“At least it wasn't negative” is what I felt from many people after receiving the news that the GDP growth rate in the final quarter of 2023 will be 0.1%, and the overall growth rate in 2023 will be 0.6%. It was an opinion. This is positive unless you consider it in terms of GDP per capita, in which case it is clearly negative given that population growth is outpacing it. The real income of South Africans is now the same as their average income in 2006. It has been on the decline since 2013, ending a decade of negative per capita growth.
Read: SA avoids recession as mining sector recovers
advertisement
Continue reading below
This is a self-inflicted growth crisis caused by the failure of state-provided infrastructure and services. Inadequate electricity supply and logistical constraints were the main obstacles to growth. Although cargo restrictions were eased in the fourth quarter, port delays hurt import and export volumes, and logistical challenges remained a major constraint on economic activity. Investment also fell in the fourth quarter, with homebuilding, transportation equipment and construction leading the negative trend.
This is why it is so important for us to track our progress in tackling the electricity crisis while also tackling the logistics crisis.
Our logistics and energy systems are clearly critical to our business. That's why we have committed significant resources to working with governments to solve challenges. We have partnered with governments through the National Energy Crisis Committee and most recently the National Logistics Crisis Committee, providing business expertise and resources. This includes over R170 million in funding raised from businesses to support both. We are aligned through the Power Action Plan and the National Freight Logistics Roadmap. These are all good plans for how to achieve deep structural change and short-term solutions to mitigate the effects of both crises.
There's absolutely no excuse for not getting this right. If we have the resources, the plan, and the sustained political will, we will succeed. The risk is that there are many distractions in an election year when we need to stay focused on delivering needed reforms.
At the same time, it is important to plan to deal with new threats to the economy. There are currently growing concerns about the country's water system. We have already seen disruptions to local water services harm businesses, forcing factories to close or relocate. Water breakdowns appear to be on the rise, with reports of empty taps from Mbombela to south Johannesburg last week. The causes of the incident have been blamed on infrastructure collapse, load shedding and a culture of non-payment by consumers. Concerns are growing over large water supplies to major manufacturers and mining companies, posing further risks to economic activity.
We cannot afford to end up in a situation where we have solved the energy and logistics crises and then face a new crisis that ultimately makes economic activity unviable. So while it is important to tackle the immediate crisis head-on, we must remain vigilant about what the next big constraint will be. As I wrote last week, the impending cutoff of gas supplies to industrial users requires mobilization late into the night to ensure that gas consumers are not unable to function as existing supplies cease in mid-2025. This is an essential issue. I'll stop.
National efforts need to focus on what matters: economic activity. Electricity, logistics, gas and water are all important to making that possible, as are many others such as tackling crime and corruption. Last week's GDP statistics were a strong call for us to act quickly.
South Africans are becoming increasingly poor and their legitimate aspirations to work, earn an income and care for their families are being frustrated.
advertisement
Continue reading below
It is incumbent upon governments and businesses to work together to support the economy, ensure key network industries are delivering services, and public utilities are functioning as intended.
One of our strategic priorities is to support capable nations. We want governments to have the ability to effectively serve businesses and the country as a whole. We want people and businesses to receive quality services from local government, central government and state-owned bodies. This goes beyond firefighting crises and works at a more fundamental level to help the nation function effectively, provide high-quality services, and avoid crises from occurring in the first place. That basic work is also an important part of our challenge. Partnerships between business and government are essential to achieving what we want for South Africa.
I want the poor economic performance of the past decade to go into the history books, and I know many in government want the same thing. Let's act quickly to make that happen.
Busi Mavuso is South African Business Leadership CEO.
