The latest economic growth forecasts from ratings agency Fitch reflect the expectation that South Africa’s economic growth rate will remain moribund.
If this pessimistic outlook is to be proved wrong, it is time for new ideas.
Without fresh thinking, South Africa will remain a low-growth environment, unable to defeat unemployment and poverty.
Fitch said South Africa’s economy was likely to grow by 0.9% this year, 1.5% in 2025, and 1.3% in 2026. This is in line with most other forecasts, but it is barely higher than SA’s population growth rate, meaning that unemployment and poverty will continue to worsen.
South Africa needs to achieve annual economic growth rates of 5% or more for the country to start making a real dent in the twin evils of poverty and unemployment. It is clear that the country cannot continue as it has been doing over the past decade. We need to think about new ways of doing things.
Possibly the greatest tragedy of post-apartheid South Africa is the high number of people who are without a job. We must remember that behind each of those statistics is a real person who faces the indignity and stress of unemployment.
Last year, the Institute of Race Relations (IRR) released a plan to get South Africa’s economic growth going. The four main components of the plan – the IRR’s Growth Strategy – are:
- Expanding capital inflows and foreign direct investment (FDI) into South Africa, to start raising the growth rate and increasing fixed capital formation;
- Building and maintaining essential economic and social infrastructure to stimulate growth and provide a solid foundation for further economic expansion;
- Translating increased growth into increased employment; and
- Helping the disadvantaged climb the economic ladder to increased prosperity, while sustaining current social protection.
The entire plan and how South Africa can accomplish these four objectives can be read here. The IRR’s proposals have been further refined in the ongoing ‘Blueprint for Growth’ series of papers, available on the website.
The primary goal of the Government of National Unity (GNU) has to be economic growth. As we approach the first 100 days of the GNU one could say that it has been successful on balance. But if the GNU fails to spark economic growth that is touching annual levels of five percent by the end of its term, it will be deemed a failure.
Things cannot continue as they are. The GNU needs to look at new ways of managing the economy. And the ideas are out there. It’s time to look at them.
