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SA needs a delivery date for economic growth

‘It’s not a lack of money or indeed a lack of will; it’s a lack of a capacity to deliver and invest in skills,’ says Prof Raymond Parsons.

NOMPU SIZIBA: The World Economic Forum had published a report in which it found that South Africa is one of the worst countries in terms of social mobility. It attributes its constraints to issues like poor education, health and employment outcomes. The report has been released on the eve of the annual World Economic Forum meetings that kick off in Davos, Switzerland tomorrow [January 21, 2020].

Today also saw the release of the policy uncertainty index, the PUI, which is published by the North West University Business School. It ticked up ever so slightly to 53.6 points in the fourth quarter, from 53.1 in the third.

Well, to take us through the issues raised by the WEF – and of course to take a quick look at the PUI, I’m joined on the line by Professor Raymond Parsons, who is from the North West University Business School. Thanks very much, professor, for joining us.

The WEF seems to have hit the nail on the head around the lack of social mobility in South Africa, and this is evidenced by the continued worsening picture of inequality in our society.

RAYMOND PARSONS: Good evening, Nompu, and may I also wish you the compliments of the season, somewhat belatedly? And it’s also the time of the year when we talk about the World Economic Forum meeting in Davos, which is held at this time.

I think, as you rightly say, the findings of the World Economic Forum on education, health and indeed jobs in South Africa simply resonates with the realities that we see around us every day and reinforces that particular lesson and it has made it clear and reaffirms again that if we want in South Africa to relieve the challenges of the unemployment, poverty and inequality, we are going to have to do many things very differently, much better, and urgently.

And so I think what the World Economic Forum report does, it simply reinforces that message that we are losing ground here in the fundamentals, and, if we don’t get them right, we will not succeed to the extent that we wish to create a better life for all. I think that’s really the bottom line. It’s reinforcing the priorities we are all saying we need to address in South Africa, in particular, this year.

NOMPU SIZIBA: Professor, earlier today I was speaking to a colleague who was covering a story in Mpumalanga of some 600 children who’ve not been able to start school because the provincial government had not got around to building mobile schools for them, as promised to their parents. And here the children were out of school for six to seven weeks during the holidays, giving the constructors ample time to build the facilities. This is one clear example where our kids are just getting a raw deal from the education system, as they are likely to be out of school as well for this week.

RAYMOND PARSONS: That’s important. These are nuts-and-bolts problems you and I talk of at a mini-macro level. But this is a striking example of what we need to get right. I know we talk very often, and I think understandably, about the developmental thing. I think what we need to focus on, is South Africa needs a delivery state. And if we focus on that, it resonates much more with the kind of practical problem – whether it’s in the field of education or elsewhere. We need to get the delivery that everyone wants, because in many cases it’s not a lack of money or indeed a lack of will; it’s a lack of a capacity to deliver and to invest in the skills to make that delivery.

NOMPU SIZIBA: Yes. I think to a degree you have spoken to it, but what is it that we need to be doing in South Africa such that, if you are born in poor economic circumstances, that’s not your lot – that indeed you can progress and graduate out of poverty. And of course education would play a big role in that graduation.

RAYMOND PARSONS: Well, I think the important point, the basic point, not the only point, is we’ve got to turn this economy around. You’ve spoken about the World Economic Forum. This afternoon it was the IMF at the World Economic Forum which has now released its updated forecast for world economic growth, and indeed for South Africa. And what have they done? They scaled us down again. They think for last year we are probably not going to get 0.5%, it’s going to be 0.4%. This year they are at 0.8% growth for this year, and maybe if we are lucky, next year 1%.

Now I’m saying what do you do with a growth rate like that? We are just hemmed in, and … better with the money we need to invest in certain areas, and in other areas it’s been shown in the field of education it’s not too much a question of a lack of money, it’s a lack of effective spending of that money. We are not getting value for the huge amount of money by global standards that South Africa is in fact investing in our education system. That’s partly what the World Economic Forum is telling us. We’ve got to do a much better job about improving our education system with the resources we have.

NOMPU SIZIBA: Obviously, policy certainty is very important. You’ve decided to call your report The Policy Uncertainty Index. Presumably you are finding the same old themes recurring in the latest report, which reflects Q4.

RAYMOND PARSONS: Well, I think this is what has resonated in the whole economic debate, whether it’s within government or in the private sector. It’s the issue of uncertainty. Policy uncertainty, if it persists and it is at a high level, is bad for investment. It simply means that the sort of investment we want is not going to take place because its almost like a tax on investment, which means we won’t get the jobs, the growth that we want, we won’t get the tax revenues we want, which is why our minister of finance is saying prior to his budget next month, look, if we don’t make the fundamental reforms need in certain areas of policy, we are not going to get this economy going and we are not then able to do the things that we want to do.

An important element here, also recognised by the president when he met with the British community last week, was that policy uncertainty has a very debilitating effect on our business confidence and investor confidence. And if that cannot be turned round with a stronger message of economic direction that comes to you in the State of the Nation Address and in the budget, then we are not going to get the growth that we want, we are not going to get the bigger, stronger and better economy we want, which we need in order to create that better life we want through the mechanism of education, which is basically at the end of the day wealth creation.

NOMPU SIZIBA: Professor, we’ve run out of time, but it’s always great speaking to you. Thank you for your insights.

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I seem to recall reading somewhere that we ranked no 80 out of 82 countries.

Which is awesome because it gives us another 2 positions to take out.

I’m pretty sure we can do it

But, but…..
We did so well in the matric exams????
And everybody have some useless degree????

The ANC is great at talkfests – preferably at a 5-star venue. But action? No, that would involve getting off one’s butt and actually doing some proper work. Much too unpleasant.
Thing is, I recently read that SARS stated that NINETY SEVEN PERCENT OF INCOME TAX INCOME was being paid by fewer than just THREE MILLION PEOPLE. Out of 57 million inhabitants in SA. Imagine if those brave few stopped paying?! No fancy ANC birthday parties. No 5-star hotel accommodation. No 17 million social grants. No government salaries – much less bail-outs for failed SOEs. And no opportunities for corruption. An interesting thought indeed….

This must be the most useless government any country has ever had.

With the deep state of South Africa with their grip on corruption and malfeasance, I do not see anything good for this country! There are too many worthless politicians (many which get redeployed instead of fired) still doing their on the job training, NOTHING they do will help.Maybe bits and pieces BUT no real reform. Cancel B.E.E. cut the size of government and GET OUT OF THE BUSINESS INDUSTRY! In all forms, participation and constricting regulations. You don’t make the poor rich by making the rich poor.

End of comments.

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