Is it too early to stop and take a little sniff of the roses? Or at least to notice that there are some tiny rosebuds to smell? It seems to me that spring has arrived in the garden of our national economy. No harvest yet, mind you, but some real progress. Now is the time to dig, prune and fertilise, so that we can enjoy the flowers some time soon.
Are there really green shoots? The data from a variety of sources all points in the right direction:
- Last week we learnt from BankservAfrica that take-home pay in SA has grown at a rate higher than inflation for five consecutive months — the first real expansion since Covid-19. This year is on track to be the best year for salaries since 2020.
- According to international insurance giant Allianz, the value of SA households’ financial assets grew by 2.2% in 2023 in real terms. This is a modest increase but it’s the first increase in many years.
- Stats SA’s latest release shows that retail sales grew 2% in July, the fifth consecutive month of growth in this indicator.
- An Ipsos/ Bank of America Survey found that SA fund managers expect an average return of 17% on equities in the coming year as a result of government reforms and a sustained economic recovery. If this comes to pass, it will represent a leap in our collective balance sheet.
- The SA Reserve Bank’s leading indicator ticked up last week by 0.7% on a monthly basis, with the annual increase reaching 4% — the highest level in more than a year.
- Inflation has staged a sustained decline, allowing the Bank to cut interest rates. Current trends suggest this is likely to be the first move in a long rate-cutting cycle.
- China announced a stimulus package, which should support SA commodity exports. There is even some hope for platinum, which has suffered a brutal and sustained downturn.
- The JSE is trading at record highs and the rand is at its strongest level in a year.
Taken together, this data suggests a real change in direction, and this is also reflected in growing positive sentiment. Who would have expected such headlines even a few months ago?
The economic lethargy of the past few years has been partly due to the abysmal performance of the state. That litany of woes is well known to us all, but the last few months have seen some progress. The government of national unity is beginning to take root. Load-shedding has been placed on hold, even if we are paying a terrible price in the form of air pollution and carbon emissions.
Transnet is starting to get its act together, even if this is happening more slowly than it should. The department of home affairs announced that it has cleared a backlog of 250,000 IDs, and is clearing other backlogs. There is noticeable progress in the fight against corruption. And SA is soon to chair the Group of 20 (G20), a real chance to shape the global agenda.
These shoots do not yet constitute a harvest, but they do provide a platform for growth. Now we need to push for sustained progress. We must continue to fix our network industries and address the terrible woes of our state-owned enterprises. We must invest billions of rand in infrastructure. We must digitise government services wherever we can, and create a far more efficient public sector.
We must encourage investment in growth industries by removing the blockages that constrain investment. We must expand industries such as tourism and global business services that can create entry-level jobs, especially for young people. We must lay a basis for future energy security that takes every available opportunity to cut carbon emissions, while still producing sufficient power.
All this will require is a public service that works, that has an appropriate set of budgets, and that is able to resist new waves of corruption. Building such service is a difficult thing to do, and should be the preoccupation of all ministers, premiers and mayors.
Meanwhile, we must double down on structural reform to drive economic growth. The people of SA have weathered a long and dangerous storm, and now we have the opportunity to rebuild. There is so much to be done, but at least we have made a proper start. If we continue to sow diligently and honestly, we can expect to reap a proper harvest in the years to come.
• Bethlehem is an economic development specialist and partner at Genesis Analytics. She has worked in the forestry, renewable energy, housing and property sectors as well as in local and national government.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.