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
Updated 2 minutes ago Development financier Eastern Cape Development Corporation (ECDC) on Tuesday reported a stable balance sheet for the 2013/14 financial year, boasting a net asset value of R1-billion at year-end. Speaking at the financier’s performance results at the ECDC headquarters...
Updated 23 minutes ago Failed South African lender African Bank Investments (Abil) is likely to re-list on the stock exchange early next year, and its government supervision will be concluded without the use of taxpayer money, Finance Minister Nhlanhla Nene said on Wednesday. The central...
Updated 38 minutes ago Department of Trade and Industry export promotion and marketing chief director Zanele Sanni has invited manufacturing and advanced manufacturing companies from Shenzhen, China, to invest in South Africa, noting that Chinese investors could also access the additional...
Recent Research Reports
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.
Real Economy Insight: Automotive 2014 (PDF Report)
This four-page brief covers key developments in the automotive industry over the past 12 months, including an overview of South Africa’s automotive market, trade figures, production and the policies influencing the sector.
Real Economy Insight: Construction 2014 (PDF Report)
This five-page brief covers key developments in the construction industry over the past 12 months. It provides an overview of the sector and includes details of employment in the sector, infrastructure and municipal spending, as well as insight into companies’...
Real Economy Insight: Electricity 2014 (PDF Report)
This five-page brief covers key developments in the electricity industry over the past 12 months, including details of State-owned power utility Eskom’s generation activities, funding and tariffs, independent power producers and prospects for the sector.
This Week's Magazine
The broad-based black economic-empowerment (BBBEE) alignment process in the con-struction sector has begun, dur-ing which the sector codes of the Construction Sector Charter Council (CSCC) will be aligned with the revised Codes of Good Practice (CoGP), which come...
It is second time lucky for Toby Venter. Ten years ago he negotiated to buy the Kyalami racetrack, but “the deal did not materialise”.
Environmental solutions company I-Cat started construction work on its R22-million, 1 949 m2 environmentally sustainable office and warehouse facility, commissioned by I-CAT Environmental Solutions, at a launch event in October. The new sustainable I-CAT campus,...
Effective file synchronisation and sharing across an organisation’s structures can provide the basis for robust mobile-device and document management while maintaining proper backup, version control and content distribution. These are the lessons learned by complex...
Hotel group Carlson Rezidor currently holds the largest hotel pipeline in Africa with 30 hotels and 6 300 rooms under development. The hotel group develops and operates Radisson Blu in the upper upscale segment and Park Inn by Radisson in the mid-market segment. With...
Next ArticleWe do not live in a global village