Jul 06, 2012
SA’s economic leadership of Africa slipping awayBack
Pretoria|Africa|Defence|Denel|India|Industrial|Africa|Brazil|China|Egypt|Ethiopia|Kenya|Nigeria|Russia|South Africa|Tanzania|Uganda|Industrial|Manufacturing|Oil|Services|Jacob Zuma|Mohammed Mursi|Nelson Mandela|Power|Thabo Mbeki|East Africa
© Reuse this
It is true that all three ANC administrations – those of Presidents Nelson Mandela, Thabo Mbeki and Jacob Zuma – have followed a policy of fiscal discipline. But fiscal discipline is not a specifically ‘neoliberal’ policy. One can easily find examples of Roman emperors (who had no conception of a free market) maintaining fiscal discipline.
As for economic policy, if South Africa had followed a neoliberal one there would, today, be no Minister or Ministry of Public Enterprises and no State-owned monopolies dominating key sectors of the economy. Probably, the only State-owned companies left would be defence industrial group Denel (for military strategic reasons) and the passenger railways.
As I have pointed out in a previous column, the South African government loves to associate with the Bric quartet of Brazil, Russia, India and China but steadfastly refuses to implement the kind of policies they undertook – the very policies that made them Brics.
Perhaps odder still is the widespread failure in South Africa to grasp that this country is not one of the rising powers at all. On the contrary, in relative terms, South Africa is one of the declining powers of the world. True, in absolute terms, South Africa continues to grow and is currently growing more strongly than the established ‘developed’ economies. But most of them are growing, too, albeit slowly, so their decline is also relative, not absolute. In comparison to many other emerging economies, South Africa is doing poorly and is falling behind.
Most seriously, the country is badly lagging behind many other African states. According to AfricanEconomicOutlook.org, in 2011, 38 African countries had higher rates of growth than South Africa. Now, of course, many of these are small economies coming off low bases. Some are rocketing upwards on the back of the global commodities boom. But not all are.
As The Economist pointed out at the end of last year (December 3, 2011), commodities account for only some 33% of Africa’s recent growth. The fastest-growing region of the conti- nent is actually East Africa, which has little oil and few minerals. AfricaEconomicOutlook.org estimates South Africa’s growth rate last year at 3.1%; its estimate for Ethiopia is 10.7%, Kenya 4.5%, Tanzania 6.4% and Uganda 4.1%.
More importantly for South Africa are the performance of the other two big economies in Africa – Nigeria and Egypt. Nigeria, benefiting from oil, is powering ahead. AfricaEconomicOutlook.org reports that the West African giant grew by 7% in 2009, 7.8% in 2010, an estimated 6.7% last year and is forecast to grow by 6.9% this year. The figures for South Africa are: 2009, – 1.5%; 2010, 2.9%; 2011, 3.1% and 2012, 2.8%.
Of course, South Africa has a bigger and more diversified economy. But, in 2009, in purchasing power parity (PPP) terms, South Africa’s gross domestic product (GDP) ranked twenty-fifth in the world, with a value of $507- billion, whereas Nigerian GDP ranked thirty-fourth at $341-billion. (These figures are from The Economist Pocket World in Figures 2012.) To put it differently, the Nigerian economy was already 67% the size of the South African economy. And it is closing fast.
Then there is Egypt. This economy is significantly larger and more diversified than Nigeria’s. In 2009, manufacturing accounted for 16% of the Egyptian GDP; the proportion for South Africa was 15%. (Services provided 47% of the Egyptian GDP and 66% of the South African GDP.) In 2009, Egypt’s PPP GDP was $471-billion, meaning it was almost 93% of the size of the South African economy.
True, Egyptian economic growth has been hit hard by the revolution. It stood at 4.7% in 2009, rising to 5.1% in 2010, only to plunge to an estimated 1.8% last year and is forecast to reach only 0.8% this year. But these upheavals will be temporary and the country may already, with the election of a new President, Mohammed Mursi, from the previ- ously opposition Muslim Brotherhood, have started the move from political turmoil to stability.
