Herman Mashaba | Our economy is in deep, deep trouble
Our economy is in deep trouble, from whichever perspective you look at it.
Some in government will want you to think that this is all arising from Covid-19, but the truth is our economy limped into this global pandemic.
The economic battering taken by economically strong countries is frightening, leaving us in South Africa to fear the worst.
We didn’t have to wait long.
Our own National Treasury last week predicted the loss of three to seven million jobs arising from the Covid-19 lockdown, with the GDP shrinking at 6.4{e93887a69cdd95d753f466db084bbc3aa0067124675315461d28d68a72842cc2} in 2020. In a country with our historical baggage, with our social injustice, with our stretched government capacity to provide for those in need, this is a calamity.
And yet, if one were to weigh the measures to safeguard health against those to safeguard the economy, livelihoods and jobs, you would be forgiven to think these efforts are mutually exclusive. There are those who go as far as criticising anyone who dares to raise economic issues at a time of a health crisis.
I find this thinking simplistic in the extreme. We do not have to choose between lives and livelihoods, the two are very much intertwined.
In fact, to correct imbalanced scales, it would be safe to say that the duration of suffering, arising from three to seven million jobs being lost, will go far, far beyond the length of time that Covid-19 will wreak havoc on the world.
Our “stimulus package”, when studied, starts to look more like smoke and mirrors than a real intervention.
At a time when South Africans were vulnerable and desperate for hope, it was packaged and sold as a R500 billion intervention. When you strip away the health and social relief measures, which are indisputably necessary, what measures were included to stimulate our economy?
Very little of it represented the economic clarity of a conventional stimulus package. To make matters worse the details of how this R500 billion was to be funded were glossed over, with the Finance Minister indicating only days later that terms had not yet been agreed with financial institutions like the IMF, World Bank and Brics Bank.
How this could have been presented as a solution, when we have yet to finalise terms, let alone receiving the financing, is beyond me?
What we need to see, urgently, is a new budget which cuts non-essential government expenditure to the bone. We need tough economic and financial reforms that allow for tax breaks to targeted industries.
We need aggressive cuts in our interest rates to increase access to borrowing and we need removals of every barrier to doing business in South Africa.
We need labour reform to ensure the soon-to-be privileged minority, who have jobs, are not protected at the expense of the majority of unemployed people.
But what is most troubling is that, rather than leading on the economic response, as he has on health, President Cyril Ramaphosa has delegated the economic response to his cabinet. This group can best be described as a confusing mess of economic ideology, which reflects how our economy has landed in this position in the first place.
The relaxing of regulations to Level 4 has not seen the maximising of industries returning to work while safeguarding the increase in infections.
Industries such as construction, which boast massive downstream economic activity, have been held back to Level 3 for commercial and civil construction and Level 2 for private residential construction.
E-commerce around the world is seen as an economic activity that generates activity, and minuses the need for people to gather in shopping malls and stores. In South Africa, this has remained banned, except for “essential products”.
Why you may ask? Minister Ebrahim Patel has deemed this would be unfair competition. More cabinet madness, at the cost of economic activity and jobs.
Ministerial hobby horses, pushing for the continued ban of alcohol and tobacco sales, drive this agenda, at the cost of R1.7 billion per month in government revenues.
The arbitrary nature of these bans, and the desperate need for government funding and protecting jobs, point to just how South Africa’s economy is at the mercy of the personal hobby horses of Nkosazana Dlamini-Zuma and Bheki Cele.
The fact that an exasperated Finance Minister indicated he “lost this argument in cabinet” is testament to what is powering decision-making in our government.
The recent revelation that the support for SMMEs will have BBBEE criteria for applicants, take this one step further. The argument to discriminate on racial grounds to address historical imbalances is a constitutional principle. To apply it in a time of crisis, to a pandemic that indiscriminately kills businesses and ends employment for people of all races, is madness.
Once again, we are now forced to endure ANC policy confusion at a time where lives, livelihoods and jobs hang in the balance.
The submissions sent by various industries in the period of public engagement included some spectacular proposals to put in place preventative health measures to allow more industries to return to work.
Given the opportunity, most businesses and industries are incentivised right now to consider extraordinary protective measures for their employees and customers. The government needs to work with these industries, ensure their standards are the best they could possibly be, meet the requirements and get them back to work.
Most of all, President Ramaphosa needs to lead on the economic solutions for our country, and not just the health issues.
Leaving our economic recovery to the likes of Dlamini-Zuma, Ebrahim Patel and Bheki Cele is a game of Russian roulette with a fully loaded gun.
Now, more so than ever before, we cannot afford to be at the mercy of ANC policy confusion and personal hobby horses.
The three to seven million people, who are about to lose their jobs and become dependent on an incapable state, are counting on this.
Herman Mashaba is a politician, entrepreneur and former mayor of Johannesburg. He is the founder of The People’s Dialogue. Views expressed are his own.