The SA economy has declined once more without having achieved any significant growth after Covid-19 as compared to its comparable counterparts in the Global South.
While the economies of our Brics partners registered substantial growth at 3% average in the first four quarters since Covid-19 regulations ended, SA never grew anywhere near these rates.
Before Covid-19, the SA economy was already underperforming – with unemployment rates at the highest with no manufacturing base to absorb its semi-skilled workers and youth.
So the recent updates on the SA economy cannot be entirely blamed on the KZN floods or the Russia-Ukraine war. Of course those shocks did affect the economy but there must not be any impression given that seeks to suggest that we had a perfectly balanced and thriving economy before these problems hit.
The truth of the matter is that the last time the economy grew above 5% was before the 2007/08 recession, and even that growth itself was largely generated from the global appetite and demand for SA’s raw materials at competitive prices.
In other words, the colonial structure of the economy, where we sit and wait for the Global North to come and extract mineral resources from our shores, was a favourable environment for the SA economy at the time.
Otherwise the opposite effect of that pre-2007 growth was that it was bleeding jobs to the markets that were receiving our raw materials. The extraction of our commodities created factories and jobs in Asia and Europe – not SA.
That is why the labour federation refers to the pre-2007 performance of our economy as "jobless growth".
Between 2008 and 2022, SA continued with this macro-economic approach – seeking to appease and attract foreign direct investment to exploit its primary economy with the hope of obtaining jobs as dividends.
Unfortunately, the post-2008 world economy had changed completely to be a different ball game with different players who use ruthless tactics to gain control of the world economy.
China in the main accelerated its industrialisation economy to the extent of shaping its foreign policy through this economic approach. China began to target Africa and other developing regions for its own industrial investments and infrastructure base to ease the flow of further raw materials to its local factories.
Through this method, China secured full employment in its domestic economy and it moved millions of people from poverty into the middle-class.
By extension, China also elbowed the US out of the world economic pyramid through this strategy, to the extent that the US itself began to be vulnerable to the foreign industrial policy approach of China.
SA on the other hand did not intervene in its own economy through similar measures. Instead, SA continued with its neoliberal and colonial outpost strategy despite glaring evidence that it is not creating jobs for its people. In fact, its people are sinking further into poverty and the global standing of SA as a leader of major eco-political developments has declined massively.
Domestically, SA’s management of its own affairs is even worse. Eskom, which is tasked to pump energy into the economy, is in near collapse. The railway system, which is supposed to enable industrialisation and regional integration, has also been collapsed.
Efforts to rebuild these institutions and infrastructure are also stifled by poor management and a disoriented political leadership that seems to be not receiving context-specific advice to address its most pressing economic challenges that affect the majority of its population.
As a consequence, the SA economy remains a monopoly industry that is owned and controlled by a few role players who grew their feet under apartheid up to the present. The new role players who come in to penetrate the field are of foreign origin – which still leaves the rightful owners of the land and the economy further out in the periphery.
This is at the core of the massive levels of inequality that our country has. As a result, it has no possibility of ever becoming a vibrant economy that grows at its high potential anytime soon.
The structural design of this economy therefore keeps SA declining or growing between 0%-1%, which is a place of nowhere that maintains the current status quo between the rich and the poor.
SA needs to look inward and start building the infrastructure, skills, and institutions that will keep its assets and produce from its lands in SA for domestic manufacturing, finalisation and trade to safeguard and guarantee job creation.
Unless SA starts to decisively change its macro-economic approach in this way and begins to place industrialisation at the core of its national life – it will never break out of this economic mess.
* Dr Mzileni is a research associate in the faculty of humanities at Nelson Mandela University
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.