SA walks a tightrope

VISION 2030: CONCERN OVER LOW SAVINGS RATES, POOR GROWTH, SMALL BASE OF TAXPAYERS

Economy not on a footing that will respond sufficiently to macro stimulus.

Acritical review of the National Development Plan (NDP) goals has painted a bleak picture of economic growth and the likely failure of the NDP to achieve its full employment target by 2030. The NDP was launched as a blueprint to achieve economic growth and to address high unemployment, poverty and inequality. Vision 2030 underpinned the plan.

This was contained in a report of the National Planning Commission (NPC), which undertook a review of the economic progress towards the NDP’s Vision 2030. The NPC tabled its findings during a webinar meeting on Thursday.

According to the report, in 2016 and 2017 there was negative investment growth for first time outside of a global induced crisis. Private and state-owned enterprises investment fell by 5% and 3% respectively.

At the same time there was diminishing foreign direct investment since 2014.

NPC commissioner Dr Miriam Altman, who presented the report, said the country’s economic capacity had fallen markedly and the growth was too slow instead of picking up.

“South Africa is already walking a macro economic tightrope, with low savings rates, poor export diversification and growth and a small base of taxpayers,” she said.

“The economy was not yet on a footing that would respond sufficiently to macro stimulus.”

The NPC found that employment had a shortfall of up to 1.5 million by 2019, or about 60% of the target. A lot less was expected from 2020.

Various sectors of the economy had performed very badly when it came to employment. Manufacturing lost 313 000 jobs between 2010 and 2019, while small firms shed jobs at an alarming rate from 64% to 55% during the same period.

Altman said employment grew but the trend did not meet the NDP target. The original target of full employment by 2030 could no longer be achieved.

“Covid-19 will make it even harder. It is still imperative to commit to full employment as the top priority, even if the timing changes,” she said.

Those living below the poverty line fell from 51% of the population in 2006 to 36.4% in 2011, reversing to 40% in 2016.

The labour market had not done well, either. The efforts to employ more youth via various state programme, such as expanded public works programme, did not translate into moving the dial.

President Cyril Ramaphosa’s economic advisor, Trudi Makhaya, said there was a strong need to address the “stop-start nature” of the country’s economy.

She disagreed with a number of points in the NPC report. She said economic growth did not have to be high but it must be consistent and sustained over a long period.