The Chief Economist from Investment Solutions, Lesiba Mothata, cited International Monetary Fund (IMF) economists Prakash Loungani and Prachi Mishra who found in a 2016 study that South Africa had the highest labour absorption per gross domestic (GDP) growth ratio amongst the countries for which data was available. He said that should encourage policy makers and private sector executives to collectively let loose their animal spirits so that South Africa emerges from its current low-growth trajectory. He was speaking at the Department of Trade and Industry’s (the dti) Economic Policy Dialogue on South Africa’s Economic Outlook hosted at the Development Bank of Southern Africa in Midrand on Monday. The Economic Policy Dialogue platform was established to advance the economic and public policy view of the dti on the current economic affairs and policy matters.
“It is no use engaging in the blame game as to whether it is business sitting on more than R700bn in cash that are not coming to the party or whether it is policy makers who change the rules of game and create regulatory uncertainty that prevents investment. What we need is to collectively put the country first. We need to end the uncertainty in mining and agriculture and do it now and at the same time address the issue of anti-competitive behaviour of cartels and monopolies, whether they are in the private sector or in the public sector,” Mothata said.
A senior economist at the World Bank’s Global Practice, Dr Marek Hanusch, said that by focusing on competition enforcement, South Africa can address the issue of the 76 cartels that the World Bank has identified.
“A massive 202,000 people were lifted out of poverty due to the breaking of cartels in wheat, maize, poultry and pharmaceuticals,” Hanusch said.
Hanusch suggested that policy makers re-orient South Africa’s investment tax incentives (ITI) towards trade, construction, manufacturing, and agriculture as that would encourage private investment and increase job creation.
“What you need to do is look at the job multipliers so that you get the most jobs for every buck you spend,” Hanusch said.
He commended South Africa’s exporters for targeting high growth countries as it is easier to grow exports into fast growing economies. He noted that almost a quarter of South Africa’s exports are going into economies that are growing at 5 per cent or higher.
A Senior Lecturer at the University of Witwatersrand School of Economics and Business Science, Lumkile Mondi said he was very disappointed in the recent bout of xenophobic attacks in South Africa.
“I am a migrant from the Eastern Cape and my parents took me to Johannesburg for the same reason that we have migrants from Lubumbashi and Addis Abba in Johannesburg, namely here is opportunity,” Mondi said.
“The Africa Rising narrative has been undermined by a lack of leadership and it is up to us to hold the leadership accountable,” he added.
He urged Africans to take charge of their future relationship with the European Union and others so that it can create its own future. What was needed was a vision to galvanise people in the way that the New Partnership for Africa’s Development (NEPAD) had done at the turn of the century.
According to the Minister of Trade and Industry, Dr Rob Davies the Economic Policy Dialogue platform was established to advance the economic and public policy view of the dti on the current economic affairs and policy matters.
“The dialogue also allows some insight to policy-makers into the legislation or regulations that should flow from the policy. On another level, it allows private sector, business and labour to get an insight into the intricacies and complications inherent in policy and legislation formulation,” Davies said.
He added that the South African economy was faced with many difficulties in 2016 such as subdued global demand, weak commodity prices, higher borrowing costs, drought and diminished consumer and business confidence. Faced with all these challenges it seemed prudent to have a dialogue on the economic expectations for 2017.
In his closing remarks, the dti Chief Economist, Stephen Hanival, said he was optimistic that 2016 was the bottom of the cyclical downturn and that prospects for 2017 were very good.
“For the first time in a long time the International Monetary has not downgraded the global economic growth outlook compared with its prior forecast. In South Africa the headwinds we faced in the past few years such as drought, labour unrest and load shedding are behind us, while global growth is picking up which has prompted a rise in commodity prices. That means that when we come back here in a year’s time, the tone of the dialogue will be more optimistic,” Hanival said.