The unexpected visitor who may rescue SA’s economy

South Africa Finance Minister Tito Mboweni in Cape Town, South Africa. Photo by: AP Photo

Finance Minister, Tito Mboweni attested last week after getting the nod from the hallelujah moment to proceed with the economic reform project.

Every team or society needs an extraordinary unifying factor to motivate its course. During the Apartheid era, the majority of citizens were united by a single force; to cease apartheid. Many other claps of thunder were not so important.

The South Africa economy was then largely exposed post-apartheid because there was very limited economic path rehearsal in preparation for a democratic government takeover. 

The 21 days lockdown comes at a time when the country’s working-class and nationalists are at loggerheads over the economic trajectory.  In his 2020 budget speech statement, Mboweni announced measures that are not in favour of the working class. “We cannot go on like this” Mboweni referring to the high wage bill.

Deeper and deeper, at the epicentre of these differences is the battle for political sustainability and ascendance. Unfortunately, this circus often plays at the expense of economic advancement that has baggy spin-offs for societal development.

Actually, there is quite a lot that the working class and the nationalist should have practically championed in the past 10 years than to adopt resolutions gathering dust on thick documents. Some of these include land redistribution, the establishment of the state bank, energy stability, suburbanisation, basic education advancement, equal health system and many others. Serious and meaningful reform should start with putting an end to sleepwalking. 

Take a look at a country like China which happens to be our top one economic trader. The coronavirus started there in almost 120 days ago. Within 60 days of the virus existence, the state took a decisive decision to swiftly build a special hospital for coronavirus patients. It was completed within weeks. Yes, within two weeks! Theoretically it would take a country like ours not less than three years to complete a construction project of that magnitude.
Towards the end of March 2020, China – a population of 1.3 billion citizens – was having approximately 2000 new infection compared to 17 000 in early February 2020. As of today, China has turned the tide in containing the virus. Many countries that watched the virus at distance and as a foreign ill are the one’ battling to contain the alarming daily infections.

There is so much to learn from China’s response to the pandemic. More so, China’s ability to grow its economy at an inspiring rate since the 2008 economic meltdown. It all boils down to China’s political value: UNITY. 

At a distance, China is viewed by some, if not many, as a cold country with non-existent human rights. But surprisingly, you will hardly see China’s citizens in rampant protest as it happens in the so-called democratic countries. It’s just innovation and economic growth all the way in China. British political economy professor, Martin Jacques, often says in his lectures China’s success is mainly sustained by the political unity which translates to easier and quicker decision making by the state.

This pandemic allows us to see why it absolutely necessary, even straightforward, to weigh different people’s interests. South Africa’s current economic situation that has been worsening by the Moody’s downgrade to junk status. 

Perhaps, the coronavirus pandemic in South Africa may be another “hallelujah” moment in saving our economy from the worst recession.  
The pandemic must unite all political forces in advancing economic reforms and all parties to agree to obvious sacrifices. There should be no time for ballroom dancing and unending consultations in the midst of an economic crisis. The real test for the ANC-led alliance is unity, now than ever before. 

For instance, there is no way the country can sustain such a huge state wage bill constituting about 36 % of the government purse. 
South Africa’s 14% of GDP spend does not stack up well when compared with trading partners such Brazil, Russia, India and China. 
According to the OECD report released in 2019, it states that the likes of Brazil (11%), Australia (10.44%), USA (9.74%), India (8.13%), and Russia (13.7%). This all sits bellow South African 36%. 

Some South African economists lately talk about a fiscal cliff that is looming if the state does not drastically reform the economy and stop the massive consumption pattern. For example, the country does not afford anymore to bail out SAA. More so to roll out cosmetic multi-billion rand infrastructure projects similar to the e-tolls and Gautrain.  

The state infrastructure projects must be reprioritised and resources be channelled to a single golden basket that will create jobs and substantial existing opportunities.

We may have had a bad visitor in the form of coronavirus as we are locked at our homes. However, pandemic may trigger a sixth sense in our political economy and bring unity that will allow the state to take urgent economic measures towards avoiding a worst negative GDP outlook in 2021 as the South Africa Reserve Bank predicts a 1% GDP growth in 2021 and to 1.6% in 2022.

Vukani Mnyandu is the Advisor at Eskom and a Master’s degree student. He writes in his personal capacity.