SA faces economic, fiscal crises – Coovadia
THE ECONOMIC Reconstruction and Recovery Plan (ERRP) required some hard decisions to attract investment, reduce state expenditure and enable business growth, Business Unity South Africa chief executive Cas Coovadia said last week.
In an interview, Coovadia said considering that the South African economy was in recession pre-Covid-19 and was downgraded to sub-investment grade status during Covid, which had exacerbated this, the country now faced a severe economic crisis.
“We also face a severe fiscal crisis. Social partners must work together on this, but the levers ultimately lie with the government and they need to lead,” said Coovadia.
Busa said the government must start implementing immediately in areas that they could do so. Coovadia said these included issuing a Request for Proposal (RFP) for the next tranche of renewables, sorting out licensing for mining exploration, bringing forward the auction of spectrum and sorting out efficiency issues at the Durban port, among others.
“These can be implemented immediately and would, if implemented, start creating an environment for investment, with the South African financial sector bidding in the RFP process, data becoming cheaper and networks more available, investment in mining exploration and more efficient and cheaper processing of goods at the Durban port.”
The government’s ERRP for the country’s economy is aimed at stimulating equitable and inclusive growth.
South Africa’s economy has experienced stagnation, which has put a strain in the effort to tackle the historical structural inequalities, unemployment and poverty. There is a consensus among the social partners that there should be substantial structural change in the economy that will unlock growth and allow for development.
Coovadia said that the social partners worked well together in the country’s economic relief stages, through a Nedlac Covid Rapid Response Task Team (RRTT), which met every Tuesday for three hours until October. By mid-November, it met every fortnight.
Coovadia said that RRTT looked at things like adherence to health protocols, distribution of Temporary Employer-Employee Relief Scheme (Ters), engaging on the Credit Guarantee Fund and other activities.
“Lowlights have primarily been in the Ters space where it took a long time to apply private sector capacity and the subsequent damning report on the UIF office.”
Coovadia said it was not a question of how much investments were required to help the country’s economic recovery, but rather one of creating the environment for investment, on the back of which necessary investment would flow. The country needed to engage urgently on structural economic reform issues and on the fiscal crisis, he said.
“Although these are medium- to long-term matters, we need to engage immediately and look at solutions to these.”