13 December 2017

South Africa: SA's Industrial, Economic Policy Under Spotlight

In a bid to stimulate thought leadership within the organisation, the National School of Government (NSG) hosted a roundtable discussion under the theme "Industrialisation and Sustainable Economic Transformation".

The roundtable discussion, attended by various stakeholders, emanates from a proposal on Industrial Policy and Economic Development Training the NSG received from the Trade and Industrial Policy Strategies (TIPS) in July 2017.

The overall objective of the session was to provide informative background relevant to training interventions across government to unpack the key economic theories and evidence that might inform industrial and economic policy development.

Additionally, the intended outcome of the roundtable discussion is to mobilise a multi-stakeholder dialogue on the implications for capacity development, and to explore the need for and nature of formal interventions on economic development and its intended beneficiaries.

Speaking at the event, Director at the Graduate Institute of Management Technology, Professor Sipho Seepe, provided expert advice on the dynamics of the South African economy and its inability to thrive on the same scale as other world economies.

Seepe identified various elements pertaining to the different economy classes in society. His presentation elaborated on the effects of the dawn of democracy in 1994, South African socio-economic realties, and how the 2009 economic crisis impacted on the current economic situation of South Africa.

"South Africans want to implement strategies and plans that are not relevant to the South African environment, and this in the process creates great financial loses for the country," said Seepe.

He noted that most challenges that South Africa faces today were due to a decline in manufacturing, engineering and agricultural activities, among others. Seepe added that the country does not invest in human capital the way it should, and that "we are caught up in the culture of outsourcing all the solutions that the country needs, an element that discredits the nation".

Another speaker, Duma Gqubule, an independent journalist, gave an informative overview of the world economy, in comparison to how South Africa is performing. His presentation gave a clear picture of economic growth in the context of the National Development Plan (NDP). His view was that, generally South Africans are grappling with understanding the true meaning of the so-called "Radical Economic Transformation".

Gqubule highlighted that for the citizens to participate fully in the economy of the country, they need to be educated about it, understand the technicalities of the performance of the currency, and have a relative understanding of the SA markets.

"This will provide a picture of how each sector of the economy is performing, and from then on we can understand why we need to transform a sector at a time," he said.

His presentation also noted that one of South Africa's major problems is rising unemployment and slow GDP growth. The presentation indicated that despite pronouncements by rating agencies, SA does not have a debt problem but that it has a GDP growth problem.

During the discussions, the audience elaborated on some of the solutions that are needed to get the country to the type of thriving economy South Africa needs. The following were some of the suggestions:

Radical transformation needs to happen in the minds and souls of an ordinary citizen, otherwise it will all be a vicious cycle.

We need to invest more in the country and have the confidence that what we produce is good enough.

The education system needs to take a total overhaul in order to start offering the type of education that is relevant to the South African environment.

The SARB, should also to a greater extent focus on stimulating economic growth

SARB could cut interest rates to stimulate growth

Once-off restructuring of our national balance sheet

Fiscal stimulus of 3% of GDP - R500bn over three years

Should only be spent on infrastructure. In construction, there is a fiscal multiplier of 1.9 times according to treasury. Each R1 spend increases GDP by 1.9 time. City of Joburg alone has R170bn infrastructure backlog but capital spending is only a fraction of that

Increase government debt (private sector social compact)

Redirect consumption spending

The core the discussions can be summarised as follows:

South Africans much not import solutions, but need to think about the country's problems and find solutions that are appropriate to us. In addition we would not achieve results with comprehensive socio-economic development and transformation if we do not do things to create a stimulus to the economy. - Malebo Ralehlaka works for the National School of Government.

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