A common and natural question that arises is what will be the catalyst for this much needed foreign investment that will drive growth and job creation? I can think of a couple of things, that are new, but they haven’t happened.
First, sort out the energy sector so that it has an excess of energy. The global evidence is that those countries that have high energy consumption per capita have faster growing economies. The phenomenon of asking energy users, particularly firms, to reduce energy usage needs to end by bringing a new generation on to the grid. You don’t grow the economy by serving energy. Fortunately, there has been some movement on the energy front with the Request for Proposals of 11.8MW of Independent Power Producers over the past week. However, the regulatory framework still needs to be liberalised and made clear.
Second, fiscal reforms are necessary. The reduction of the wage bill and the framework for future public sector wage settlements needs to change. Above-inflation wage settlements which do not consider productivity are a sure way to bankrupt the state with less than desirable results. This is exactly the reason we find ourselves with the need to cut the wage bill by R160bn in the medium term, it is to reverse the R159bn above inflation wage settlements since 2006/2007.
Third, the evidence out of the State Capture Commission of Enquiry is jaw dropping. The law needs to demonstrate that it can deal with corruption at every corner of society, particularly that which results in the leakage of funds that would have been meant for investment and service delivery. The past couple of weeks have been encouraging but nowhere close to headline-grabbing in a way that would make non-resident investors take notice.
Fourth, quickly deal with spectrum allocation. It seemed from a distance, like a low hanging fruit but the evidence suggests it has not ripened enough. This is potentially one that requires less back and forth with the various player to get it over the line.
Lastly, the state needs to equalise access to opportunities from access to covid-19 relief funds to big infrastructure projects. If the goal is inclusive growth, the new entrance must not be disadvantaged because they lack capacity, naturally they will not have it by virtue of being new entrance. The state must capacitate them to participate. Incumbent players must not be advantaged by proximity to power and information. This will possibly not do justice to this aspect, but the point is this, if inclusive growth is to happen the plain filed must be levelled and it will take more than the disclosure of information to all parties to achieve it.
More factors need to change that will further build confidence in the economy, however, getting the above aspects moving visibly will generate momentum that can self-sustain.