South African economy stalls under ANC rule
5 March 2024
StatsSA confirmed that South Africa barely skirted a technical recession. At 0.1% growth in the fourth quarter of 2023, our economy is at a standstill, and South Africans are becoming poorer. The status quo will prevail as long as the ANC remains in power.
In February, Treasury National Budget estimated a growth rate of 0.8% for 2023. Its projection, even though low and uninspiring, was evidently overly optimistic. This means that expected revenue, already revised downward, remains overstated and even less money will be available for crucial expenditure on service delivery and social support.
Our economy will not grow at the projected 1.4% over the medium term, given the multitude of crises that beset every facet of the South African experience.
Crime and corruption, industrial scale mismanagement, an inefficient public procurement framework, the energy crisis, and deployed cadres have crippled our economy.
The ANC's approach to resolving the energy crisis has proven grossly inadequate as electricity blackouts and widespread corruption in the sector continue to suppress economic activity, productivity, local- and international competitiveness, business confidence, and investment.
Government is now alarmingly reportedly delaying the disclosure of critical information regarding the enormity of the energy crisis to paint a rosy picture and an illusion of progress heading into the national election.
The ruling party has broken the logistics and transport sector, and its continued insistence on centralising operations has removed any hope of recovery. The DA does not have any confidence that Transnet’s recovery plan will address the structural issues that beleaguer the entity. Despite all the noise about injecting private sector expertise into the sector, there is no action to be seen. This inertia in promptly engaging in meaningful privatisation and opening the market to private investment will condemn South Africa to a perpetual low-growth cycle.
Our flailing growth prospects has compelled Treasury to introduce austerity measures. With an average annual GDP growth rate of 1.2% throughout the last 15 years, our economic performance has been lacklustre at best. GDP per capita has declined by around R3,000 over the same period. All the while South Africans are told to be content with abhorrent state services that are supposed to ensure reliable water, electricity, education, health, transport, and safety.
That Treasury resorted to raiding the Reserve Bank confirms government’s desperation and the last ditch effort so save face will do nothing to stop the fast-approaching debt crisis, vastly diminished fiscal space, vanishing employment opportunities, and growing public disillusionment.
Instead of adopting ruthless and targeted growth focused reforms, Government is doubling down on destructive policies like expropriation without compensation and racialisation of our employment legislation and public procurement framework. Such reckless policy missteps impact vulnerable South African households who are already reeling under a government-induced cost-of-living crisis directly. The ruling party has made numerous statements about addressing the cost-of-food crisis, specifically proposals to stabilize food prices. However, no concrete actions have been implemented, and the situation continues to deteriorate quickly.
The positive takeaway from today’s numbers is that South Africa’s private sector continues to display resilience despite the Government’s proclivity to crowd it out and reluctance to enact the requisite growth-friendly reforms. This is a testament to the sector’s unrealised potential and what could be achieved with competent governance.
With each passing day, the irreparable damage to our economy and international standing because of the ANC’s governance failure grows more evident. Its tenure has been catastrophic.
Only a DA government has the resolve to rescue South Africa from this crisis. On the 29th of May South Africans must abandon the party that has clearly abandoned them.
Issued by Dion George, DA Shadow Minister of Finance, 5 March 2024
