By Busi Mavuso
The impact of the Covid-19 crisis is becoming ever clearer: business confidence is record low; over 1-million jobs have been lost; and the Reserve Bank is forecasting that GDP will fall by 33% in Q2 of 2020.
On Friday B4SA released its proposals for an accelerated economic recovery for South Africa. These are bold fightback measures against the economic shock that accompanies the Covid-19 crisis.
The scale of the impact and the urgency with which we must respond are becoming ever clearer. Business confidence is the worst it has been on record. Over 1-million jobs have been lost and the Reserve Bank is forecasting that GDP will fall by 32.6% in the second quarter. We cannot become numb to the horror of those figures and what they mean for the quality of life of many South Africans.
BLSA was a founding member of B4SA and made various contributions to the development of these proposals. They emerged from a comprehensive process drawing on the voluntary efforts of many researchers and businesspeople. We now need to drive the process forward and focus on implementation.
The only way out of this crisis is to drive private sector investment and confidence. The fiscal constraints on government are simply too large for it to be able to finance a recovery. As finance minister Tito Mboweni made clear in parliament last week, we are facing a debt crisis that will compound our economic problems. But while government does not have the fiscal muscle to lean against this crisis, it does have the policy tools to do it. And that is where we must focus, to get the policy environment right to mobilise private sector investment and spending. We have been sliding backwards, for 10 years during the presidency of Jacob Zuma and now due to the major shock of the crisis. The substantial economic gains of our first 15 years of democracy have been lost. We must tackle the challenges we now face with all the vigour and determination we mustered in 1994.
To do that, we need a clear partnership between business, government and labour. That gets said often, but the tasks everyone must make are specific: government must create policy certainty and an enabling environment; business must source global capital to invest into projects to create growth and jobs; and labour must bring ideas on how to create new jobs and ensure greater labour flexibility, rather than just protecting existing jobs.
We talk a lot about social compacting, but we mustn’t forget that every player has their capability set. Compacting cannot be a substitute for task assignment and action.
B4SA has brought several clear proposals to the table that would be job enablers and activate investment. Energy security and a transition to green generation would deliver the energy security business needs to invest, while sparking an industrialisation process around green technology. Transport and logistics can improve the efficiency of the economy, moving freight off roads and onto rail, expanding port capacity and improving road infrastructure. Digital migration and spectrum auctions could lower the cost of data, enable e-learning and e-health an accelerate e-commerce. Better water infrastructure and agri-industry could unlock greater agriculture potential. Buying South African can boost domestic production while improved access to finance would increase inclusion. In all, B4SA has identified 12 priority initiatives that would collectively grow GDP by
R1-trillion, adding 1.5-million jobs and increasing tax revenue by R100bn a year.
Sadly, as has been said before, South Africa is great at plans but bad at implementation. Implementation and accountability now must be the focus. BLSA will work to identify implementation blockages and ways to unlock them. While talk shops can often be a substitute for real work, talks will be required to get alignment between business, government and labour. But then implementation must be ruthless, with programmes adapted according to performance.
My team and I are focused on driving that process forward. I look forward to engaging with many of our members and counterparts as we do so.
I wrote in my Business Day column that the cost of poor financial management in a country in recession and facing the Covid-19 pandemic is very high. As we head into the peak of Covid-19 that promises much pain to our society, our municipalities, unfortunately, are in a dire state. Municipalities sit at the state’s touchpoints with the most vulnerable in society and municipal mismanagement threatens to undo the state’s best laid plans. This is part of the crisis we need to fix.
With the Covid-19 infection rate rising alarmingly, there may be a need for more stringent lockdown regulations. If so, a proper risk-adjusted approach to selective lockdowns that maximise economic activity is important. We should encourage more work from home where possible, provision of private transport and support of health protocols by businesses. We should also encourage measures such as tax holidays to support businesses that are likely to be most affected, I wrote in Business Report. Furthermore, much better consultation between all stakeholders in the economy could help avoid some unnecessary pitfalls this time around.
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