President Mursi’s priorities are reported to be political stability, a new Constitution – and the economy. And what economic philosophy does President Mursi and his party support? The free market. Or, if you prefer, neoliberalism.
If the incoming administration gets the economy growing fast again then, within a handful of years, Egypt will resume its traditional place as Africa’s biggest economy. That will have all sorts of serious political and diplomatic consequences for South Africa. Pretoria needs to get real about beneficial economic reform.
Edited by: Martin Zhuwakinyu© Reuse this Comment Guidelines (150 word limit)
Creamer Media Senior Deputy Editor
Other Keith Campbell News
Article contains comments
Updated 4 hours ago Irish Foreign Affairs and Trade Minister Charles Flanagan told media on Thursday that Ireland was well positioned to play a greater role in Africa, particularly in the aviation, pharmaceuticals and agricultural industries. Flanagan was this week leading a high-level...
Updated 4 hours ago The Lesotho Highlands Development Authority (LHDA) has appointed three consultants for work packages as part of Phase 2 of the Lesotho Highlands Water Project (LHWP). The contracts, worth a collective M40-million, were awarded to the SMEC-FMA joint venture (JV);...
Updated 4 hours ago JSE-listed Huge Telecom continued to grow its distribution capabilities during the year ended February 28, with the number of business partners increasing by 136, or 47%. Huge Telecom’s connectivity services, which were distributed mainly to small and medium...
Recent Research Reports
Steel 2015: A review of South Africa's steel sector (PDF Report)
Creamer Media’s Steel 2015 report provides an overview of the key developments in the global steel industry and particularly of South Africa’s steel sector over the past year, including details of production and consumption, as well as the country's primary carbon...
Projects in Progress 2015 - First Edition (PDF Report)
In fact, this edition of Creamer Media’s Projects in Progress 2015 supplement tracks developments taking place under the Renewable Energy Independent Power Producer Procurement Programme, which has had four bidding rounds. It appears to remain a shining light on the...
Electricity 2015: A review of South Africa's electricity sector (PDF Report)
Creamer Media’s Electricity 2015 report provides an overview of State-owned power utility Eskom and independent power producers, as well as electricity planning, transmission, distribution and the theft thereof, besides other issues.
Construction 2015: A review of South Africa’s construction sector (PDF Report)
Creamer Media’s Construction 2015 Report examines South Africa’s construction industry over the past 12 months. The report provides insight into the business environment; the key participants in the sector; local construction demand; geographic diversification;...
Liquid Fuels 2014 - A review of South Africa's Liquid Fuels sector (PDF Report)
Creamer Media’s Liquid Fuels 2014 Report examines these issues, focusing on the business environment, oil and gas exploration, the country’s feedstock supplies, the development of South Africa’s biofuels industry, fuel pricing, competition in the sector, the...
Water 2014: A review of South Africa's water sector (PDF Report)
Creamer Media’s Water 2014 report considers the aforementioned issues, not only in the South African context, but also in the African and global context, and examines the issues of water and sanitation, water quality and the demand for water, among others.
This Week's Magazine
While economic forecasts for the African continent are most favourable, African airlines may not be able to benefit from the expected growth in the region’s gross domestic product (GDP), International Air Transport Association VP: Africa Raphael Kuuchi has warned....
The Automotive Production and Development Programme (APDP) will need to change substantially post 2020, says Metair Investments South African operations COO Ken Lello. “We must not make tweaks. We have to change. What we are doing is not sustainable.”
Banking group Absa’s forecast is for the rand to end the year at around R13 against the dollar, weakening further to R13.50 by 2016, says Absa sectoral analyst Jacques du Toit. He warns that possible interest rate hikes in the US may see capital being pulled from...
The Dispute Resolution Centre at the Bargaining Council for the Civil Engineering Industry (BCCEI) is now open to handle party-to-party disputes. The BCCEI represents the interests of all level four to nine Construction Industry Development Board companies.
Communications technology firm Ericsson sub-Saharan Africa head Fredrik Jejdling says the company’s commitment to sustainability and corporate responsibility has been integrated into all facets of its operations, which has provided it with sustainable revenue...
Next ArticleIf you can’t beat them, join them