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Jimmy Moyaha: This time we will look at the State of the Union address. [Sona] It is expected to happen tomorrow.There is a lot of discussion going on about what we want from President Cyril Ramaphosa. intention But what we know about the president maybe not To tell.
I'm joined by Dr Nthavisen Moleko, a development economist at Stellenbosch Business School, on the phone to consider this. Good evening, Dr. Moleko, thank you for your time.
Every year, we receive the State of the Union Address. That's always a promise. It's always “this is what we did, this is what we achieved.” What are you expecting this time?
Ntabsen Moleko: Thank you so much for having me. I think more than half, or 56%, of the goals I set last year were not achieved. And the majority of them, 44% who met the criteria, were minorities. There were approximately 52 appointments. Historically, financial services and access have continued to grow. [the] economy and [creating] work.
So a big part of the issues that the President mentioned around incorporation and licensing, for example, Japan Post Bank setting up a R10-billion SME Fund to support the growth of SMEs, particularly in areas such as hemp and cannabis. I think this is an issue related to the field. , we needed a regulatory framework that would enable investment, particularly in Eastern Cape communities and the people who are making this grow naturally.
That's a big no. We were unable to produce results in this regard.
If you look at the enablers of growth, what we call the logistics industry and the network industry, we have not been able to finalize some of the timelines, especially tenders.
We had two at home, [and] As for the terminal between Durban and Ngurah, only one of the two was designated. Transnet locomotives were to be restored and the fleet expanded, and the Transnet freight railway was also to be rebuilt. we didn't do this.
A quick look at the list shows a series of promises, but from a growth perspective we see that we did not get the results we wanted, especially in terms of unemployment and employment. . And I think the bottom question, and the fundamental question you want to know, is: What is the cause?
I think one of the fundamental and direct causes is that the growth structure and growth strategy cannot be changed unless the growth structure is changed.
Changing the composition of growth changes the growth rate, type of growth, and impact of growth. And that composition requires us to industrialize, manufacture, produce and further include excluded South Africans, especially young people, women and black South Africans, and these things are intentionally must be done.
I think some of the goals were very well thought out, but we have to deliver on them and act on them so that we see the necessary changes in our economy.
There are also other aspects regarding social indicators, safety and security, crime, etc. These were part of his less than 40% of goals achieved, with 44% met but 56% unmet.
Jimmy Moyaha: This is what I like about talking to development economists. It's always about the solution and solving the problem. As you speak, I know a friend who is a development economist, and he has very similar views and reiterates many of the points you mention here. I did.
Dr. Moleko, we are looking at this from a rational and logical perspective. The reality is we are in an election year. Tomorrow we're going to get commitments, we're going to get the conversations that we've been having for the past few years, we're going to be told that load shedding is ending, and all of that.
What practical statements do we need to hear tomorrow from a growth perspective? From an economic perspective, given that youth unemployment stands at 58%, we need more promises. What practical things do we need to hear instead?
Ntabsen Moleko: Well, the first thing I'll focus on is “previously promised”.
I think it is logical not to make any new commitments. So let's consider the following: “What did I say I would do before?'' Well, out of the 62 people she said she would meet, she hasn't met 35 of them yet. So, what will be the final decision on Japan Post Bank's approval? What will be done with the Small and Medium Enterprise Fund? ”
Why is it important? This is important because small businesses are the backbone of every economy and need capital.
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Financial inclusion is one of the things that directly determines whether an economy grows or becomes an unequal and non-inclusive economy.
South African banks have been able to support the kind of financial structure that we see, a hegemony and oligopoly of four or five banks that currently control over 80% of asset values and bank finances. do not have.
Therefore, the state needs to intervene intentionally. The state must intervene. For me, I think the key driver is clustering. I will focus on the first beam, depending on the state's capabilities. It's possible.
The president had promised that he was going to make the government work, not just do a skills audit. [and] One of them is to ensure that entrance exams for those entering the civil service are passed.
Do they have the necessary and required skills because the public sector is what it is? [to which] The Budget and Treasury provides all the resources that the SARS Commissioner is collecting.
How is this money put to good use? Are the people in these departments competent?
The issue of fulfilling our commitments is that funds are being returned in different departments and even in different states. This is money that can be spent on general health and education, early childhood development and ECD, whether it's expanding infrastructure in under-resourced areas.
But we cannot fulfill our mandate without an educated workforce and a security cluster in our police system.
It can be done quickly.
I think the other aspect is the money that needs to be utilized for long-term infrastructure development. Local capital can be utilized. We don't need to constantly borrow money from multilateral institutions, the IMF, the World Bank. Foreign currency debt is destroying Africa. Many countries have been forced to restructure their debts, mainly due to currency depreciation. This trend was also seen in South Africa and against the dollar, driven by lower commodity prices.
And much of our economy depends on foreign exchange earned from exporting goods. Therefore, the moment a currency depreciates and the exchange rate of that currency depreciates, whether it is the Kwacha, the Cedi, or in this case the ZAR, the ability to meet revenue collection and target payments to multilateral institutions will be weakened. . That would increase the probability of default, raise the sovereign risk premium, and create all sorts of problems. [arise] From the aspect of public deficit.
Therefore, we need to consider more carefully the use of savings and capital, especially from the private sector. I think there is an infrastructure asset class that is currently being encouraged through Regulation 28. It's an opportunity for us to take advantage of it.
Obtained infrastructure funding from DBSA [Development Bank of Southern Africa]; Leverage and leverage our savings for development through the mechanisms enabled by financial markets.
So there are a few things you can do. We have the infrastructure and the institutions, but I think the will and the urgency around it is what needs to be addressed immediately.
Jimmy Moyaha: I wish I had more time for this conversation, but I'm sure I'll come back to it again. And I'm going to create an expanded version of this conversation.
But for now I'll leave it alone. That's how Dr. Nthabiseng Moleko, a development economist at Stellenbosch Business School, shares her thoughts and insights on Sona 2024 as we await the President's speech tomorrow night.
