Cyril’s missing economy policy
SUBPAR: SUMMITS AND STIMULUS PACKAGE
SA needs a policy that drives growth and positions it for 21st Century.
As the entrails of former president Jacob Zuma’s era are exposed each day before the Commission of Inquiry into State Capture, South Africa witnesses the consolidation of the political project spearheaded by President Cyril Ramaphosa.
But a key piece of the puzzle is missing: his government does not have an economic policy. All that’s been forthcoming is a stimulus package, plus two summits – one on jobs, the other on investment. Do these add up to an economic policy? No.
Here’s why.
I agree with economist Duma Gqubule that the stimulus package is a mix of shortterm stimulus measures and longer-term structural transformation measures, without doing justice to either. The shortterm measures don’t include the elements of a stimulus package such as lower interest rates and increased spending. And the longer-term structural transformation measures, such as the infrastructure investment programme, is nothing new.
More importantly, the longer-term vision ignores the changing nature of the global economy. This is being transformed by new information and communication technologies, the renewable energy revolution and the recomposition of work.
South Africa urgently needs a coherent economic policy that takes account of these realities. This cannot be driven by an industrialisation strategy that relies on 20th century capital intensive sectors like mining, chemicals, pharmaceuticals and the military. Many are in decline.
And the new policy musn’t be written only by economists. Economists need to work with South Africa’s scientists.
South Africa has dug itself into a deep hole. Ramaphosa’s efforts to root out corruption are a good – but not sufficient – first step to getting the economy onto a sound footing.
Chicken and egg: investment, growth
During the recent investment summit, Ramaphosa announced the “investment strike” was over. But many economists, such as professor Adrian Saville, argue that investment never drives growth. Instead, investment follows growth.
In theory, heavy state investment in infrastructure (as promised in the stimulus package) is a good thing. But what matters is the type of infrastructure and how private investment is crowded in, without flipping into privatisation (which has its own challenges).
Given the country’s vast array of stateowned enterprises, it’s obvious it needs an economic policy that prioritises their investments. Yes, most need to be cleaned up and refinanced. But that’s not enough. Radical thinking must be applied to entities such as Eskom, which has requested a R100 billion bailout.
It’s role could be redesigned entirely. But a plan for a complete overhaul would be best served by merging South Africa’s best economic and scientific thinking.
Together, they could generate an economic policy that puts energy at the centre. In line with global trends, this would need to be renewable energy because it creates more jobs, is distributed across small towns rather than concentrated in a few industrial nodes, and can drive a new job-creating industrialisation strategy.
SA needs a policy that drives growth and positions it for the 21st century.
Mark Swilling is professor of Sustainable Development at Stellenbosch University
This article was first published on The Conversation.