How much better would the governing ANC have been received by voters had it been supported by a rising tide of incomes and jobs (including good jobs in the public sector for teachers, nurses and doctors, which have proved unaffordable), which have been painfully absent since 2019?
Yet even impressive and necessary fiscal austerity has not soothed the investors in SA’s government debt that have to cover our lack of tax revenue. They continue to demand high nominal and after-inflation returns for funding SA, for fear that slow growth in the economy and in tax revenue makes printing money — and more inflation — much more likely sometime in the future.
Households have had to ante up the extra taxes needed to pay the extra interest on their national and more costly personal debt, and to support a growing dependence on poverty relief provided to half of all households. This is leaving less spending power available to households to encourage businesses to supply them with more of the goods and services they desire.
Businesses, largely bereft of growing markets, have hired fewer workers and added to their growth-enhancing plant and equipment at a slower pace. High interest rates have meant high costs of funding businesses, which furthers discourages the essential work providers.
Welfare, rather than work, has been SA’s poverty relief programme — and it has unintentionally but inevitably discouraged the supply of labour, with regulated minimum wages adding further disincentives to the demand for and supply of labour. A potentially very valuable economic resource thus goes wasted and potential workers become highly frustrated.
About 11-million South Africans are formally employed outside agriculture, out of an adult population of 40-million.
Any governing party chastened by its electorate would surely look to the economy to improve its own re-election prospects next time, as well as the prospects of the citizenry
Many middle-income participants in formal employment with access to excellent, privately supplied medical benefits apparently were put off by the promise of equally good healthcare, provided publicly. Their trust in effective government delivery has understandably been lost and will not be easily regained. That is a fact of SA political life that any political party that depends existentially on support from the centre should recognise.
Slow growth has its own vicious spiral downwards, and faster growth lifts all boats, including those piloted by government agencies. And any governing party chastened by its electorate would surely look to the economy to improve its own re-election prospects next time, as well as the prospects of the citizenry. They would put both party and SA in joint first place encouraging a stronger economy.
The ANC government, especially its Treasury, has not wanted for reform plans recently. Private-public partnerships to invigorate the failing infrastructure feature prominently and are welcome. And its budget deserves support from the economically literate.
Being allowed to proceed on its announced path, with the hope they could do much better in executing its plans, would clearly be a relief to SA business and its funders. The largely stable stock, bond and currency markets suggest that it will be so allowed.
The essentially market-friendly DA and its fellow travellers, with about 120 of the 400 MPs under its wing, would offer the much preferred partner for the ANC in government were growth and re-election prospects front of the ANC mind. The EFF and the MK do not offer, or even promise, faster growth — they have other growth-destroying redistribution objectives.
The very different approaches — racially biased interventions in the labour market rather than merit-based value for money contracts for labour, goods and services — are a serious difference between the ideologically interventionist ANC and the instinctively more market friendly DA. Yet the interference in the SA markets based on racial identity and preferments of one kind or another has been a primary contributor to persistently slow growth. They make business less efficient and confident, and less valuable than it would otherwise have been, and do so indirectly when the economic agenda — what the government does — is set by rent seeking opportunists rather than determined by a national interest in value for tax money.
Any political development in SA that leads to more meritocratic efficiency and less crony capitalism would be growth- and vote-gathering.
• Kantor is head of the research institute at Investec Wealth & Investment. He writes in his personal capacity.
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