We must have confidence in Cyril to repair economic confidence

While some people are still gripped by “Ramaphoria”, reality came crashing in on Tuesday with the news that the South African economy is contracting – our Gross Domestic Product (GDP) declined by 2.2% in the first three months of 2018.

That means that, effectively, the country has either been going nowhere, or going backwards, in real terms, for the past decade.

Part of that can certainly be blamed on the global financial crisis which struck in 2008 – but most of our woes, we would guess, are down to the damage wrought during the years of Jacob Zuma’s presidency and the insidious effects of state capture.

There was not only a direct impact on the economy through a reduction in real government spending caused by the fact that billions were being stolen, but there was an even more serious impact on that intangible … confidence.

That confidence was both among the business community and ordinary South Africans.

While the economy has been stagnating or – as is now the case – contracting over the past 10 years, citizens have found themselves battered by a relentlessly increasing cost of living and a precipitous decline in jobs.

Consequently, they have either been reluctant to spend, or have had little or nothing left over to spend other than on mere survival. So businesses have been badly hurt right around the country.

This means there has been little meaningful investment locally in productive capacity. In addition, the talk of expropriation of land without compensation – and its attendant bogeyman, loss of property rights – has further dampened investment appetite, both local and foreign.

On the positive side, it is still early days for new President Cyril Ramaphosa. He is changing the country and trying to root out corruption and bad governance.

We have to hold tight until his efforts start bearing fruit.

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