The post-Covid-19 economic recovery plan outlined by President Cyril Ramaphosa can work – but implementation of the various policies must be fast-tracked. Plans are only beneficial if they are implemented. Failure to do so means they remain just that – plans, with no meaningful change in the material needs of the citizenry.
By: Dr. Paul Kariuki
There is no country that has not been affected by the Covid-19 pandemic. Most countries are targeting their efforts towards rebuilding their economies, actively exploring possibilities that will revive their economies and provide hope to their citizenry. The South African economy, like other countries, has not been spared by the pandemic and government is hard at work exploring every possibility that will fast-track the recovery of our economy.
Given the latest plan presented to the nation by President Cyril Ramaphosa, there is no doubt that the government is keen to see the economy restored and revived so jobs can be created, and chronic poverty stemmed. However, for the economic recovery plan to work, implementation of the various policies must be fast-tracked. Plans are only beneficial if they are implemented, failure to do so means they remain just that – plans, with no meaningful change in the material needs of the citizenry.
The following aspects must be prioritised with urgency:
First, the government must stem the growing debt and improve revenue collection, so it has the financial capacity to spur economic growth without necessarily relying on loans. While there is an acknowledgement that the government has spent a great deal of its financial resources in response to Covid-19, the time has come to stem further uses of resources from loans. Recently, the International Monetary Fund loaned the government $4.3-billion. According to Director-General at the National Treasury Dondo Mogojane, the nation should be scaling down its debt burden, given the growing debt-to-GDP ratio, set to reach 81.8% by the end of the fiscal year.
Second, focus on rebuilding public trust in the state. Inefficient delivery of public services wears out the trust and confidence of the citizenry in state institutions. Currently, there is a trust deficit in the country, especially where service delivery is concerned. It is necessary to rebuild political trust in order to create durable consensus between the state, political parties and the citizenry aimed at reducing inequality and poverty. However, rebuilding political trust is directly proportional to the behaviour of individual politicians. There are actions that individuals do in life that create and build trust in people. For example, leaders should not promise what they cannot deliver, as failure to deliver on promises interferes with trust. Also, leaders must never take advantage of the vulnerable in society through their actions. Individual politicians’ behaviour influences building trust with the public.
Third, relax lockdown regulations to allow all sectors of business to re-open. It is difficult to encourage meaningful entrepreneurship in a state of disaster and increasing taxes. Perhaps the time has come for less state intervention in the economy and allow more market intervention to drive the economy. This way, there is room for competitiveness that is necessary for innovative responses as ordinary citizens and businesses interact constantly, influencing economic decisions as well as the prices of goods and services. This is important for addressing economic sluggishness.
Fourth, the government needs to deliver infrastructure on time and on budget. Thus far, the government has not delivered many of its planned infrastructure projects either on time or on budget. Two of the major reasons for this situation are corruption, in both the public and private sectors, as well as lack of technical expertise to deliver these projects timeously. Corruption must be curbed immediately. In its response to the President’s economic plan, Nedbank argues that the skills exodus must also be stemmed, especially in key sectors such as construction, so that the economy has the requisite technical capacity to deliver on its infrastructure plans. More importantly, fix systemic challenges as far as project management is concerned so that project delivery is improved on time and budget.
Fifth, as a short- to medium-term measure, the government needs to refocus its attention towards specific sectors that are labour intensive such as manufacturing, agriculture and construction to mention a few, recommend Professor Mark Swilling and Dr Nthabiseng Moleko, in their paper New wine into new wineskins. They further suggest that this policy action ought to be supported by relevant education and skills programmes aligned to these sectors. Connected to this, the government should also consider fast-tracking land transfers for agricultural and manufacturing purposes. This way, the government will be creating a conducive environment for speeding up job creation, absorbing more unemployed people into these sectors in the end.
Sixth, the government needs to create the means for linking local entrepreneurship endeavours to the mainstream economy as suggested by Swilling and Moleko. In this case, retailers in communities and townships need to be integrated into the main economy and be protected from any exposure to unfair competition by established businesses. This way, local economies will be stimulated to grow beyond their current capacities and in the process improve livelihoods at the local level as many people get involved in entrepreneurial activities in their own communities.
Finally, successful implementation of the plan needs to be measured against plausible milestones, with clear timelines and targets so it can be assessed with accuracy. Any deviations and delays will be picked up on time and remedied to ensure that the plan yields the envisioned outcomes. In the end, public accountability will be enhanced as the government shares its progress reports per milestone achieved.
In summary, the economic recovery plan has the potential to restore our economy back to its winning ways. However, it will need to be implemented and supported by the right policies and political will to make everything work as envisioned. It is time to deliver on this much-awaited vision. DM