Treasury forecasts of GPD growth of 1.8% over the next three years ‘falls far short’ of the levels required to address South Africa’s more than 46% unemployment rate, the Institute of Race Relations (IRR) has warned.
‘The country will fall further behind its emerging-market peers and competitors,’ the IRR said in a statement following Finance Minister Enoch Godongwana’s 2022 Budget speech.
Drawing attention to Godongwana’s statement in his speech that ‘South Africa now pays grants to more than 46% of the population’, the IRR noted that this ‘perfectly encapsulates the situation into which the ruling party’s ideological and policy choices have forced South Africa’.
The IRR said: ‘Policies such as expropriation without compensation, the National Health Insurance, expanded race-based labour legislation (in the form of the Employment Equity Amendment Bill), and Localisation Master Plans, will not save South Africa. On the contrary, they will make things worse.’
It noted that the ‘respite offered by a commodities boom is temporary. And the benefits from said boom would have been higher had the government’s Transnet monopoly and hostile legislation not inhibited the country’s export and trade potential for many years now.’
IRR CEO John Endres said: ‘The fiscal squeeze is on. The finance minister finds himself in the difficult position of having to reduce deficits in an environment where both cutting expenditure and raising revenue are well-nigh impossible. The only way out is through strong economic growth, but this path is blocked by policies that preclude it.’
The statement concluded: ‘As long as the country fails to embrace radical, pro-growth ideological and policy changes, we can expect more populist and short-term measures to remain on the table, such as a Basic Income Grant and prescribed assets. South Africa has drifted into a treacherous current, and is only just managing to keep its head above water – without a brisk change of stroke, the country risks being swept further into peril.’