South Africa’s ruling African National Congress and business leaders are heading for a showdown over how to revive an economy ravaged by the coronavirus and a two-month lockdown to curb its spread.
An ANC document dated May 22 proposes encouraging the use of pension funds and the central bank to finance infrastructure spending to drive economic growth.
The government should also create a state bank and pharmaceutical company, according to the document, which was drafted by Enoch Godongwana, the party’s head of economic transformation.
Lobby group Business Unity South Africa panned the document on Tuesday, saying it revived “old ideology and dogma” that envisions giving the state a bigger role in the economy, allowing it to tamper with the central bank’s mandate and independence and enabling it to lend support to non-strategic state companies.
“We need to agree on the structural reforms critical to enable investment, growth and inclusion,” Busa chief executive officer Cas Coovadia said in a statement.
“We remain convinced the private sector is best placed to stimulate such economic growth.”
Business groups have played a key role in helping the government tackle the fallout from the virus, raising money to support small enterprises and buy protective equipment and ventilators, and alienating them would bode ill for efforts to reignite economic growth and create jobs.
Business for South Africa, an umbrella body of business groups, has warned as many as four million jobs may be at risk in an economy where only 16.4 million people worked before the pandemic hit.
Gross domestic product could contract 7% this year, according to the central bank, the most in at least six decades.
Attracting investment will be imperative to the reconstruction effort, and the task will be extremely difficult in the post-virus period, Busa said. It called on the government, business and labour unions to prioritize the national interest and work together in pursuit of a growth rate in excess of 5%.