spending less than it was getting from taxes and other revenue—excluding debt service costs—for the first time in many years,” she said.
The medium-term budget (MTBPS) painted a picture of control and stability, and the ratings improvement should have a material impact on South Africa’s debt costs and businesses operating in the country.
This will result in economic growth and more jobs, she said, adding that the recent jobs data—where the country added 294,000 new jobs in the last quarter—is a reflection of this turn, and confidence in the Government of National Unity (GNU) in particular.
However, amid these positives, Gauteng is not at the same party.
Mavuso pointed out that in the recent jobs numbers, Gauteng was the biggest loser, accounting for 66,000 jobs lost over the quarter. KZN also lost jobs, but only 2,000, which pales in comparison. This is contrast the Eastern Cape and Western Cape, which added 83,000 and 75,000 respectively.
The BLSA CEO said that it was more than just the jobs data where Gauteng is dragging—the province has seen massive deterioration in its major metros, and political instability and dysfunction has led to stunted economic performance.
As the province contributed a third of South Africa’s GDP, this puts the brakes on growth nationally.
“The quality of services (in Gauteng) continues to deteriorate amid political dysfunction in the metros, and uncertainty around the provincial government’s ability to rein metros in and restore service delivery,” she said.
“Tshwane and Johannesburg in particular cannot apparently get it together to establish a stable council leadership arrangement that can start tackling the dysfunction. Public infrastructure is falling apart. Water and electricity blackouts are commonplace, widespread and consistent.
“There appears to be no confidence-boosting plan showing that those in charge are capable and committed to solving these problems.”
Mavuso pointed to the recent threats by Eskom to start cutting electricity to the City of Joburg as another indication of distress. Even though this was resolved through intervention by the national government, it created a wave of uncertainty and panic among residents and businesses.
“No one should be surprised that businesses in Gauteng are slashing jobs,” Mavuso said.
The same uncertainty is carried by political instability and the ongoing water crisis.
Politically, Gauteng is run by different structure than the national GNU. While the GNU involves the ANC, DA, IFP and many smaller parties (ten in total), the Gauteng government opted for a different approach, where the DA is not part of the provincial structures.
As a result, the make-up of the major metros—Joburg and Tshwane in particular—have been chopped and changed, putting pressure on the stability of the GNU and cooperation in other parts of the country.
“Political dysfunction has a real cost in economic performance,” Mavuso said. “So, while the GNU is delivering improved confidence nationally, the experience of much of Gauteng remains negative.”
“(While) we must not lose sight of the fact that the overall picture is positive—as the positive ratings outlook and improved employment figures show—if we focus some attention on fixing the dysfunction in Gauteng, we could add to that positive momentum,” she said.
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