Ailing economy needs new firm hand at tiller
If SA were a company, a turnaround specialist would be mercilessly chopping at the executive to ensure growth returns, writes
THE definition of madness is doing the same thing, in the same way, many times over, and expecting a different outcome.
While the economy has slumped to barely a crawl, government carries on as if it’s business as usual.
But if we are to avoid a credit downgrade in December, a new skipper is desperately needed.
The leading indicators, the unemployment rate and GDP growth, have worsened since the ratings agencies gave us a reprieve in June, so we can be sure that a credit downgrade is well and truly on its way.
By the time S&P, Fitch and Moody’s get around to considering SA again, SAA will probably have another undeserved R5-billion in taxpayer-funded guarantees.
The SA Post Office will likely also have pocketed some of our tax money in further guarantees.
And Eskom will have gouged some more.
These will be short-term, wasteful measures. Other than helping to line the pockets of a few connected fatcats, none of this will add anything substantial to the economy.
The economy is perilously close to zero growth.
Come December, we’ll not only be staring a credit downgrade in the face, but a recession seems certain to be a part of the nation’s life.
That is, if we escape one when Statistics SA publishes the second quarter’s GDP number on September 6. (Growth declined 1.2% in the first quarter.) Sure, it may be easy for the optimists among us to assume that I’m being unnecessarily pessimistic and a prophet of doom.
But show me a sign that anyone is intervening decisively at a macrolevel to kickstart economic growth.
Unemployment reached a record high of 5.7 million in the quarter to March.
And in the following quarter another 403 000 South Africans lost their jobs, according to Stats SA.
This is despite the many government departments dedicated to improving the economy.
At executive level, since 2009, we have had the National Planning Commission; as well as the ministries of economic development; small business development; rural development and land reform; and planning, monitoring and evaluation.
They joined the departments of trade and industry; treasury; tourism; labour; mineral resources and energy ; public enterprises; and agriculture, forestry and fisheries. In a normal society these departments would have been created to facilitate trade and economic activity. But in the case of SA all they have succeeded in doing is putting up every conceivable stumbling block for entrepreneurs.
Government is heavy at the top – and by that I mean more than just the weight of the ministers presiding over departments.
The creators of our executive arm simply rounded up all the comrades and created positions for them – and for their deputies.
Much less than their deputies and civil servants, few of these worthy ministers would be able to tell you in under 10 words what it is they do for the people of SA.
That is, other than driving around in expensive and noisy vehicles with battalions of hangerson, also paid with tax money.
Virtually all these worthies had never even run a spaza shop before being charged with growing the economy in a complex market.
Whatever their efforts, they have clearly failed to facilitate economic activity.
GDP growth has slumped to negative territory from the lofty heights of 7%/year in 2007. But in this economy we desperately need to show the markets that we can bounce back – that we can trim ourselves back into shape.
With a credit downgrade menacing, it is time this fat is removed.
Government needs a turnaround specialist at its head whose first duty would be to ask our esteemed ministers (to borrow from Shakespeare): “What conquest brings he home? What tributaries follow him to Rome?”
Then, we may just survive.
Mantshantsha is deputy editor of the Financial Mail.