Johannesburg - The perilous state of the South African economy is the single biggest threat to the country’s future, Democratic Alliance leader Mmusi Maimane said on Saturday.
Speaking to reporters at Nkululeko House in Johannesburg after the DA's two-day federal executing meeting (FedEx), Maimane said on top of the agenda was South Africa’s deep and persistent economic crisis and how the DA planned to rescue and reform the economy.
"The perilous state of the economy is the single biggest threat to our country’s future. It is with great concern that over the past months the conversation has moved from how to grow the economy to how we avoid total collapse," he said.
"There exists a tangible mood of fear throughout the country, with the vast majority of South Africans lacking hope in the future. Discontentment with the current downward spiral is fast producing fertile soil for mass rebellion. The reality is that change will come, whether by the ballot or other means. We have no more time to kick the can down the road. We need immediate action."
Despite this, the requisite urgency and a bold reform plan from President Cyril Ramaphosa and his African National Congress government was lacking. For the past 18 months Ramaphosa had occupied the presidency it had been business as usual, with an added dose of "economic gimmicks" in the form of summits, talk shops, and roadshows.
Unemployment was at a post-1994 record high, breaching the sobering 10-million mark for the first time. 10.2 million South Africans were without a job, with an expanded unemployment rate of 38 percent.There were now 746,000 more jobless South Africans than there were 18 months ago when Ramaphosa assumed office. This was a clear vote of no confidence in Ramaphosa’s much heralded yet ineffective “jobs summit” held earlier this year, Maimane said.
"In terms of growth, the South African Reserve Bank (SARB) has forecast growth for 2019 at a meagre 0.6 percent - the worst since 2016. Last year, South Africa experienced its first recession in over a decade – with two consecutive quarters of negative growth. We also saw the economy contracting by 3.2 percent during the first months of this year – the biggest decline in a decade. It appears we may just narrowly avoid another recession in 2019.
"As things stand, we are the closest we have been to complete, all round junk status since 1994. In July this year, ratings agency Fitch changed their outlook for SA to junk status. Moody’s, the only agency that has SA above junk status, also expressed its concerns, especially given the lack of change or plan to reform SoEs [state-owned enterprises] - specifically Eskom. Once we hit complete junk status, we are staring down the barrel of an International Monetary Fund (IMF) bailout," he said.
"In order to avoid economic collapse and bring about rapid growth, a clear and concrete plan for urgent reform is required. The DA is currently in the process of expanding our 'economic Recovery Plan' – a comprehensive package of reform interventions that are unashamedly pro-growth, pro-investment, and pro-job creation."
The focus of this plan was on deliberate structural reform that would act as shock to the economy to revive it and usher in rapid economic growth. This plan would include, among others:
- Splitting Eskom into two separate entities while allowing IPPs to come on board by passing the Independent Electricity Management (IEMA) Bill;
- Passing the DA's “Jobs Bill”, consisting of a wide range of incentives for foreign companies to invest in SA - bringing thousands of job opportunities;
- Implementing a government-wide comprehensive spending review aimed at reviewing the efficiency of spending, the composition of spending, and future spending priorities to “tighten our belts”;
- Placing South African Airways under business rescue with a view to sell it off;
- Scrapping black economic empowerment and replacing it with a pro-growth plan that offered real broad-based inclusion in the economy;
- Beginning the rollout of a voluntary civil service year for young people;
- Introducing tax incentives for big job-creating sectors including manufacturing, tourism, mining and financial services;
- Rejecting investment-killing policies including the NHI, expropriation without compensation, the national minimum wage, and the nationalisation of the SARB;
- Cutting the public sector wage bill; and
- Creating an enabling environment for job creation by freeing up micro enterprise and relaxing labour legislation.
"In order to halt our economy’s spiralling decline and create opportunities for those left outside the economy, we need bold and urgent reform. This is the DA’s plan, and we intend to pursue it with intensity," Maimane said.