SA’s economy is on a knife edge and it is time to take tough decisions to get the country working, with international rating agencies saying they want the government to start walking the talk on structural reforms, says deputy finance minister David Masondo.
In an interview last week Masondo said the promises made in the state of the nation address and budget speech in February have to be delivered in full in order to confront SA’s challenges. In March the country is to hold an investment conference — the third of which has so far attracted R700m — in order to push forward with President Cyril Ramaphosa’s agenda of making SA more competitive in global markets.
“Structural reform is key to getting SA working. The regulation of illegal immigrants in the workforce, reform of state-owned enterprises [SOEs] and getting business to employ more workers are the low-hanging fruits that can yield success in the short term,” Masondo said.
The government is completing consultations on job reservation for SA citizens in some sectors of the economy, while an audit of SOEs in order to consolidate their work and discussions on a social compact with organised businesses and labour in the national interest are continuing.
The big issue is the cost of electricity and Masondo said even though Eskom is cash-strapped the price of electricity cannot keep going up.
“Raising tariffs is going to choke the economy,” Masondo said. “Our competitive advantage in SA, in the past, even under that apartheid government, we could say that we can give you electricity cheap.”
Amid SA’s persistently rising levels of record-high unemployment and inequality, Masondo said “unfortunately it is going to take time” to get SA working.
Ramaphosa’s administration will face the electorate in less than two years in a general election. Successive electoral declines have now seen the party drop below 50% in 2021’s local government ballot. Political unrest, which sparked riots after former president Jacob Zuma was jailed for refusing to account for state capture, also weighed on business confidence.
Cosatu president Zingiswa Losi and SACP deputy general secretary Solly Mapaila were at the ANC’s lekgotla ahead of the budget speech in January, which agreed to some extent on the way forward.
While Losi and Mapaila declined to comment, SACP spokesman Alex Mashilo said the narrative on structural reform needs to evolve to one on structural transformation. Foreign nationals are being used as scapegoats and the issue is the transformation of the colonial economy.
“As the SACP we stand for structural transformation, as opposed to neoliberal structural reform. Transformation must include transforming the structure of the colonial economy, riddled with its colonial features and including the building of national production. This requires support for manufacturing expansion and diversification as opposed to industrial incentives presented in the budget last month,” Mashilo said.
However, presidential economic adviser Trudi Makhaya said most important is to fix what is wrong with the system.
“The nonpayment of contractors is a long-standing problem and mechanisms have been put in place to deal with it. Sometimes a department raises certain issues that they have with a contracting issue, but to be fair, that should be raised upfront rather than after a long time. This is one of the issues that the red tape reduction should address, because it really is stifling a lot of business development,” Makhaya said.
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