South Africa’s bleak economic outlook concerns many business owners, especially small to medium businesses.
However, President Cyril Ramaphosa’s turnaround plan does carry some weight for experts like senior economist Elize Kruger, who believes that because our economic growth is very low, a small growth can make a difference in the trust that our economy is growing. And trust is a big driver of the economy, she said.
Kruger spoke at this month’s Rand Business Forum (RBF) meeting at Carvers Restaurant on 18 October.
She was joined by Wits’ head of the school of economic and business sciences, Professor Jannie Rossouw, and political scientist Roland Henwood from the University of Pretoria.
“Previous projects that were promised were never really implemented, and even a bit of implementation can encourage trust. [Former president Jacob] Zuma did not have the political will to make the previous plans for the country work. I want to believe that Cyril has the political will,” Kruger said.
Kruger believes the business sector in South Africa has a lot more goodwill towards Ramaphosa than it had towards Zuma. This, she believes, is why she believes the glass is as half full.
But, Rossouw said, the country must avoid the fiscal cliff, where civil service remuneration, debt service costs, and social grants exceed the total tax revenue of the government.
“Civil service remuneration accounts for 4 per cent for government tax revenue. We can no longer afford our civil service. Expect taxes to go up in the next three years, possibly with VAT at 16 per cent,” he warned.
There is another growing concern that could affect the country and its taxpayers in comings years. Both Rossouw and Henwood agree that the country faces a demographic crisis.
Henwood explained that there is a big housing backlog for people who currently live in Gauteng. But more and more are migrating to the province for work opportunities, growing the backlog even more.
“This is a crisis that we are confronted with that is getting no attention. By 2031, to cater for the people that migrate to Gauteng, we need to build nine times the infrastructure that we have. This does not even look at the backlog that already exists,” Henwood said.
Whether they agreed that the country is in a glass-half-full standing or not, the panellists all agreed that the need for economic growth is currently the most important solution to turning around the country.
“But uncertainty about ownership must be clarified before investment and economic growth will be restored,” Rossouw said.
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