Like any business or organisation on a slippery slope, South Africa needs a turnaround strategy. Pres. Cyril Ramaphosa came forward with his New Dawn plan, and, as can be expected, there are those who support him and those who may have better plans.
South Africa has huge fiscal and economic challenges, as set out by finance minister Tito Mboweni in his maiden Medium Term Budget speech last week. We could soon face a situation where we may have to turn to the World Bank for assistance, thereby having to play according to their rules.
However, the New Dawn plan provides a lot of hope for the South African economy and its people.
Looking at the stimulus plan, the Jobs Summit, Medium Term Budget and Investment Summit as components of the bigger plan and as interwoven cogs in the economy, their value becomes more visible.
Ramaphosa’s plan may contribute significantly to the private sector, labour unions and government’s pledge to create 275 000 jobs per year for the next five years when one looks at the wider picture as a whole:
- The short-term stimulus of R50 billion
- Commercial banks agreeing to make R100 million available to black companies
- The creation of an infrastructure fund and the public sector’s estimate to invest R855 billion over the next three years in infrastructure
- International investors who already pledged $35 billion and several big companies pledging public investments of R140 billion last Friday
Pledges already add up to more than R1.5 trillion – and more is expected. Ramaphosa wants investments of US$100 billion (excluding government) and if this target can be reached, bottlenecks can be overcome, and labour can work together with firms, then the jobs target is within reach.
Given that gross fixed investment increased by a paltry R43 billion from 2015 to 2017 and that only 153 000 jobs were created over this period, then the investments already pledged will make a huge difference to the South African economy’s prospects, because when gross fixed investment grows, so does the economy and jobs.
However, Ramaphosa cannot do this alone. Organised labour, business and government will have to provide blue-blood leadership of the type that has a new paradigm, is innovative, constructive and developmental. This leadership must ensure that the New Dawn train stays on track and in motion, even if it means that many will initially have to wait on the platform.
For further enquiries or to set up a personal interview, contact Andre Venter at 083 251 3274.