“At least it wasn’t negative” was the sentiment I noted from many in response to the news of 0.1% GDP growth in the last quarter of 2023, resulting in overall growth for 2023 of 0.6%. It is positive unless you consider it in terms of GDP per capita, in which case it is decidedly negative given that population growth is outpacing it. South Africans now earn in real terms on average what they earned in 2006. We have been trending lower since 2013, so we have now crowned a decade of negative per capita growth.
Read: SA averts recession as mining sector rebounds
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This is a self-induced growth crisis that comes down to a failure of state-provided infrastructure and services. Inadequate electricity supply and logistical constraints were the key obstacles to growth. While load shedding eased in the fourth quarter, logistical challenges were a major constraint on economic activity with port delays damaging exports and import volumes. Investment also declined in the fourth quarter, with residential building, transport equipment and construction leading the negative trend.
This is why it is so important for us to tackle the logistics crisis, while following through on the progress made to confront the electricity crisis.
Our logistics and energy systems are obviously important for business, which is why we have dedicated considerable resources to working with government to resolve the challenges. We have partnered with government through the National Energy Crisis Committee and latterly the National Logistics Crisis Committee to bring business expertise and resources, including over R170m in funds raised by business to support both. We are aligned through the Electricity Action Plan and the National Freight Logistics Roadmap which are both good plans for how we can achieve deep structural change as well as short-term solutions to ease the impact of both crises.
There really is no excuse for us to not get this right. We have the resources and we have the plans, and if there is sustained political will, we will succeed. The risk is that in an election year there are many distractions, when we need to keep focused on delivering the reforms needed.
At the same time, it is critical that we also plan to manage new and emerging threats to the economy. At the moment, the national water system is an increasing concern. We have already seen how local water service delivery failures can damage business, forcing factories to close and relocate. Water service failures seem to be growing with reports last week of taps running dry from Mbombela to the south of Johannesburg. Incidents are blamed on crumbling infrastructure, load shedding and a culture of non-payment by consumers. Bulk water supply to large manufacturers and mining companies is an increasing concern, posing further risks to economic activity.
We cannot find ourselves in a situation where we have resolved the energy and logistics crises only to be confronted with a new crisis that ultimately means economic activity doesn’t happen. So, while tackling immediate crises head on is important, we must maintain vigilance on what the next major constraint is. As I wrote last week, the looming cut-off of gas supply to industrial users is a challenge we are having to grapple with, mobilising late in the day to try and ensure gas consumers are not left unable to function come mid 2025 when existing supplies will cease.
The national effort needs to focus on what matters: economic activity. Electricity, logistics, gas, water are all important to enable it, as are many other things like tackling crime and corruption. Last week’s GDP figures were a very loud clarion call for us to act fast.
The people of South Africa are becoming poorer, and their legitimate aspirations to be able to work, generate incomes and take care of their families are being frustrated.
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It is incumbent on government and business to work together to support the economy, ensuring key network industries deliver and that utilities function as intended.
One of our strategic priorities is to support a capable state. We want the government to have the capacity to be effective in delivering services to business and the country at large. We want people and businesses to receive quality services from local and national government, as well as the state-owned entities. This goes beyond firefighting crises but working at a more fundamental level to support the state to be effective, providing high-quality services and avoiding crises from emerging in the first place. That fundamental work is also an important part of our agenda. Partnership between business and government is essential for us to achieve what we want for South Africa.
I want the poor economic performance of the last decade to be consigned to the history books, and I know many in government want the same. Let’s act with urgency to make it happen.
Busi Mavuso is CEO Business Leadership South Africa.
