SA economy: Time to start praying

Even if reforms get on track, global difficulties loom.
SA needs to move on reforms. Image: Shutterstock

President Cyril Ramaphosa’s efforts to reform the economy can easily become a case of too little, too late.

Since taking office in February 2018, he has initiated much-needed reform, but the sluggish pace of implementation along with the sad state of the country’s finances leaves SA especially vulnerable should it have to go through an economic shock like the 2008 global financial crisis.

The current weakness can be seen in how well the country was positioned when it went through that crisis. Back then, SA had a budget surplus of 0.9%, with the repo rate sitting at 11.5%. When the government announces its national budget in a few weeks’ time, we will probably see the deficit increase to 6.5% and repo rates at 6.5%.

The International Monetary Fund (IMF), a lender of last resort for countries that have managed to get themselves into trouble, is not blind to the threats SA faces.

Read: IMF rumours may be the scare South Africa needs

In its 2019 Article IV Consultation Report on SA, it says that besides issues such as the high public sector wage bill and the debt of state-owned enterprises, the county’s efforts to reform its economy could be upended by events outside its control.

The report did not exactly say that SA needs a bit of luck to avoid an economic catastrophe, but it was certainly implied.

The IMF’s Risk Assessment Matrix rates the likelihood of “rising protectionism and retreat from multilateralism”, “sharp rise in risk premia” and “weaker-than-expected global growth in US, Europe and China” as high in the short to medium term.

Read: What an IMF bail-out will look like … 

Apart from medium level risk of a downturn in the US economy, the IMF’s outlook for global risk is rather negative.

Locally, the fund says there is a medium level of risk that governance setbacks or delays in the implementation of reforms will result in protracted domestic policy uncertainty, and that low growth will lead to a deterioration in banks’ asset quality and liquidity conditions.

It also notes the risk regarding Eskom’s inability to pay its R450 billion debt, and indicates that the threat of government losing the market’s confidence as a result of “excessive budget deficits or other policy missteps” is high.

The IMF defines risk as follows:

  • Low – a probability below 10%
  • Medium – a probability between 10% and 30%, and
  • High – a probability between 30% and 50%.


Source: IMF Article IV Consultation Report on SA, 2019

The danger to the South African economy can also be seen in the report’s ‘heat map’, which benchmarks its level of financing needs and debt as a percentage of GDP, using thresholds of 15%  and 75% respectively – beyond which a country is regarded as high risk.

If these benchmarks are exceeded in a stress scenario, they appear in yellow on the heat map.

If they exceeded the IMF’s baseline modelling, they are coloured red.

The difficult position South Africa is in is clear to see – of the 17 scenarios on the heat map, 13 are red, with only two in yellow and two green.

Source: IMF Article IV Consultation Report on SA, 2019

The economy is not likely to help. According to the report: “On current policies, [IMF] staff projects a lacklustre growth recovery from an estimated 0.4% in 2019 to 0.8% in 2020 and 1.5% in the outer years.”

All of this means that, as things stand, even if SA implements the right reforms at a rapid clip, in an increasingly troubled global economy, it could see its efforts come to nought.

Time to pray the heavens are with us.



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Awesome article ….a sobering punch to ones senses and insecurities about RSA

I doubt however however Cyril and his self anointed “Wise guy” MEC’s would really understand the severity even if they were read this as a fireside story

Leah, Cyril and his band of merry men don’t have a clue. They can’t think further than their noses are long.


with all the infighting it’s hard to trust that he ANC will stay on mission and not revert to #statecapture 2.0 if they can unseat CR and get one of their stooges in place. JZ is basically flipping them the bird when it comes to the commissions of inquiry and they’re just taking it. If he velvet glove doesn’t work, you need the iron fist. Actions can go a long way towards creating momentum, that will stop the stealing and inspire the masses to stay and help SA heal.

Finally sa is a true 3rd world country with no hope of ever getting better.

Or as Trump calls it ………

Simple Solution.

