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President Cyril Ramaphosa. (Gallo / Sowetan / Esa Alexander images)
- Professor Thuli Madonsela says that South Africa needs economic reforms that it has never tried before to recover from the Covid-19 pandemic.
- The former public protector says that while the Constitution guarantees equality for all, economic inequalities have endured.
- He has commissioned a report proposing seven strategic interventions to boost economic growth and reduce unemployment.
Former public protector and chairman of the legal trust at Stellenbosch University, Professor Thuli Madonsela, says South Africa must attempt reforms it has never attempted before to get out of the impasse it is in.
Madonsela spoke during a webinar Wednesday night to release a report she commissioned from the university’s business school called “New wine in new wineskins “.
The report was released on the eve of President Cyril Ramaphosa’s formal release of an economic response to the Covid-19 pandemic. Ramaphosa will address a joint session of both houses of Parliament on Thursday afternoon on his plan that seeks to chart a growth path for South Africa’s ailing economy.
The report published by Madonsela on Wednesday night proposes seven strategic interventions to build a resilient economy that can survive the impact of the Covid-19 pandemic. These proposed interventions, the report says, will boost employment and double the growth of gross domestic production within a decade.
The seven strategic interventions are reforms: industrialization, aggressive fiscal stimulus, food production, investment mobilization, labor absorption strategies, strengthening of state capacity, and growth through redistribution.
South Africa’s economy has been devastated by the Covid-19 pandemic, with 2.2 million people losing their jobs in the second quarter as quarterly GDP contracted by a record 16.4%, while the business confidence and manufacturing production plummeted.
Economic inequalities
Madonsela said the report illustrates that while the Constitution reaffirms the equality of all in South Africa, economic inequalities remain. He said it was his wish that Ramaphosa consider him in his long-term planning for South Africa’s economic recovery.
“How is it that, after having adopted a Constitution, we as a country have remained unequal? The Constitution does not make us an economy. It makes us a nation. We need to establish a society where all citizens have their free potential and their lives improved.” Madonsela said.
Stellenbosch University Business School faculty member Dr. Nthabiseng Moleko said the interventions proposed in the report had the potential to create up to 9.8 million jobs and reduce unemployment by 12 % in the space of ten years.
“It is possible to have a growth of 6.2% in the next decade. The government, the economic group, the unions and the private sector must make alternative and bold decisions in all areas. We must consider the necessary compensations so that we can achieve this goal.” Moleko said.
Moleko said the government has had several economic plans in the past 25 years, including the Job Growth and Redistribution plan, the Accelerated and Shared Growth Initiative and the current National Development Plan, which have produced the worst results of the lot.
“The worst performing growth we have seen for the economy has been from NDP results. With growth of 1.1%. That is not good enough for us to overcome the problems we face. ASGISA had the best performance of 3.5% and even that’s not good enough, “said Moleko.
Social scientist Professor Mark Swilling said the report was better able to produce results than archaic methods the government has developed. Although the economy has been transformed in recent years, economic policy has remained practically stagnant.
“Many of the certainties of the last two decades have collapsed. Economic paradigms generally change after a major crisis. We now have one of the biggest economic crises we have ever had, and we must ask ourselves what economic paradigm will inform the future,” Swilling said. .
The report analyzes the possibility of changing the current mandate of the Reserve Bank from inflation targeting to nominal GDP targets with a dual mandate to use monetary policy tools to help achieve a 6% growth target and price stability. with the upper limit of 8% for the inflation rate.
It also looks at the potential of using pension funds for growth and development, ensuring that capital is used to drive national priorities, in a context where government regulations and the maintenance of good governance discourage rent seeking. and the misuse of pension assets.
