Fixing economy will require pruning those who think money grows on trees

If South Africa hopes to turn around the devastation wreaked on its economy by the Covid-19 pandemic, it would have to ensure it fills critical positions with people better suited for the job, instead of current leaders who think “money grows on trees”.

The country’s economic prospects were granted some more relief this week, as President Cyril Ramaphosa announced that the country would be moving to lockdown alert level 1 as of Monday. This includes the opening of borders for leisure and business purposes, permitting venues to host guests at a 50% capacity and a relaxed curfew.

Ramaphosa said rebuilding the economy, creating jobs and restoring growth was currently vital, with Cabinet building and finalising the country’s economic reconstruction and recovery plan in the coming week.

This can be only done, however, by sidelining people who have “unsustainable expectations” of how money is spent, as this invariably leads to corruption, said economics professor Bonke Dumisa.

“The Ministry of Finance is ready to deal with these things. However, the major problem is that they are surrounded by people who do not want to accept that money does not grow on trees.

“We do not need to have people who will continue spreading unsustainable expectations that there will be a lot of money spent left, right and centre, which led to the corruption which we see with Covid-19,” Dumisa said.

Another issue, said professor of governance at the University of the Western Cape Patrick Bond, was the “conservative mindset” at the top, which needs to shift to be in line with the rest of the world.

“Both the state’s fiscal and monetary stimulus packages have been crippled by conservative mindsets in Treasury and the Reserve Bank. A major shift in thinking is needed, to reflect the new awareness of how state spending can boost an economy, whose capitalists are on investment strike, and where poverty has soared given 4.5 million job losses due to the Covid-19 lockdown.”

“All over the world, Reserve Banks are boosting state spending so as to kickstart the economy, and far more generous income-support programmes and expansive infrastructure programmes are underway, than in South Africa,” Bond said.

How government can revive the economy

Government should prioritise greatly reducing the public sector wage bill, immediately introduce a wealth tax, sell off hobbling state-owned entities (SOEs) which are a “headache”, and change South Africa’s “freebie” mindset if the country was “going to see heaven” in the next few years, said analysts.

The scrapping or cutting down on the highly criticised and disputed public sector wage bill is a good place to start in trying to revive the economy as it is the country’s “downfall”, said Dumisa.

“Trade unionists are crying about this, rather than asking how they can help, and realising they have been paid throughout and not demanding salary increases. But they are still talking about salary increases and bonuses and nothing on cutting down on the wage bill. That will be the downfall of South Africa,” he said.

Government should also consider introducing a wealth tax and reorganising the economy on the basis of a “democratically-planned economy”, Bond added.

“Introduce a wealth tax immediately, alongside decisive steps to retain our economic sovereignty – such as capital controls and prosecutions of corporate thieves – and thereby halt illicit cash outflows, tax dodging schemes, tender fraud and corruption,” he said.

Dumisa touched on another unpopular and sensitive solution, which was to sell-off and privatise state-owned entities that frequently required billions of rands in rescue funds.

“Those SOEs which keep causing a headache must go – even SAA. We cannot keep using tens of billions of rands to rescue. It is the same culprits all the time. The same with the national broadcaster [SABC]. These are sensitive issues and you create enemies if you put it bluntly. The days of rescuing sinking ships are gone and are unsustainable.

“If ever we want to see heaven visiting South Africa in the next two to three years, we must change the total mindset of South Africans.”

rorisangk@citizen.co.za

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