1: Downscale the inflated Government employees, get rid of Mayors @ R2 mill a pop each (City Managers are sufficient enough) As it stands, with or without Mayors 90% of Municipalities in SA are bankrupt, (Mangaung downgraded again, twice in 6 months) so what are they doing there?
They do not add value bar helping KFC achieving their sales forecast ..Give them each a chain (ceremonial, like in the days of old) send them off to get a day job sell their million rand cars, and use that money to build homes for the homeless and schools for the uneducated

2: Lock up the State Looters (Start with Comrade Ys) and all his corrupt uneducated civil servants. Recoup the Trillion Rand that was stolen from us the tax payers and repay Treasury

3: Scrap BEE and bring back the skilled worker that was kicked out of SOE’s with “packages” to make way for cadre deployment and preferred uneducated comrades

4: Employ hard working honest and skilled people irrespective of colour or creed

5: Find a POTROSA (President of The Republic of South Africa) that has real Cojones to make a difference , not someone that constantly gives lip service who is a crowd and comrade pleaser

Finally: Look after the Goose that lays the Golden the 3 million tax payers and of course small business who contributes enormously to employment with tax advantages

I guess i’m allowed to dream. The above is simple and achievable, but Communists are blind and oblivious to the real facts, yet they steal from us the tax payers and live like capitalists enjoying the best life has to offer

They’re not stupid, we are for allowing them to steal our hard earned money and walk off to spend it lavishly

It’s a disgrace, nothing short of criminal, and we allow it!

Cyril never misses an opportunity to miss an opportunity.

Now this is the blunt, unvarnished assessment of a truly independent body. The ANC sees this as a sign to step up the looting via EWC and NHI as money is gonna run out.

There is a clear trend here. Since it came to power the ANC abused its position of power to make laws that legalise the infringement of property rights. The ANC is a one-trick pony. The redistribution of other people’s assets, this is the glue that holds them together as a party.

Simply look at the track record. BEE laws, the redistributive rates and taxes regime, the exploitative cost of electricity, the nationalization of mineral rights, the security of tenure laws that basically nationalised housing for farmworkers, the cannibalisation of SOE’s and municipalities, the parasitic Mining Charter, cadre deployment, employment equity and the exploding national debt are forms of asset confiscation.

The ANC has no option but to carry on with these policies of plunder. The pressure on them will only increase as unemployment rises. They will never do the right thing. This is why they won’t go to the IMF. The IMF will force Cyril Ramaphosa to become Margaret Thatcher. The IMF will force the ANC to adopt the right free-market economic policies of the DA, Cope and FF+. Turkeys don’t vote for thanksgiving.

The ANC will use the only trick they know. They will infringe on property rights, and they see the pension funds as the piggy-bank. They will keep on buying votes with other people’s money.

And dystopian Zimbabwe beckons …

Do one have a choice with regards to the IMF? What are the other options?

Yes, there are a few options. The best option is to simply implement the correct economic policy early on and to prevent the need for a bailout. It is always preventable, just like a hangover. The socialists hardly ever take this route because they like the free alcohol that they stole from property owners. England took this bitter pill when Margaret Thatcher took control to cure “the sick man of Europe”. She had intelligent property owners backing her at the polls.

It is always the implementation of socialist strategies that necessitates IMF intervention. They run out of “other people’s money”, face starvation and then run to the IMF for money. This money comes with prerequisites that socialists do not like. These prerequisites basically come down to Thatcherism – free-market policies, the rule of law, individualism and property rights- everything that socialism is not.

The socialist may try austerity measures first, but they never succeed because the voters and groups with a vested interest, like BEE beneficiaries and cadres, will punish them at the polls.
Therefore the socialist opts for the handy alternative called “money printing”. The Central Bank funds government expenditure with newly-created money. This is a form of confiscation of assets as the spending power of the currency is stolen to bribe ignorant voters. This is no solution and creates many more problems. Zimbabwe and most Latin-American countries went down this alley.

Our Reserve Bank is independent, so that leaves the ANC with either austerity, a return to Thatcherism, or the begging-bowl as the only options. I guess they will give the begging-bowl a try and then abandon this choice after a while because the entire BEE thing will implode on top of them.

After its all said and done, we cannot escape this reality that ultimately, the economy, service delivery and the infrastructure are merely reflections of the mindset of the average voter. With that in mind, you can predict your own future anywhere in the world. This is the difference between Switzerland and Zimbabwe.

IMF loans comes with strict adherent policies which is set to change the discourse of the ANC and this they don’t want as it , amongst other things, it withholds them from using their dirty paws to steal

The only other alternative is the BRICS bank which is probably the preferred option with the IMF being West. (We know what that means)

However our debt is so big we’ll probably bankrupt the BRICS bank. The Government will be in the same predicament as with all insolvent SOE’s, constantly in dire straits and eventually no International Fund would want to bail us out except of course the people with the slanted eyes who are by all accounts the new Colonialists of Africa.

