Energy, education are top tests -- not Greece
OUR economy is trapped in stagflation, characterised by low growth, high inflation and, to add salt to those painful truths, rising unemployment. More worryingly, things are unlikely to improve any time soon.
The inflation isn’t demand driven. Instead, it’s being pushed up by high administrative costs such as rates and electricity bills and a weakening rand, now trading near its lowest levels on record. Last month, the currency passed its previous low point, reached at the start of the millennium.
Some of the blame for the state we are in can be quickly written off as a global story — everyone in the emerging-market world is in a similar predicament. Europe and its Greek crisis is another development that any politician in the ruling party will be quick to seize as a reason that we sit in a rather uncomfortable position on the southernmost tip of Africa.
To a degree, it’s a valid point; the neighbourhood is in dire need of some positive offshoots of growth outside of just the US. But there’s a much bigger truth and it’s that we’ve scored one too many own goals and continue to do so. We may look at Greece’s struggles with restructuring its economy, and righting the many structural flaws that are impossible to achieve without the social distress we see unfolding.
South Africa needs to have just as honest a discussion about the structural limitations on the economy, now Africa’s second biggest. Chief among them is the energy situation and an educational crisis that is best illustrated by the boom in private schooling.
Without energy security, the economy is limited to the low growth rates we are experiencing. Until January 2008, before that fateful day when the lights went out at gold and platinum mines across the country, the economy was expanding at rates that made the goal of halving unemployment a distinct possibility. Since then and the unfolding seven and a half years of policy uncertainty and numerous leadership changes at Eskom — not to mention its changing political principals — an energy shortfall is part of our daily lives and is set to remain so for years.
With unemployment above 26% and youth unemployment above 50%, the failure to provide a clear road map to deal with the electricity crisis is the biggest blight on government’s report card.
The other structural flaw in need of urgent attention is education. Until this is done, South Africa will continue to dig itself into a deeper hole, all the while reducing the chances of the economy creating the jobs we so desperately need.