Daniel Silke is a leading political economy analyst and futurist. As Director of the Political Futures Consultancy based in Cape Town, he holds a Master’s degree in South African and International Politics. Accustomed to dealing with macro-trends occurring globally, he comments on the current political-economic trends which will affect post-COVID South Africa.
The year 2020 has proved very different from what the World Economic Forum anticipated. Their top five risks for the year were climate-change-related; pandemics did not enter their predictions at all. No-one could have foreseen economies halted by lockdown; people separated by social distancing or the online platform Zoom becoming a telecommunications giant almost overnight. World leaders have been facing previously unknown circumstances with no precedents to which to refer.
COVID has caused a broad-based worldwide economic decline and many countries are finding themselves in a deep recession. Countries with a sturdier economic policy foundation will recover more quickly, but the vulnerable ones may take longer. Meanwhile, global issues such as the geopolitical tensions and trade wars between the United States and China have been exacerbated by COVID. Loss of income and economic downturn will leave a longstanding worldwide legacy. Professionals who can work from home, those whose jobs have not been interrupted or those who have a nest-egg investment and can benefit from the fluctuations in the market are likely to make a quicker recovery.
Easing of the case count and flattening of the COVID curve in South Africa allows the lifting of recent constricting regulations and a move towards recovery mode as shown in statistics coming through. Spending has recommenced, albeit at lower levels. “Business confidence, which was at its lowest levels for decades, is just starting to creep back as the economic environment begins to open up,” remarks Silke.
The stringent lockdown, which halted the economy for several months, has resulted in a 17% year-on-year decline in the latest GDP figures. The government will have to trim expenses by reducing the size of the bureaucracy and limiting pay increases of civil servants; both difficult issues but ones which COVID has forced upon us. Government spending has to drop and growth-oriented economic reforms must be adopted; yet to achieve this we will have to borrow more and heavily. In restructuring the economy, one must be mindful that COVID can (and has!) exacerbated existing inequalities. Yet the doom and gloom predicted for Africa during the pandemic have not come to pass. If, as is expected, Africa becomes the second biggest continental population by the end of the century, then this is where the future consumer will be located.
South Africa will have to make tough decisions as we embark on ‘building back better’. A key social problem is unemployment, currently standing at between 40 and 50%, impacting on all aspects of the economy. The poor GDP will reduce employment opportunities even further. Public health is one area requiring great changes and will involve large budgetary allocations. Another is the improvement of the power generation system which should be linked to renewable energies, locking them into our power grid for the future.
In order to grow the economy there must be better infrastructure. Roads, ports, airports and other critical facilities need to be world-class in order to grow a top-rate economy. Digitization across the full spectrum is the only way to ensure fast, efficient internet countrywide, especially to poorer communities. As a water-short country, our water retention schemes require urgent attention and improvement. The manufacturing sector must be revived as supply chains are less likely to be disrupted if they are closer to home; besides, the entire African continent is a ready market for our goods. “We need a prosecuting authority in South Africa that can maintain pressure on those that have been allegedly involved in transgressions of the past and monitor that this won’t happen in the future. It is a critical aspect to maintaining and invigorating trust in our State,” explained Silke.
Political bottlenecks are a major issue which must be overcome if we are to kickstart a revival in South Africa. Trust between the State and the private sector must be engendered. The Ramaphosa administration has made some headway in this, but there is still space to encourage the private sector in helping to invigorate the economy. Financial backing for small start-up businesses, especially for poorer entrepreneurs is sadly lacking. Education and basic literacy levels must be improved. All these cogs need to be turning fairly well to start the process of social upliftment.
There is no lack of plans or ideas; South Africans are entrepreneurial, but implementing these plans has been the problem. However, with the current economic slump, with the unemployment emergency we face, now is the time to bite the bullet, put aside ideologies and suspicions which might hold us back and start reviving; building back South Africa. Not to where it was before COVID, but better; to make it internationally competitive. Humans are an impatient species and we are impatient for change, but in the words of Mahatma Gandhi, “To lose patience is to lose the battle.”
“I implore you not to lose patience. Exacting change on all of these small levels, even in small parts… can indeed set us on a better road going forward. I’m confident that with moderate shifts across the board and moderate compromises we can take this country forward once again,” concluded Silke.
This talk was presented at Nation Builder’s 6th annual In Good Company conference (September 2020), which focused on “Building Back Better”.