As long as they give and give, our comrades will continue looting not caring about the consequences, as is evident the last 25 years. Time to start taking lessons in Mandarin
It boils down to strict monetary discipline and unless they lick up the looters, downscale Government and Municipalities, we’re pretty much stuck in a hole, an abyss so deep turning back will need strong leadership which we unfortunately do not have

In summary, the communist ANC will continue down the road of destruction trying more ways to steal from the 3 million tax payers responsible for 50% of State Coffers revenue until a bailout will be the only option left to save the sinking ship.
Time to put our life jackets on

Pathetic policies, ignoring great talent to resolve problems, South Africa will continue further downward. Disaster is inevitable, canceling Bilateral agreements started this mesh in 2013, not any leader as such. Good luck on any change soon, the figures will be more dreadful this year, and next year worse again and again. They have thrown their best talented people out with the bathwater (EWC, BBBEE, no Bilatral agreements anymore).
Good luck, our ship is sinking, because we cut the holes ourselves to sink our ship.

I must have been asleep these past two years.

What efforts “to reform”?

What much needed reforms did he “initiate”?

And then only last week it was said on these pages that the JSE is the best low risk investment available. Hoo boy…see how that is turning out. Now one of the worst performing markets over 10 years.

When I was a kid you could believe it when somebody said I read it in the newspaper. How times have changed.

Then let’s pray in the name of “YAHWEHShua, our Elohim”

The repo rate was never 3.9%!

Thanks for pointing that out. It has been corrected.

In 1988 PW Botha in one of his rants said something which is actually playing out right now.

The conservatives back in the day (admittedly) certainly had vision.

While the wealthier liberals were against the oppression from Apartheid, but when they realise how African rule would play out in later years, they have sufficient capital to ‘merely’ emigrate within the English-speaking Commonwealth.

No matter how regressive the old conservatives were, the act of emigration must be the ultimate vote of no-confidence.

SA, is the Titanic.
Eskom & SOE’s the punctured hull.
Unions, the water gushing in.
And govt took all the life boats.

Optimism has gone…bye-bye!


Well said!
And add to that:

“The approaching, submerged ROCK reef is the rising Govt & SOE debt”

“The ANCHOR is the artificial AA/BEE social-economic exercise dragging the ship to a halt”

“The ENGINE ROOM….those are the loyal Saffas (of all colour) trying to make things work on a daily basis, sweat & grease, in an attempt to restart the marine-diesel”

…but the drunk captain-cANCER has already spent all the diesel-money for his own new yacht in Dubai”

Prayer is usually the default option if all reason fails. Now here in SA we are heading for an economic calamity. GDP growth per capita falling annually while the globe is growing at 3%+! What happens when the inevitable global recession happens? Our GDP per capita drops by 15%?

And the ANC continues with soviet era EWC and NHI? Are these people all on colossal quantities of dagga?

Accept the reality, as long as the clueless ANC alliance are in charge not even pray has a chance of success.

Not time to start praying ! It’s time they had educated voters that do not fall for their voters lunch boxes, free T shirts and never ending ANC promises that are never kept!!!!!!!!!

Great article for its presentation of current IMF stats, but you leave us pretty high and dry in your cul de sac analysis of “Time to pray the heavens are with us”.

Is that not the “metaphorical sign” to do something useful like build an ark and round up all available creatures and resources to develop a new plan or something?

Your belief in an invisible court of a benevolent (and also invisible) Lord of Heaven’s armies may even require the services of a psychoanalyst, but putting that aside and sticking with the social science dynamics of economics, more or less…. there is much positive to be drawn from the quantum shifts in numbers being portrayed here.
Despite the low growth trajectory of South (and mainly Southern) Africa over the next year or two, this region has historically led the way on the continent.
This current period of adjustment represents a slight “catch-up” period for countries in the West, East and North of Africa. And a filter through of the law of adjustment as Southern Africa realigns itself from m a traditionally Western-centric The stage is set for numerous disruptions of the traditionally Western-driven narrative of Africa. Simply search “major trade partners” and the top ten will include United Kingdom, France, Italy, Germany, and the USA long before any of our African fellowship.
Kenya and Uganda are two examples where economic growth is being driven through the pursuit of alternative energy policies and brand new cutting edge technology.
Six African countries were among the world’s 10 fastest-growing economies in 2019: Rwanda, Ethiopia, Ivory Coast, Ghana, Tanzania and Benin.
Southern Africa, the slowest growing region in 2019 at just 0.7%, was not simply the victim of poor political leadership. Enter Cyclones Idai and Kenneth and a nearly 13% contraction in Zimbabwe, a serious limp on our North Eastern ventricle.

