SA economy needs a hero
STEADY HANDS: VITAL TO STEERING SHIP
Reserve bank says firm leadership is the answer to the country’s woes.
Mboweni and Kganyago seem to have recognised that firm leadership is an answer to country’s woes.
In August, South Africa’s economy survived the biggest threat it has faced since its democracy – the Turkish lira’s contagious free fall that spread to emerging markets. This was a reminder that a connected global economy brings with it externalities that can have significant, far-reaching effects.
The Reserve Bank (Sarb) last month made two interesting statements.
The first was on the future rise in interest given the global trend over the next two years. And, on the back of continued United States Federal Reserve System rate hikes, a strong US economy that’s continuing to outdo its peers while adding jobs.
It made me wonder whether Sarb governor Lesetja Kganyago and co will follow suit and raise rates in coming months – a potentially contentious move considering the ordinary citizen’s high debt levels.
What kind of impact would a shortterm interest rate hike have on potential borrowers, household debt, the housing market and the cost of servicing government debt?
The second, was that “South Africa has had almost no investment growth since 2013”.
This will take time to undo and has reduced the economy to a spattering jalopy in a world where some countries’ economies have managed to be supercharged, despite the global slowdown and even recession. SA’s recovery must be spurred on by government and private sector.
SA’s economic performance in those “Lost Years” attests to our leaders’ lack of economic awareness. Globalisation moves forward, leaving those struggling behind.
It’s therefore critical for those directing Treasury and SA’s monetary policies to remind their political principals of this.
Now that sense has begun to prevail, it’s time to look at SA with fresh eyes: authorities must ensure the country is wellplaced and catches up to changes in the world economy; political rhetoric must give way to rationality; and uncertainty must make way for stability.
Finance Minister Tito Mboweni must hold his ground and repeatedly tell colleagues the truth: the state has no business running SAA and can’t afford to.
Other countries are pursuing smarter paths towards their economic advancement and are more focused on their economies than political interests.
SA politicians also need to temper their preoccupation with mining and manufacturing while ignoring other areas like agriculture – and realise that not investing in people development deprives SA of the ability to diversify its economy and skills.
These are some of the main causes of SA’s weakness, aided by clumsy political interference in the economy. This has resulted in stagnation and delayed recovery.
I wish Kganyago and Mboweni steady hands and steadfastness. The only way to lift people out of poverty and unemployment is through a growing, working economy.
The economy needs a champion. It’s encouraging to see an administration that has recognised that.