Jul 06, 2012
SA’s economic leadership of Africa slipping awayBack
Pretoria|Africa|Defence|Denel|Industrial|Africa|Brazil|China|Egypt|Ethiopia|India|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)
Other Keith Campbell News
International consulting engineering company Royal HaskoningDHV (RHDHV) has appointed Salani Sithole as South African MD, effective March 1. Sithole has been with the company for six years and, prior to joining RHDHV, held various positions in engineering consulting,...
Recent Research Reports
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.
Defence 2014: A review of South Africa's defence industry (PDF Report)
Creamer Media’s Defence 2014 report examines South Africa’s defence industry, with particular focus on the key participants in the sector, the innovations that have come out of the sector, local and export demand, South Africa’s controversial multibillion-rand...
Road and Rail 2014: A review of South Africa's road and rail infrastructure (PDF report)
Creamer Media’s Road and Rail 2014 report examines South Africa’s road and rail transport system, with particular focus on the size and state of the country’s road and rail network, the funding and maintenance of these respective networks, and the push to move road...
Real Economy Year Book 2014 (PDF Report)
This edition drills down into the performance and outlook for a variety of sectors, including automotive, construction, electricity, transport, steel, water, coal, gold, iron-ore and platinum.
This Week's Magazine
National flag carrier South African Airways (SAA) is in an advanced stage of renegotiating its deal with European airliner manufacturer Airbus to acquire A320 single-aisle (or narrow body) aircraft. The aim is to replace ten of the aircraft still on order with five...
Worldwide, the main thrust in the ports industry over the past decade or more has been to increase efficiency. Traditionally, ports have been run by engineers and mariners and, in the past, increasing a port’s capacity was achieved by expanding the harbour. “That has...
What do you do when an elephant has a toothache? You call Dr Gerhard Steenkamp from the University of Pretoria’s (UP’s) faculty of veterinary science, Onderstepoort, one of only two elephant ‘dentists’ in the world.
The 2015 Sanlam/Business Partners Entrepreneur of the Year (EOY) competition was launched earlier this month in Johannesburg, with the main focus on creating and inspiring entrepreneurs to create jobs and boost the economy.
In a recent letter to the editor that I sent to Engineering News (Concerns regarding South African portion of Square Kilometre Array) and in a follow-up article elaborating further (We must start preparations to build our own synchrotron light source), I stated my...
Next ArticleWe do not live in a global village