South Africa cannot afford “stalled policy reforms” in its bid to kickstart the country’s stalled economy, says Business Unity South Africa (BUSA) President Sipho Pityana.
His remarks come after the National Economic Development and Labour Council (NEDLAC) agreed to an economic recovery plan on Tuesday.
“The moment Cabinet signs off on the economic recovery plan, social partners need to focus on its implementation,” said Pityana.
“It is time to bite the bullet. We can no longer afford stalled policy reform as it erodes the economy’s potential growth and its global competitiveness.”
He added that the lack of economic direction in the past precipitated the first crisis, and Covid-19 precipitated the second.
Third crisis would be ‘terminal‘
“All of us government, business, labour and community need to make the most of what we have learnt to ensure we do not enter a third, terminal crisis in which the wheels come completely off the economy, we are indebted to the IMF forever, with all the conditionality that comes with such a scenario.”
Pityana said there are three critical matters that will have medium and long-term impacts and must be acted on immediately.
“These include fundamental structural reform interventions, to enable both global and local investment and achieve inclusive and sustainable growth. Critical interventions to stabilise the fiscal situation, such as managing debt and public expenditure, are also important.”
Finally, Pityana said, “hard decisions” need to be taken on state-owned enterprises (SOE) in order to optimise efficiencies and government should consider “divesting from SOEs with no prospect for yielding economic or social benefit to the country.”
Data from Stats SA last week showed a steep slump in GDP as COVID-19 took its toll on the economy.
“Perhaps the second quarter of 2020 will become known as the pandemic quarter. South Africa’s economy suffered a significant contraction during April, May and June, when the country operated under widespread lockdown restrictions in response to COVID-19. Gross domestic product (GDP) fell by just over 16% between the first and second quarters of 2020, giving an annualised growth rate of ‑51%.”
Stats SA added that this contraction dwarfs the annualised slowdown of 6,1% recorded in the first quarter of 2009 during the global financial crisis.
“Historical data from 1960, sourced from the South African Reserve Bank, show that the second quarter of 2020 experienced the biggest fall in GDP since that year, far steeper than the annualised 8,2% decline in the fourth quarter of 1982.”
Eskom needs ‘inclusive and conclusive’ solution
Members of the social compact at Nedlac have also committed to mobilising funding to address Eskom’s crisis in a sustainable manner, according to reports.
Pityana said the commitments to support Eskom would hopefully ensure the issue of power supply would be dealt with as quickly as possible, in a “conclusive and inclusive fashion.”
Another short-term priority is expediting digital migration by March 2021, releasing high demand spectrum and expediting the rollout of broadband and other ICT infrastructure.
There is also emphasis placed on localisation, replacing imports as a means of job creation.
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