The president’s announcement last week that our borders would be further opened for tourism enables the stressed hospitality and tourism industry to try and recover some business during what would normally be their busiest time. Reverting to more normal alcohol sales times will help. Every step towards getting our economy back to normal is important.
The unemployment figures last week again reminded us how serious the economic blow has been. While on one reading it showed that more people were working in the third quarter than the second, it was still clear that we are far from the “normal” of before the pandemic. We lost over 2.2million jobs in the second quarter and in the third about 540,000 came back.
That means we are still far from pre-pandemic levels. This shows how important it is that we do everything possible to get our economy back on track, including welcoming tourists.
Enabling economic activity is just the start, however. What we really need is confidence so that businesses can use the gap that they have to invest and expand. We are going to have to adapt to the permanent changes that the crisis has delivered.
That will require innovation and a positive outlook. If business people don’t have a sense that a positive future awaits them, we are not going to see those employment numbers recovering for a long time.
Confidence can come from many places. The move last week to charge ANC secretary-general Ace Magashule with fraud and corruption is the kind of signal business has been needing. We need to see that corruption at every level is being seriously tackled. Of course, more can be done on this front, particularly in the private sector where both massive and minor frauds and other malfeasance has gone unchecked for too long. Fraud and corruption destroy trust, which is an essential factor in business.
Tackling it head-on is one way to deliver confidence in the wider effort to get business to have the confidence to invest and grow the economy. But by charging Magashule, the prosecuting authorities have demonstrated that they are not afraid of confronting the powerful. It is a strong signal that a key pillar of our constitutional democracy has been re-established.
As we head towards the festive season, our country needs reasons for cheer. We have all experienced trauma from this crisis but we are now able to lead lives that are much closer to normal. We can socialise, use restaurants and make holiday plans. That is a far more positive position to be in than many European countries now facing record infection rates and draconian lockdowns.
Of course, we cannot let our guard down. There is still much opportunity for the virus to resurge here. But our warm weather, judging from the experience of other countries, makes it easier to maintain distance and stay outdoors, curbing infection rates. Now that we also have a realistic prospect that vaccines will be ready within months, I feel we can safely hope that the worst is behind us. That is another reason for confidence.
The major confidence boost, however, must come from our government in the form of delivery of the economic recovery plan. Rapid conclusion of agreed structural reforms will open the way for economic activity. It is the only form of largescale stimulus we can afford right now because it comes for free, requiring only the implementation of policy reforms. As we all try and get back to normal lives, government must open the way for opportunities that we did not have before the crisis. If we can look forward to new opportunities, and a pandemic that is officially history, this might be a festive season indeed.
A report by Busa into the public sector wage bill released last week finds that that SA’s public sector is not large by international norms but it is “unusually” well compensated. The research, conducted by Intellidex, encourages government, labour and business to work together to develop productivity reviews and then productivity enhancement plans for the public service to help the public sector deliver on its reform and service delivery agenda. A review of the report can be found here but I also wrote in Business Report that reducing the public sector wage bill is a difficult but unavoidable task for the state, but it has to live within its means.
I hope that President Cyril Ramaphosa uses this week’s investment conference to ram home impending changes in policy and communicate clearly how SA intends to pursue reforms so that we stand out in a crowded field of countries seeking to unlock investment. That will certainly help boost confidence, which as I wrote above, is so desperately needed for investment in the economy. What is positive is that the president will have progress to report in electricity reform, spectrum auctions and other measures, I wrote in my Business Day column.
This is a weekly newsletter from BLSA CEO Busi Mavuso.
BLSA is a business organisation that believes in South Africa’s future and shares the values set out in the Constitution. In 2017, BLSA signed a contract with South Africa, committing business to playing its part in creating a South Africa of increasing prosperity for all by harnessing the resources and capabilities of business in partnership with government and civil society to deliver economic growth, transformation and inclusion.
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