On Sunday, I arrived in Malaysia, a proper country, to speak at an international conference. From 2009 to 2024, the country had an annual average GDP growth rate of 4.2%. It has achieved full employment — an unemployment rate of 3% in August.
Over the past 16 years, this joke of a country called SA had an annual average GDP growth rate of 1.1%. Using the unrealistic official rate, which I only use for international comparisons, SA had an unemployment rate of 33.2% during the second quarter.
Instead of obsessing about the world’s second-highest unemployment rate, there is always something to distract us. At a recent Mapungubwe Institute for Strategic Reflection workshop about former Capitec CEO Gerrie Fourie’s fake unemployment statistics, there was a pointless discussion about why SA has a higher unemployment rate than Zimbabwe.
Maybe there is a problem with the data, the unemployment denialists say. Malaysia influenced the development of SA’s BEE policies. In 2006, I edited a book about the implementation of BEE during the first decade of democracy, and former Malaysian prime minister Mahathir Mohamad wrote the foreword to the book. In 1991, Mohamad launched “Vision 2020” — a plan to transform Malaysia into “a fully developed country” within three decades. In 2012, the SA government launched the National Development Plan (NDP) — but the Treasury and the Reserve Bank, the two most important institutions in the economy, blue-ticked every macroeconomic policy target that was in the NDP. That would not happen in Malaysia.
Two weeks ago, President Cyril Ramaphosa announced the ANC’s 10-point plan to grow the economy. It was the sixth so-called growth plan over the past 15 years, after the New Growth Path of 2010, the NDP, the nine-point plan of 2015, the Treasury’s economic strategy of 2019 and the Economic Reconstruction and Recovery Plan of 2020. After reading the ANC’s latest uncosted plan — it did not have a single number, target or time frame — it became obvious that the party does not want to be in power any more.
There is nothing new, and the “plan” just repackages existing failed economic policies, changing only their ordering and areas of emphasis. I also read the Treasury’s Growth and Inclusion (Gain) strategy, and it doubles down on the failed microeconomic policies — or structural reforms — that the government has been implementing since it established Operation Vulindlela in 2020.
The ANC must understand that GDP growth and the unemployment crisis are macroeconomic policy issues. If the Treasury is targeting a primary budget surplus of 2%, everything in the ANC plan is irrelevant. This is because the Treasury will be sucking out oxygen (or demand) of 2% of GDP from the economy each year. The Gain strategy assumes that structural reforms will offset this deficit or negative starting point in any attempt to kick-start the economy. But we cannot light the fire without enough oxygen, and the past two years of primary budget surpluses have coincided with GDP growth that is less than 1%. After five years, Operation Vulindlela has failed to achieve higher GDP growth.
Economist Asghar Adelzadeh offers the following explanation: “Advocating microeconomic policy reforms to overcome the macroeconomic crisis is a convoluted and inappropriate approach. It is like using brain surgery instruments to conduct heart surgery. The patient, in this case the economy, will undoubtedly be compromised.”
Ramaphosa must start worrying about his economic legacy — an annual average GDP growth rate of 0.5%, by far the lowest of any president since 1994. At what point does he admit that everything he has done is not working and that he must try new economic policies?
• Gqubule is an adviser on economic development and transformation.
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