Like any other year, the month of February has been a busy four weeks of the business calendar. We had to watch and listen to President Cyril Ramaphosa deliver his State of the Nation Address (SONA) on Thursday, 13 February 2020 and he was followed by Provincial Premiers like David Makhura who delivered his State of the Province Address (SAPO) on February 25, 2020 in Ga-Rankuwa titled “Growing Gauteng Together”.
The start of this year is a bit different in many ways from the previous years. Firstly, it is a leap year, secondly, it’s a start of a new decade which I call “A Decade of Inclusive Growth” and thirdly our economy is in deep trouble.
As we start a new decade, many ordinary South Africans, foreign investors, economists, politicians, business owners and workers are wondering what the future will hold. Examining the past ten years offers valuable lessons and insights into which trends will shape the next 10 years and can help establish a New Economic Pathway for South Africa.
Following the 2009 Global Financial Crisis (GFC) and the Great Recession, the South African economy has never recovered to the GDP growth rate levels of 3.5% average seen before the GFC. The economy has failed to achieve significant GDP growth rate, unemployment is at its highest record of 29.1%, 19 million people will be on the social grant welfare system in the 2020/21 financial year according to Minister Mboweni’s Budget Speech 2020, most state-owned entities (SOEs) are in ICU with government bailout life-support keeping them afloat for now, the government wage bill has reached unsustainable levels and low consumer and business confidence has resulted in a stagnant economy.
Simply put: South Africa has no great economic success story to tell looking at the past 10 years. Our last ‘feel good year’ was 2010 when we hosted the FIFA World Cup tournament in our shores. Moody’s Investor Services is predicting a 0.7% economic growth rate for 2020 while the Minister of Finance was a bit optimistic during his Budget Speech by predicting a 0.9% GDP growth rate for 2020.
For most South Africans, they would like to put the past decade behind them and start the new decade with a positive economic outlook.
To my disappointment, I must point out that I did not hear the President saying anything about real economic growth plans for the next decade. His SONA was all about the next 12 months. But maybe this was intentional since he should know very well that 10 years is a long-time in politics and the ‘new dawn’ might not last that long.
But for many businesses and investors, their business strategy would normally focus on the next 5 years, 10 years or even 20 years. Business planning is not done on a monthly or quarterly basis, a medium and long-term view is taken before committing capital and resources.
There is a growing recognition that the limited increased prosperity experienced during the past 25 years of our democracy has bypassed many individuals, especially women and young people. Thankfully, this is driving tough, but important, conversations about equity, inclusion, and barriers to a better life.
As we look ahead to 2030, many of the past 10 years economic trends will remain deeply embedded to the South African economy. In order to overcome the current economic challenges South Africa Must Choose A New Pathway That Will Deliver an Inclusive Growing Economy by 2030.
Traditional economic thinking focuses on growth with the assumption that wealth ‘trickles down’ and creates prosperity for all. This thinking tends to view citizens and communities as recipients of wealth, rather than producers. Rather than creating prosperity for all, it has deepened inequality, increased poverty and heightened precariousness.
By contrast, an inclusive growing economy approach works to reshape the economic system to make it better serve people and community interest and embrace people and communities as active players in wealth creation. Social capital is firmly linked to, and interwoven within, economic prosperity.
The end goal of an inclusive economy is human wellbeing within environmental limits based on the premise that social, economic and environmental issues are interconnected. This goal can only be achieved when government development agencies, non-profit organisations and businesses across the public, social and commercial sectors, mutually support and develop one another, unafraid to build relationships and share power.
While every province, city, town or community will face its own unique challenges that require new, creative tactics, the following three (if you have more than three priorities it’s like you don’t have any) priorities should remain top of mind for all those responsible for economic policy in South Africa and business owners and leaders for the decade ahead:
- Focusing on People: At its core, economic development and growth should serve the needs of people and businesses in a community. In an age of disruption, education will become even more important in providing promising career opportunities to individuals. At a broader level, provinces/cities that can effectively train, retain, and attract the best and brightest will be best positioned to thrive. Doing so will require continuously aligning training options to the needs of businesses and ensuring that everybody has the chance to participate in these systems.
- Turning Disruptive Technologies into Opportunity: The disruptive effects of technology are increasingly top of mind for economic policymakers, business owners and entrepreneurs. Already, artificial intelligence (AI) and automation are changing the nature of work and reducing the need for workers in certain sectors. While we often focus on the negative impacts of disruption, technological innovation also creates new opportunities. From contributing to the rise of new industries such as Additives Manufacturing to facilitating remote work, technological change will always bring pros and cons. Over the next decade, the most successful economies, places and businesses will embrace technology and accelerate the opportunities it creates, versus fighting the tides of time.
- Partnering for Success: Addressing our challenges today and into the decade will require robust partnerships. For too long, government and business have operated in silos due to the trust deficit that existed during the past 10 years – focused on their constituency issues and not communicating, let alone collaborating on critical macro-economic issues. Modern challenges are far too complex for this approach. Tackling unemployment, skills development, attracting foreign direct investment, equity, housing, transportation, and more requires that we take a holistic approach to economic growth and partner together to amplify our impact.
At the start of the decade, this means we must strategize. As we saw during the past ten years, success does not happen on its own. We cannot predict the future, but we know the challenges we face today. Building a framework for collaborative action will help us address our economic challenges and better prepare us for whatever might come.
Where will your organization be in 2030? Do you have the partnerships and tools in place to achieve your vision for this new decade?
Now is the time to start the conversation and build the roadmap to get there, and GROWTHMAP INFONOMICS can help! Contact us to explore how we can help your organization strategize for today and the decade ahead.
Thokozani Thwala is a Business Development Advisor and an Economic Development Influencer. He can be reached at thokozani@growthmap.com
