Let us be real about something. Our economy was sick and on its way into hospital before Covid-19 hit SA. If you read the views of ratings agencies and international investors, their negative views of our economy were informed by the trifecta of barriers to doing business, a hostile labour regime and a lack of certainty. It is this last point that I want to focus on.
Last Wednesday, President Cyril Ramaphosa addressed the nation on new measures to open the economy, with an emphasis on the restaurant, personal care and hospitality industries. It was welcome and overdue news to an industry with many businesses that will never recover from the world’s longest and hardest lockdown.
What made me angry was the lack of certainty behind the president’s announcement, being left only with a timeline of “in due course.” When the regulations will come out, what they will prescribe and when these businesses can return back to work is anyone’s guess.
These are industries that, until recently, were employing nearly one-million South Africans. They are unlikely, even after being allowed to return to normal operation, to recover to prior levels of trading. They would not know when they can open and what measures they would have to put in place to operate. This is what I mean by uncertainty.
Now imagine if the announcement were made with a simultaneous publishing of the pre-drafted regulations. The following morning these businesses would have been able to start working on the requirements to open their doors again, with precise knowledge of how they are to operate. Why presidential announcements must be a week before the ministers communicate the specifics I will never understand.
But, in many ways, the management of this lockdown has revealed the gross mismanagement of our economy and its theoretical foundation in discredited soviet-era economic thinking.
The disregard for certainty around the reopening of industries is part of our government’s newfound delight in its centralised control of the economy. The fact that everyday businesses lose more and employees earn less is not of concern because the economy will, apparently, wait for our ministers.
However, one can draw the roots for recent uncertainty around the entire mismanagement of our economy. Ramaphosa has pandered to the radical left of our country by flirting with notions of expropriation without compensation, nationalisation of the SA Reserve Bank and radical transformation.
All of this had meant that the world has perceived SA to have squandered its Cinderella status in the early days of our democracy. We are no longer seen as the rainbow nation that overcame the impossible and grew an economy at 7%.
I dread the idea of being the finance minister under the current government, faced with the reality of presenting a revised budget on June 24, with the following factors that cannot be ignored:
- An economy that is predicted to shrink more than 6%.
- The SA Revenue Service already communicating revenue undercollection of R285bn.
- The economy to shed between three-million and seven-million people in 2020, to join the 10.5-million people without work before Covid-19.
- The country’s debt to GDP ratio to rise to close 80%.
- With a country already declared junk status and dependent on the World Bank and IMF in the future.
SA is at a crossroads with our economy. If we turn left we will go down the road of the president’s “reimagination of our economy” or Nkosazana Dlamini-Zuma’s “class suicide”. This path will involve the collapse of our economy and the discovery that rebuilding a collapsed economy will take decades, if at all.
If we turn right we will need to embark upon a road of tough economic reform. Expenditure will need to be scaled back, our civil service will need to be cut and we will have a smaller cabinet. It will mean a souring of the ANC’s relationship with the unions. Tough reform of our labour regime would need to be coupled with wholesale investment in infrastructure and the industry of opportunity creation: education, small business and investment incentives.
The difficulty I perceive is that the correct choice at this crossroad will inevitably require a choice between the ANC and SA. The problem emerging from this is that it is the ANC that has the power to make this choice. If there is to be a salvation for the people of SA, it will have to come from the people of SA.
• Mashaba, the former mayor of Johannesburg, formed The People's Dialogue after stepping down in anticipation of launching a new political party later in 2020.
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