Business Leadership South Africa (BLSA) CEO Busi Mavuso says that although the country’s gross domestic product (GDP) for 2020, particularly in the fourth quarter of the year, exceeded most forecasts, the figure “remains a disaster for the economy and very far from what we should consider ‘normal’”.

Not too long ago, she says the South African economy was growing at above 5% a year, and that from 2004 to 2007 5% yearly growth set the benchmark, with GDP regularly reported around that rate. “Any dip below it was considered a national failure.”

However, since then, Mavuso says it has become “interesting” how South Africans’ perceptions of what is acceptable have changed.

“We can debate about potential growth and how figures should be seen in a global context, much of which is outside our control. But we must also resist . . . seeing mediocre and poor performances as acceptable. We must be shocked by such outcomes and use them to redouble our efforts to get the economy growing vigorously.”

She adds that the shift in perception on what is acceptable has been happening over the past decade, during which growth has gradually drifted downward. “We have barely managed to exceed 1% since 2015, meaning that in per capita terms the economy has been shrinking.”

Seemingly, to address the decline, Mavuso says organised business and others have been calling for structural reforms to enable the economy to grow – efforts that have not been met with the urgency and shock required by the predicament, and instead with a kind of “resignation”.

However and fundamentally, she suggests that South Africa is in a different position now, and the downward trajectory can be changed. “We have a leadership that is committed to doing so. But we must be careful that the habits formed in a low-growth environment do not constrain our energy and views on what we should deliver.”

Further, Mavuso says South Africa must get back to its previous higher growth rates if it is to sustainably change the fortunes of all South Africans. “That must be our goal and we should not rest until we achieve that.”

MOVES IN THE RIGHT DIRECTION

She says Operation Vulindlela is making strides in supporting government departments to implement already agreed policies in areas that can make a big difference. “The Economic Reconstruction and Recovery Plan agreed by social partners as the way to overcome the pandemic sets out a clear path to fix the business environment to enable greater growth.”

The efforts at boosting infrastructure investment can also add positive momentum, she notes. “These are the kinds of initiatives we should all be rallying around, across business and the public sector, as well as other social partners.”

However, while there is hope of GDP momentum building going forward, there are also factors pulling GDP backwards, states Mavuso. This includes another court decision earlier in February which delayed the auction of spectrum by the Independent Communications Authority of South Africa (Icasa).

“The auction is one of those key structural reforms the economy needs, opening up the airwaves for data services by network providers.”

Opening of spectrum needs to dovetail the migration of analogue television signals to digital, she says; but the process is being hampered because sequencing has not been reliably delivered and the courts are highlighting deficiencies in Icasa’s process.

This is just not acceptable, says Mavuso. “Icasa must reach out for support to get the process fixed up. It is an independent regulator, and that independence is important, but it must ultimately serve the public interest, which is getting the auction done.”

Further, the supply of electricity remains another front where it is hard to see tangible progress consistently being delivered, she notes. “We are waiting for the results of the ‘urgent’ round of bids that were delivered to the Independent Power Producer (IPP) Office in mid-December as part of the expedited energy procurement round.”

Mavuso says that, in the first round of the IPP programme, winners were announced only a month after bid submissions, and therefore it was not clear why the energy sector is still waiting in a round that is officially “urgent”.

“We are also meant to be getting the request for proposals for Round 5 of the programme. Why has that not gone out?”, she questions.

Such delays hold up the economy, states Mavuso. As a result, a return to the growth rates South Africa should be able to expect is being deferred. “Is our tolerance for these kinds of delays because we have become resigned to poor economic outcomes? As business, we are committed to providing the support necessary to change the outlook. Let us work together to fix the economy with the urgency that South Africans deserve.”