The economic and political outlook for SA is at this stage looking rather bleak.
This is according to economist Dawie Roodt of the Efficient Group, who addressed the East Rand Business Women meeting held recently at Summer Place.
His theme, after all, was “Going Nowhere Slowly”.
He made specific mention of the worldwide political tensions that have ripple effects upon SA’s economy.
This includes America pulling out of the Iran nuclear deal, the moving of the US embassy to Jerusalem and the ensuing trade war between China and the USA.
According to him, America’s actions, which impacts import duties, could be negative for SA as the country benefits substantially from extensive trade and assistance agreements with the US.
US imports of steel and aluminium from SA especially could have negative consequences.
Trumps’ decision has caused a spike in the brent crude oil price, while the currency of the world superpower has rallied, especially against the rand. This has caused constant hefty price increases on fuel in SA.
Roodt said it is impossible to foresee in the short term how the rand will fair against the dollar, but in the long term, the rand could weaken, performing well below par.
- Economic growth
According to him, the only way to fix the growing inequalities in the country, with the greatest inequality still existing among the black population, is a healthy economic growth.
Roodt said SA needs a growth rate of around five per cent when taking into consideration factors such as the growing population. However, a lack of skills, labour legislation, taxes, and labour relations are all stumbling blocks to meet such an economic growth (which is currently estimated to grow between 1.5 and two per cent)
He fears SA might see a continued rise in taxes, with only a small group bearing the burden of the masses. Roodt mentioned a possible wealth tax in the future, based on assets.
He also lamented the fiscal mess that SA faces, as a result of the overburdening public sector of millions of workers, who according to him, are all overpaid.
The strain on taxpayers is exacerbated by 17 million people who are receiving grants.
- Political outlook
Regarding SA’s political landscape, he said at this stage the new president, Cyril Ramaphosa, is not yet in a politically strong enough position to make wholesale changes.
He also pointed out that the previous president caused enormous damage to the economy, which needs to be fixed.
South Africa is still counting the cost of parastatals that have bled the country dry, such as SAA and Eskom.
He, however, does believe with the DA imploding and with a more charismatic leader at the helm of the ANC, that the ANC will most likely gain greater support in next year’s election.
This can have huge repercussions on the country if the ANC gains a two-thirds majority, which could lead to the complete overhaul of the Constitution.
Roodt also highlighted that another factor to take into consideration when it comes to SA’s future outlook is how the ANC is becoming again a liberation movement, with the strong tendency towards a leftist ideology.
This is because the ANC is part of the Tripartite alliance with Cosatu and the SACP.
Roodt pointed out that the SACP has always determined the ideology of such a partnership, while Cosatu these days represents more the public sector workers, therefore not the worker on the street.
“At one stage, the ANC reinvented themselves to become a national democratic movement, but the signs are pointing towards the ANC returning to its ideologies before 1990.
“This, therefore, means greater centralising of power, which is why there are all the talks of land expropriation. Such expropriation directly impacts on our rights, especially our right to property which is under threat.
“While we continue to be part of BRICS (an acronym for an association of five major emerging national economies: Brazil, Russia, India, China and South Africa), it remains imperative that we also do not make America angry.”
Roodt said at least a glimmer of hope is the advent of private currency, operating on blockchains, such as Bitcoin, which could spell a brighter future economically.