‘Self-induced’ decade of decline for South Africa

 ·11 Mar 2024

Business Leadership South Africa (BLSA) CEO Busi Mavuso says that the country is sitting in a self-induced growth crisis – thanks to the failure of the state, moving from one crisis to the next.

Mavuso said that many in the government and elsewhere have given a positive response to South Africa’s latest GDP growth figures – where the country narrowly avoided a technical recession by posting growth of 0.1% in the final quarter of 2023.

Overall GDP growth for the year was 0.6% – something unimaginable in a year hit by the worst levels of load shedding on record amid other crises in logistics and infrastructure.

The BLSA lead noted that the main sentiment has been a more optimistic spin that “(GDP growth) could have been negative”.

However, Mavuso said that the reality is that it has been negative: South Africa has spent the last decade in decline, with real GDP per capita shrinking to levels seen in 2006, trending lower since 2013.

“We have now crowned a decade of negative per capita growth,” she said.

This is a self-induced growth crisis that comes down to a failure of state-provided infrastructure and services.”

“Inadequate electricity supply and logistical constraints were the key obstacles to growth. While load shedding eased in the fourth quarter, logistical challenges were a major constraint on economic activity with port delays damaging exports and import volumes.

“Investment also declined in the fourth quarter, with residential building, transport equipment and construction leading the negative trend.”

She said the latest growth figures sound a very clear “clarion call” to the government to do something about it.

“There really is no excuse for us to not get this right. We have the resources and we have the plans, and if there is sustained political will, we will succeed. The risk is that in an election year there are many distractions when we need to keep focused on delivering the reforms needed,” she said.

Mavuso said South Africans are becoming poorer, and the prospects for employment are diminishing – and the country is moving from one crisis to the next.

A water crisis now knocking on the door, she said, which will have dire consequences for households and also entire industries, threatening economic growth even further.

She added that the government and the private sector need to work together to address not only the crises that are already in play – but also to make sure that future crises are planned for.

“We cannot find ourselves in a situation where we have resolved the energy and logistics crises only to be confronted with a new crisis that ultimately means economic activity doesn’t happen. So, while tackling immediate crises head-on is important, we must maintain vigilance on what the next major constraint is,” she said.

“Partnership between business and government is essential for us to achieve what we want for South Africa.”

Read: The best and worst municipalities for drinking water in every province in South Africa

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