The promises of politicians are always greater than the South African taxpayer’s capacity to deliver, says Efficient Group chief economist Dawie Roodt.

He says the current ANC/Cosatu/South African Communist Party tripartite government has become ideologically confused, scripting contradictory policies that are often not implemented.
 
Faced with high debt levels, high social spending (redirected from capital spending), little room to increase taxes significantly as South Africa has too few rich people, and several inefficient, bankrupt State-owned enterprises, Roodt fears government may target pension funds as its next source of funding.
 
“What is the next pot of gold? My suspicion is the next pot of gold will be pension funds. Make sure you have a good financial adviser,” he warns.
 
Roodt expects zero per cent economic growth for South Africa this year – or even negative – and only 0.8% next year.
 
“The technical definition of a recession is two successive quarters of negative growth. In my definition of a recession the economy expands below population growth. This means we have been in a recession for quite some time already.”
 
Roodt expects the rand to show initial weakness if South Africa is downgraded by ratings agencies later this year, however, he believes “the currency may come back thereafter”.
 
“Don’t think of the rand as a one-way bet only.”
 
He adds, however, that he “does suggest to people to diversify their portfolio abroad”.
 
Roodt expects an interest rate hike later this year, and “maybe next year as well”.
 
He warns that rapidly escalating food inflation will see a further rise  in social tension in South Africa.
 
The Problem With Blacks, Whites, Indians and Coloureds
Investigating a number of economic factors, such as income distribution, number of dependants and life expectancy, Roodt worked to determine the financial wellbeing of the different racial groups in South Africa.
 
In profiling the financial health of South African blacks as a collective, he believes the group is currently faced with too many dependants – unemployed, the aged, unskilled and children – to move forward in a meaningful manner, despite rising income and life expectancy.
 
He believes blacks could move forward financially by improving skills development, especially for girls, as well as through improved access to jobs. 
 
He notes that China and Japan, and, in fact, the world at large, have benefited from adding women to the workforce, as this move significantly reduces the number of dependants in an economy, while also doubling the workforce.
 
Black economic empowerment of a select few may be hurting this population group in terms of income distribution, he adds.
 
Roodt says coloureds face similar problems to blacks, with the added conundrum of not being “black enough” to benefit from social rebalancing policies.
 
He says whites have already largely seen the demographic wealth wave pass through the group, with the best times behind them, as they are getting older, with few children, and falling income.
 
Indians, however, says Roodt, are in a “sweet spot” at the moment, with few dependants, growing income, low unemployment levels, and high skill levels. 
 
He summarises by noting that “we can get the country on the right track, but not by putting the same selected people on all the management boards. 
 
“We need to start with our children, especially our girls. We need to make sure we provide them with the best possible schooling and skills development opportunities, and then we must allow them access to the job market. Unfortunately this will take time.”
 
* Roodt spoke at the TruckX conference, held in Johannesburg earlier this month.