Aims are attainable
But success will probably come later rather than sooner
THE SOUTH AFRICAN ECONOMY is now pretty well at the point that various high-profile scenarios in the early Nineties said was feasible in favourable circumstances.
These exercises included inputs from such heavy hitters as the International Monetary Fund and the World Bank.
The good news is that this phase – the first but vital steps in a hugely longer journey of turning aspirations to reality – has been broadly completed.
Plenty of cheerful rejoicing is clearly justified. But some important cautions must also be thrown into the mix.
We must note crucially that the SA economy is roughly where the 1990-93 “futurologists” generally thought it could be by the year 2000 – subject, of course, to various key caveats.
In other words, SA has arrived at the initial terminus all right, but maybe some seven years behind schedule. It’s worth keeping both those facts well in mind.
That’s particularly so in considering the likelihood of projections for the next decade – most notably those put forward in the Government’s Asgisa (Accelerated and Shared Growth Initiative for SA) macroeconomic game-plan – being realised.
The key targets here are to have average annual economic growth at 6%-plus from 2010 and to halve poverty and unemployment by 2014.
Experience clearly indicates that the Asgisa aims are attainable.
The record also shows, though, that sustained success, if achieved, will much more probably come later rather than sooner.
I don’t find that possibility either surprising or, realistically, disappointing – any more than the time delay between the time-scales of the scenarios of the early Nineties and the actual economic progress of democratic SA.
For starters, those scenarios almost all significantly underestimated the obstacles confronting post-apartheid SA.
The steady intensification of trade and financial sanctions against SA in the Eighties (some aspects dated from the Seventies and earlier, but that was largely forgotten in the spectacular gold boom of 1979-81) took a heavy toll on the economy’s productive capacity.
Capital equipment and machinery across many industrial sectors became increasingly obsolescent and inefficient.
Many export markets have been at least partly lost, although some important offsetting gains were also made, essentially in Africa and Asia.
There are no quick fixes to such deepseated problems.
Crucial point is that it took SA much longer for the economy’s productive base to recover than the IMF and the rest assumed could happen.
Remember, too, that the area that most concerned many analysts then – the ability of SA to hold peaceful elections and to avert civil war, most pressingly in Natal – proved immensely less difficult than widely feared.
But even that could not produce anywhere near instant economic triumph.
Something similar is certainly possible in seeking to bring about fulfilment of the Asgisa agenda.
For example, on the surface SA has secured vast educational gains over the past 10-12 years.
That is primarily based, however, on the grossly over-simplistic view (common in many other countries, including Britain among developed nations) that massive rises in spending equate to similar increases in overall educational standards.
But that is far from necessarily true, as in health, transport and other sectors.
Key fact is that SA has chronic shortages of human skills.
These can to some extent be glossed over in a world of booming commodity prices and a global economy that over 2003-06 enjoyed its best growth burst in 25 years.
But these exceptionally strong segments of the business cycle don’t run forever.
There are leaner periods, as at the start of the Eighties (goodbye President Carter in the US), the Nineties (ditto, President Bush Snr) and this millennium (Bill Clinton got out just in time).
Sure, there are no Thirties-style depressions and even recessions have latterly been mild and short-lived.
However, countries such as SA, which are so heavily dependent on the world economy, can get bitten nastily.
Look at the unpleasant ripple effect on SA of the “Asian contagion” setback almost 10 years ago.
That’s when countries that have intrinsically vigorous, dynamic private sectors and efficient business-friendly public sectors are usually best able to cope. That’s also where I have residual worries about SA.
The ANC Government is at best ambiguous about its attitude to traditional (ie “white”) business. This may be understandable, given SA’s history.
But unless and until “transformation” involves colossal greenfields enterprise by groups designated “black” by the authorities, economic growth will continue to be heavily reliant on the traditional sector.
In that case, however, that sector (along with all others) has to be nurtured.
But in mining, for instance, we see lacklustre new fixed investment when we might rather expect boom conditions.
Transformation-by-charter patently needs to be handled much more carefully in SA.
Company tax has been cut in SA, yes, but relatively the burden on corporations compared with the rest of the world has been rising (see graph).
This threatens to retard rather than advance Asgisa.