Wake-up call for the na­tion

CityPress - - Voices -

South Africa got another shock this week. The econ­omy is in re­ces­sion. There have been ru­mours and signs of an im­pend­ing re­ces­sion for at least two years, but now we have con­fir­ma­tion.

This lat­est jolt fol­lows on the fall­out of the Cab­i­net reshuf­fle that saw Pravin Gord­han re­placed as fi­nance min­is­ter by Malusi Gi­gaba. That change caused two in­ter­na­tional agen­cies to cut South Africa’s rat­ing to “junk”.

All of this should be a wake-up call for the coun­try, and politi­cians in par­tic­u­lar, that some­thing ur­gently needs to be done. How­ever, gov­ern­ment isn’t seized with any vis­i­ble ac­tion and one can only won­der what it would take be­fore a new path of ac­tion is char­tered.

The coun­try’s econ­omy can’t af­ford any more po­lit­i­cal shocks that dam­age con­fi­dence and lead to credit rat­ing down­grades or any other loss in eco­nomic per­for­mance, jobs or in­vest­ment.

Things aren’t look­ing up. Early signs are that South Africa could have con­tin­ued be­ing in re­ces­sion in the sec­ond quar­ter of this year, or at least limped along with slow growth.

The re­ces­sion will weaken tax rev­enue, which will in­crease gov­ern­ment’s bud­get deficit and could see state debt rise and the coun­try’s credit rat­ing placed un­der fur­ther pres­sure. The con­trac­tion in the econ­omy is likely to see jobs lost.

Wor­ry­ingly, Gi­gaba has yet to come up with any plan to avert fur­ther credit rat­ings down­grades or to get the econ­omy grow­ing. He has yet to mend fences with the lo­cal busi­ness com­mu­nity, with trust be­ing low. He has not re-es­tab­lished the al­liance with labour and busi­ness that Gord­han set up to get the coun­try grow­ing and stave off any fur­ther rat­ings down­grades.

In a week in which Pres­i­dent Ja­cob Zuma kept com­pletely silent about news of the re­ces­sion, Gi­gaba needs to re­store con­fi­dence, cor­rup­tion needs to be tack­led and the gov­er­nance of sta­te­owned en­ter­prises fixed – to name a few things that need to be at­tended to. Right now, the fo­cus of gov­ern­ment seems to be ei­ther self-preser­va­tion or pro­tect­ing in­di­vid­ual in­ter­ests, rather than ad­dress­ing macro is­sues such as the state of the econ­omy.

Gi­gaba him­self is com­pro­mised, so restor­ing con­fi­dence is go­ing to be dif­fi­cult as his cred­i­bil­ity and true in­ten­tions are go­ing to be ques­tioned.

Newspapers in English

Newspapers from South Africa

© PressReader. All rights reserved.