By: Sisanda Ngongoma
Port Elizabeth- Professor Raymond Parsons from North West University visited the Nelson Mandela University Business School in Second Avenue Campus. The professor was in the University to deliver his speech about how politics are affecting the economy of South Africa and why the economy is affected by politics.
The lecture was called “strategic Conversation” and professor Parsons unpacked some of the economic issues faced by the Country. He opened his lecture by saying, “the presentation is based on the fact that the more South Africa’s house is kept in order, the stronger its ability to deal with any global economic headwinds”.
In South Africa the mantra is if we want to get the economics “right”, we have to get the politics “right” as recent political events have gain demonstrated. The professor said that the political change from the Zuma era to the Ramaphosa was one the biggest in South Africa’s economy since 1994, he also said that it damaged the economy of South Africa in the beginning of it but with a quick recovery. The professor talked about the appointment of Ramaphosa as president of South Africa saying that there were some positive possible factors about his appointment, saying that the election did immediately create a more favorable political environment and a better national mood, given his leadership ability, credibility and his skill set. He also mentioned that Ramaphosa has done a good job on trying to address some of the issues that were faced at time like addressing the state capture, streamlining Cabinet and improve governance and accountability and also his commitment to create an investor-friendly environment and wanting to raise $100bn in investment over next five years, as he had already stated china invested on South Africa during BRICS Summit.
He carried on saying, “despite some achievements in recent years, in the past decade South Africa and its economy have been largely damaged by some of poor economic decision-making that is continuing even now and mismanagement in key policy areas affecting the economy. The failure of National Development Plan, state capture as a ‘weapon of mass corruption’, weakening of key institutions like NPA and other economic costs of a ‘lost decade’ is that in recent years economic growth has gradually drifted into a ‘low growth trap’.
The increasing number of people has made South Africa poorer because the youth is unemployed. Professor Parsons said that according to the National Treasury Stats SA from 2007 to 2018 GDP, Investment Ratio, Unemployment, Public Debt to GDP and Credit rating had been massively decreasing and that the credit rating was stable but in 2018 it went to Junk Status.
Professor Parsons also stated that South Africa’s economy in 2018 had been recovering rapidly from a financial crisis after so many scandals. He also mentioned that there were other glitches such as cost of delivery and performance failures, key state-owned enterprises like Eskom, the finance mismanagement, load shedding and excessive electricity tariffs. He carried on saying that the perception of South Africa in a global context was no longer regarded as ‘special’ because its ranking indicators were decreasing from 2017.
He said in his conclusion,“In a nutshell, it can no longer be business as usual in South Africa because a strong anti-business sentiment has developed -not only in South Africa- for various reasons, including recent bad corporate behavior and financial scandals like junk status and state capture”. He also added that markets and business needed political support, yet their very functioning often eroded that support. “Therefore business needs to take long term view of its commitment to the South African economy. We need to urgently promote what might be called inclusive capitalism by giving many people in South Africa a much bigger stake in the economy to uphold and defend, whether it is land or job”, he said in closing.