It will take South Africa three years to reach pre-Covid-19 levels of GDP – if the country makes the right decisions, says Martin Kington, head of the economic work group for Business for South Africa (B4SA).
In a webinar on Monday (17 August), Kingston said that South Africa has been very good as a country at talking, but has been very bad at deciding on policies and then implementing them efficiently.
Current estimates show that the coronavirus pandemic will likely result in an annual contraction of 10% of GDP, with ‘catastrophic’ reductions in employment to above 50%.
In addition to this, there are persistent concerns around the country’s failing state-owned enterprises and government’s push towards infrastructure projects as a solution.
Kingston said that it is important for South Africa to stop talking, and finally act.
“We need to move from discussion to decision-making and rapid implementation. To implement these initiatives we need to harness the resources of all actors, not just the state.”
Kingston said that South Africans are ‘leading experts’ in reinventing the wheel and can no longer follow this path of ‘replication and duplication’.
“If there are policies that work, we must build on them. If there are those that are broken or ineffective, then we must address them.”
He noted that government, labour and business have all tabled proposals on economic recovery, and that there is clear common-ground among the stakeholders.
“Let’s not have another paper. Let us make sure that we can focus on a number of areas, such as infrastructure.”
Cas Coovadia, chief executive of Business Unity South Africa (Busa), agreed with Kingston’s assessment, and said that the country needs to move with urgency.
“Covid has been a terrible pandemic and it’s taken a terrible toll on our people. But it has also shown us that if we make use of opportunities, we can actually work together a s a country. Let us work from the context of a crisis and let us add extreme urgency moving forward.”
Coovadia said that this plan cannot be taken forward by the government or business on its own, and that the partnership between the stakeholders is critical.
Busi Mavuso, chief executive of Business Leadership South Africa, said this week that the move to a level 2 lockdown is not on its own a strategy for a recovery.
“The recovery strategy needs a comprehensive set of economic reforms to drive a rapid turnaround in economic fortunes,” he said. “Yet we are still stuck at the talking phase of those reforms.”
Mavuso said that at a Nedlac meeting of government, business, labour and community leaders last week, detailed plans were discussed. Business presented an overview of the plan it has developed over the past months, with the detailed proposal totalling about 900 slides.
Similarly, organised labour presented detailed plans with the two proposals sharing common elements such as the need to auction spectrum and grow investment.
Mavuso said that government delivered a “plan of sorts”, noting that this is the first time it has done so despite various ministers having referred to the central role that government’s plan will play in driving a recovery.
“However, the 17 slides presented a fragmented and uncoordinated vision that was described as a draft with no official status,” he said. “It appeared to have been pulled together at the last minute from a variety of different sources without any discussion between them.
“The energy vision, for example, is oddly focused on gas, and mentions nuclear, but makes no mention of green energy. Elsewhere the document talked of the need for green bonds and green economy interventions as one of eight recovery priorities. This is not the same hymn sheet.”
Mavuso added that the president promised a decisive economic plan with the structural reforms needed to kickstart this economy by April.
However, it was clear from the Nedlac presentation that not much has really been done since, he said.