Phumlani Majozi on why the country's deterioration is likely to continue
At this point, it’s fair to say that South Africa is a total mess. Anybody who disagrees with this assertion is fooling themselves.
All economic fundamentals are in terrible shape – and will likely deteriorate under the governing African National Congress (ANC).
Economic growth, foreign direct investment, consumer and business confidence, unemployment, are all in a dire state.
The saddest thing is not that these fundamentals are in tatters – it’s that we see a total refusal from the current government to implement the reforms that will reverse the awful situation.
Cyril Ramaphosa was initially seen as a man who would turn this country around for the better – after Jacob Zuma’s disastrous years. I was amongst those people who thought he would. Well, I was on the wrong side of history – and I regret it.
The expectations were that Ramaphosa would work towards restoring economic growth, business confidence and make South Africa an investment and business friendly environment through pro-market policies. He has not done that – and it doesn’t look like he will in future.
We are now two and a half years into his presidency – and bad, anti-growth policy persists.
On Ramaphosa’s watch, by end of the first quarter of this year, the country was in a recession. The economy contracted by -2% in the first quarter of 2020. This was before COVID19 lockdowns took effect – which indicates bad policy is largely to blame for the contraction.
With this bungling of the economy under the ANC, I see this country not being fixed, and the situation getting worse for at least the next two decades.
I say the next two decades because after Ramaphosa, it’s the notorious David Mabuza – who we already know will be a disaster – and seems to be getting along very well with Julius Malema of the far-left, Stalinist Economic Freedom Fighters (EFF).
The EFF already has a huge influence in the ANC. We saw it pressuring the ANC to remove Zuma, and also pressuring it to adopt land expropriation without compensation.
Mabuza’s presidency, in some form of cooperation with the EFF, will be a disaster of its own worst kind. We can only hope things improve after Mabuza – depending on who takes over – and that’s far in the future.
In the midst of this mess we are in, Ramaphosa has said that government will be at the forefront of our recovery – which is very wrong and misguided.
Business must be at the forefront of the recovery – not an indebted, corrupt and incompetent government. The time to remove barriers for business so they thrive and create jobs is now.
We are in this dire fiscal situation because of government’s disastrous, unconstrained spending and laws that have weaken our workforce and economic productivity. That the President still wants government to lead the recovery after this massive damage is baffling.
With this pro-government approach from Ramaphosa, we are still headed downhill as a nation.
To make things worse, government wants to impose wealth tax in order to source tax funds valued at R40 billion over the next four years. This should be announced in February next year.
Over the past years, taxes have been rising and rising. How much do these politicians want from us exactly? Increase in taxes represses economic growth – and is always a counterproductive policy. The rich will move their money overseas. Don’t these politicians understand this?
In one of his columns last December, one of my favorite political analysts Prince Mashele, correctly wrote that Ramaphosa is refusing to listen.
Serious and accomplished people – including Minister of Finance Tito Mboweni – have made recommendations on what needs to be done to revive the economy – and the President doesn’t listen. How sad.
Some South Africans see the disaster approaching. They are packing their bags and leaving the country – emigrating overseas.
Two of my colleagues left the country recently. Another gentleman told me that almost ten of the people he knows have moved overseas over the past few years. And there’s another colleague of mine who plans to leave.
These people who are leaving are being rational and are doing what is best for themselves and their children’s future.
All signs indicate that under the ANC, we are on the path to socialism – an economic system that has always caused havoc and poverty in human history.
The fast-paced decline of the country that began under Jacob Zuma is continuing – and it seems there’s no return to better economic times – at least for the next two decades.
We hoped Ramaphosa would stop and reverse this march to statism. How wrong we were.
Phumlani M. Majozi is a senior fellow at AfricanLiberty.org. Views expressed here are his own. Follow him on Twitter: @PhumlaniMMajozi