Trade between nations on the continent has been limited to just 15% of all export and import commerce compared with more than 70% in Europe.
The US currently has one free-trade agreement on the African continent — with Morocco. Kenya and (maybe) South Africa are in the process of negotiating bilateral terms to a free trade agreement too. Tricky, finicky and energy depleting and not much chance under the current USA regime for major surplus benefit to us.

This is in contrast to the multilateral planning being channelled into the African Union free trade area, which aims to secure a comprehensive free trade agreement with USA after the current agreement- AGOA (African Growth and Opportunity Act).

This provides 39 sub-Saharan African countries duty-free access to the US for about 6 500 products ranging from textiles to manufactured items. A charitable hand me down from Clinton to Obama, renewed for 10 years in 2015.

So, in essence yes there is a lot of administrative work to be compiled and finalised in the background. However, the essential business of matching supply and demand across our continent is an open book crying out for intuitive and imaginative private sector efforts. Limitless opportunities abound, really.

Very little can be done from our side to address potential events like “rising protectionism and retreat from multilateralism”. Or even “sharp rise in risk premium” and “weaker than expected international growth”. These are outside our control.

Our area of focus is clearly on the domestic challenges. Part of this is a production efficiency problem, and part is an economy of scale problem. We are in the process of rescaling our outlook to include a pan-African distribution and sales network- an entirely new quantum with the requisite scale to generate growth and profitability for our generated outputs and services.

The more I hear cadres prioritising foreign direct investment, “special” business vehicles and SOE’s without any reference to grassroots agricultural transformation for instance, the more I grit my teeth.
Local agriculture, production and distribution flows alone have the potential to strengthen the livelihood security for the majority directly or indirectly dependent on farming but in addition creating a huge demand that will reignite the wheels of economic growth.
Essentially, a downscaling of political interferences- including addressing corruption with relevant controls and systems and upskilling with training and development programmes, solutions accessed manly via an appropriately geared private sector. Some steps in progress, including the redress of the land issue in progress, have the potential to get the resources in alignment to deliver a greater and healthier abundance across the spectrum.

This is in essence the 4th industrial economy. Also known as “The green economy”.

The risks reflected in the statistics of the article also have to be taken in context. The IMF are a Western-centric organisation and good at evaluating what has come before but pretty poor at predicting what local innovation will precipitate a move to the next developmental layer.

The illustrated scenarios of Mid and high risk have probability weightings in the range of 10 to 30% and 31 to50% respectively.

Even calculating statistically at the worst-case scenario for each the probability of any given scenario outcome on the medium-risk assessment matrix of 8 expected outcomes is a 2.4/ 8 probability and on a high-risk basis 4/8- even odds on a good/ bad or indifferent result- highly unlikely that everything will go wrong, I could expect surprises from the light side just as much as the dark if I was of the mind to do nothing much at all. I have Irish ancestry so I will keep an eye on our blessed “Murphy’s law “- “Anything that can go wrong will go wrong”.. so rather go outside, encourage shifts and changes- engage and at least try and make a plan!

With the best constitution in the world, democracy for many is a sugar coated gob stopper and that with each coloured layer that’s gets licked away nothing really changes…

I propose a new rule for all political parties, achieve 3% growth in municipalities and national Goverment or get band for 4 years from participating in the election.

They missed the boat a few years ago big time.
Australia beat them to it making the average australian worth
R6 million.

Instead each south africa is worth average of a homeless person in australia.

Several years ago I left SA for good.

While in SA I ran a business that employed up to 10 staff at any given time (5 permanent and 5 temp).

As I left I closed all ventures. Sold all equipment and assets. Cashed in all monies and left SA.

I am just one South African that emigrated. No more taxes from myself or my businesses. Ten staff no longer had employment.

You might say this comment is snotty and harsh….my response: you damn right ! SA did nothing but create an extremely unfriendly business environment. SA did nothing to protect my family,community or friends from the ravages of crime !

From a happy South African living abroad.

Stop killing farmers,
Stop trying to legalise property theft,
Take government corruption seriously,
Take crime seriously,
Stop over-taxing employers,
Protect minorities…….

….What have I missed??

End of comments.



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