Letter: Economy suffers as bad decisions are being made - The Star

President Cyril Ramaphosa said in his latest weekly newsletter that the COVID-19 pandemic and the associated lockdown would aggravate ‘an unemployment crisis and weak economic growth’ and that ‘difficult decisions and difficult days lie ahead’. 

South Africa’s future may hinge on these ‘difficult decisions’. It should not be forgotten that the country stands at this juncture in no small measure because of the decisions government has taken over the years. One might think of labour market policies, the conscious politicisation of the civil service and counterproductive empowerment policy.

Since President Ramaphosa took the helm, enormous political capital has been invested in pushing for expropriation without compensation (EWC) – as a result of which, South Africa has foregone a lot of capital that might otherwise have been attracted to the country. Little is, after all, as dissuasive to businesspeople and investors as a threat to the security of their assets.

Hopes that the COVID-19 crisis would enable a more pragmatic line have been disappointed. EWC remains firmly on the table, current empowerment policies are ‘here to stay’, prescribed assets look increasingly likely, a ‘new’ state airline is to be built on the wreckage of the old.

President Ramaphosa himself talks of ‘radical economic transformation’ as the framework for economic recovery (although recovery is hardly likely to be an adequate description of what it portends).

These are decisions that government has taken. Overall, they point to more of what has harmed South Africa’s prospects for years. It is unclear whether it was ‘difficult’ to take these decisions; but, with GDP set to shrink by 7% and probably more this year, and a debt crisis looming, they will prove very difficult for the country.

Terence Corrigan

Project Manager, Institute of Race Relations