I am always puzzled by those perennial optimists who consistently expect that SA is just about to turn the corner. I wish I could share their enthusiasm when the evidence suggests we’re in for more stagnation and decay.
It’s not that I’m a perpetual pessimist. It’s just that I’ve been writing about the SA economy for a long time, and the more dismal my predictions the more accurate they’ve turned out to be.
Stats SA is set to announce that the economy contracted mildly in the second quarter, thanks mainly to the KwaZulu-Natal floods and accelerated load-shedding. Don’t panic though. The economy is likely to bounce back in the third quarter, allowing SA to avoid a technical recession. It could even grow by about 2% this year.
Unfortunately, that’s as good as it’s going to get — 2% growth has become our ceiling as we struggle to overcome the enormous energy, infrastructural, fiscal and governance deficits that accumulated during the state capture years.
Yes, the government has plans to overcome these challenges, but given the dithering and political expediency that has marked President Cyril Ramaphosa’s first term, South Africans have lost faith in the government’s ability to execute a growth plan.
Except for the optimists. As they see it, SA is on the cusp of a fixed investment boom, driven by private investment in renewable energy. When combined with the government’s undertaking to spend R100bn on infrastructure over 10 years, the country’s prospects brighten considerably.
Then there’s the government’s shift towards allowing private sector participation in funding and managing infrastructure, harbours, and some aspects of rail, as well as the wholesale liberalisation of the energy sector. It all sounds wonderful on paper and, if they were executed efficiently and within budget, these developments could indeed be a game changer for the SA economy on the three- to five-year view.
But when has this government ever executed anything efficiently? SA can’t take another three to five years to slowly muddle through, seeking an elusive consensus while per capita growth continues to shrink. The country is getting poorer and its people exceedingly restless.
Tipping the scales to the downside is the deterioration in law and order (particularly the failure to prosecute the construction mafia and the perpetrators of the July 2021 riots); endemic corruption; rising xenophobia; the near collapse of many public hospitals and small towns; staggering unemployment; and rising poverty and political uncertainty.
The spiralling cost of living doesn’t help, but is mostly temporary. Inflation likely peaked at 7.8% in July, and by this time next year could be back at the 4.5% target as base effects and slowing global growth bring oil and food prices back to earth.
I’m more worried about the politics, lawlessness and ineffectual economic reform. While Operation Vulindlela continues to chip away at SA’s deep structural growth constraints, it’s not convincing enough to ignite confidence and fixed investment upswing.
Meanwhile, many of the government’s policy prescriptions continue to make things worse — just think of its suffocating localisation policy, public procurement and BEE regulations, as well as the plethora of job-sapping labour laws. And every day the screws are tightened, when the entire edifice should be dismantled.
Add to this the potential for the ANC’s December elections (or the Phala Phala debacle) to unseat Ramaphosa, and the prospect of chaotic coalition governments in several provinces after 2024, and you can see why I’m not in the happy camp.
While it is true that things are much improved compared to the state capture years, and many reforms point in the right direction, the economy is still stagnating, the fiscus remains fragile and the politics as toxic as ever.
As South Africans struggle to make sense of it all, the optimists remind me of Dory, that plucky little fish with an extremely short memory, whose mantra was: “Just keep swimming, just keep swimming”.
Like everyone, I’ll strive to keep my head above water; just don’t expect me to be happy about it, or to forget why I can’t escape that sinking feeling.
• Bisseker is a Financial Mail assistant editor.
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