Editorial: SA in crisis: Now we need leaders

August 30, 2015, 10:02am
Picture: Delwyn Verasamy M&G

Editorial: SA in crisis: Now we need leaders


The neglect in a number of areas is glaring apparent as the rand reaches new lows and economic growth shrinks into negative territory.

As the rand reaches record lows and we find economic growth has shrunk into negative territory – sparking fears that South Africa is in the midst of a technical recession – the neglect in a number of areas has become glaringly apparent. The country is in desperate need of solid, innovative leadership to halt a dangerous decline.

The great fall of China is certainly making its mark on South Africa’s and other emerging economies, but gross domestic product figures for the second quarter of the year show once again that domestic factors are a key part of a worsening situation.

Weak domestic and global demand have had an effect on many sectors; the biggest economic hole in which South Africa finds itself was dug by Eskom, showing that energy constraints are more dire than was first thought.

In most economies, a weakening currency is not all bad news – it helps to boost exports. Not for South Africa, though. The energy problem not only contributes to negative economic growth, but will also see to it that any hope of capitalising on the weak rand by ramping up export-orientated production is squashed.

One can’t help but wonder how South Africa might have weathered the storm had the construction of mega-power stations Medupi and Kusile run on budget and on time. Alas, all our eggs were placed in one basket and, if one may mix a metaphor, those chickens have come home to roost.

Tourism is a sector that typically benefits from a weaker currency, and it needn’t be as adversely affected by power constraints. But the timing of stricter visa rules – and a rocky adjustment period – will probably see South Africa miss out on any of the benefit of a weak rand in this area, too.

The only silver lining to this cloud is that the government could be pressed to make bolder and more decisive moves to staunch the haemorrhage. Talk of policy intervention may seem too little too late, but the government doesn’t have to start from scratch. Some practical solutions have been on the table for a while.

In 2003, Cabinet approved private-sector participation in the electricity industry and decided that independent power producers would account for 30% of future power-generation capacity. This stipulation, however, did not find its way into the integrated resource plan. And, despite the success of the government’s independent power producer programme, according to research from the CSIR Energy Centre, Eskom’s coal and diesel power still account for 90.4% of the electricity put out from January to June this year. The national development plan contains practical solutions too, but it seems only to have been used to allay investor fears. Implementation has been patchy, at best.

Enter Operation Phakisa, modelled on Malaysia’s “big fast results” programme, which seeks to accelerate implementation of the NDP by setting up “laboratories” for different sectors. They will bring role-players together, set targets and monitor progress.

Much of what the economy is experiencing cannot be helped by government intervention alone. But this crisis should certainly not see perfectly good policy gathering dust: government can finally put it into action.

Editorial: Mail & Guardian