Policy, not pandemic, to blame for decline

SOUTH Africa’s 2% slide in GDP underlines the challenge facing President Cyril Ramaphosa’s administration: far-reaching economic reforms are unavoidable if the country is to stage an economic recovery.

The GDP contraction – with the mining and manufacturing sectors being the largest contributors, contracting by 21.5% and 8.5%, respectively – is a consequence, not of the pandemic, but government policy that is hostile to growth and investment.

While the ANC might want us to believe the pandemic is to blame, the data reflecting the GDP decline does not include post-lockdown data.

Yet, despite our shocking unemployment rate – 30% and climbing – Finance Minister Tito Mboweni’s emergency budget offered no indication that the government is willing to embark on the policy reforms which remain the only guaranteed means of growing the economy. The likelihood is rather that the Cabinet will shepherd us into a deeper recession.

The case for pro-growth, pro-enterprise policies has never been stronger, yet the government’s willingness to divorce itself from poisonous command-economy ideology has never been weaker. South Africans must be bold in generating pressure on the government to see reason, to acknowledge that you cannot borrow your way out of debt, or spend yourself out of insolvency. The Institute of Race Relation’s global awareness initiative to expose the ANC’s policy addiction to International monetary Fund donor nations aims to achieve exactly that.

HERMANN PRETORIUS | Deputy Head of Policy Research/Institute of Race Relations