Chop the fat

If SA were a com­pany, a turn­around spe­cial­ist would be mer­ci­lessly chop­ping at the ex­ec­u­tive to en­sure growth re­turns

Financial Mail - - BETWEEN THE CHAINS SIKONATHI MANTSHANTSHA - @SikonathiM mantshantshas@fm.co.za

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 been granted an­other un­de­served R5bn in tax­payer­funded 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 fat-cats, 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 macro-level to kick-start eco­nomic growth.

Un­em­ploy­ment reached a record high of 5.7m 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 & land re­form; and plan­ning, mon­i­tor­ing & eval­u­a­tion. They joined the depart­ments of trade & in­dus­try; trea­sury; tourism; labour; min­eral re­sources & en­ergy; pub­lic en­ter­prises; and agri­cul­ture, forestry & 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 hang­ers-on, also paid with tax money, for lit­tle re­ward.

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.

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