South Africa will be able to materially improve the lives of all South Africans and deliver on the promise of 1994 only if it is able to kick-start, and sustain, high levels of inclusive economic growth.
Business for South Africa (B4SA), established as businesses’ response to the Covid-19 pandemic, has presented a plan to address SA’s economic and social challenges.
It assembled a team of industry experts to analyse challenges and consider potential opportunities. It focused on sectors and projects that can scale quickly to create jobs.
The organisation said that from 1994 to 2008, SA thrived with gross domestic product (GDP) doubling to $287bn and the debt to GDP ratio almost halving to 27.8% while foreign direct investment grew 30-fold to $12bn and tax revenue grew by 550%.
However, B4SA said, in the past 10 years SA has seen the debt-to-GDP ratio more than doubling, foreign direct investment declining and unemployment and inequality continuing to rise.
It said SA entered into recession before Covid-19 struck.
B4SA said Covid-19 has unravelled much of the progress since 1994 as debt-to-GDP ratio is expected to exceed 100% by 2023.
The business collective said SA must address key issues which undermine the country’s relative competitiveness and impede its growth potential.
Among those was that the country was not sufficiently competitive to attract foreign investment. Some of the key factors which make the country uncompetitive include security and labour market flexibility.
SA also dropped from 35th in 2008 to 84th in 2019 out of 190 countries in the World Bank ranking on the ease of doing business index. Key areas of concern include poor electricity supply, difficulty in starting a new business, credit availability, cross-border trade red tape and difficulty in enforcing contracts.
B4SA said the focus must be on improving SA’s competitiveness and ease of doing business. It said given the limits on state and state-owned entity capacity and funding, a social and economic compact with business, labour and society was key to SA’s success.
It said the state must guide strategic initiatives and provide an enabling environment with policy certainty and consistency.
Business must focus on sourcing capital and investing in projects and initiatives to create inclusive economic growth and jobs.
B4SA said labour must focus on ideas to create new jobs and ensure greater labour flexibility and fair working conditions rather than just protecting existing jobs.
“All social partners must focus on ensuring shared prosperity to address poverty, inequality and unemployment.”
Among the immediate changes that will improve consumer and business confidence and require no policy changes identified by B4SA include the introduction of lower port fees on exports and the stimulation of domestic and regional tourism.
The top five sectors which B4SA identified as high impact industry focus areas are: small, medium and micro enterprises, energy and water, mining, construction and transport.