Addressing the issue of political instability as a cause for the decline in the south African economy raised by ratings agency Moody’s, the south African Deputy President Cyril Ramaphosa has assured that the country’s economy would in no sooner time bounce back to its feet.
Ramaphosa said this while addressing professionals and academics at a Gauteng ANC summit in Sandton last night.
According to the deputy president, Ramaphosa, while the economy is facing challenges including a major shift in investment, South Africans must be careful not to overplay issues facing the country.
He further pointed that the country is “stable” politically and the government is not slacking in creating billions of rands of new investment. “Our institutions are resilient and robust. We’ve got very stable institutions.” he said.
Ramaphosa, who is a member of the ruling African National Congress (ANC) said he has confidence in his party which according to him is working very hard to hunt down corruption in the system.
The deputy president is doing his best in presenting the country as a most viable place for foreign investments despite the country’s chaotic democracy.
We could recall that while speaking to Japanese business delegation last month, he told the investors not be concerned about the “noisy parliament” they see on television.
“We have a noisy, vibrant and robust democracy, so when you see this on TV you should never be concerned – that is merely the diversity of SA’s democracy,” said Ramaphosa.
Ramaphosa assured the investors of the government’s effort to rectify the economic issues in the country and urged them to be patient.
However, an economist warned that South Africans should brace themselves for tougher economic times as the government waivers on the implementation of its National Development Plan (NDP).
Cees Bruggemans of Bruggemans & Associates, Consulting Economists said in a note on Tuesday (22 March), that to suggest 0.9% growth ‘appears unrealistic, though perhaps still politically useful as we approach local elections’.
“Recession is such an ugly word, yet it rules the roost practically everywhere now,” the economist said.
He added that given the reported extent to which private interests have captured the state for their own benefit this past half decade, there is a major political challenge taking shape – it concerns the recapture of the state.
He pointed out that agriculture, motor trade and electricity generation are deep in recession, manufacturing, mining and non-residential building activity continues to drift in and out of a coma, while the household sector is seeing its real income gains wasting away.
“Under these challenging circumstances to steadily raise interest rates and impose R18 billion of tax increases while constraining government spending – cutting the budget deficit from 4% last year to 3.2% of GDP this year – is to hammer yet more nails into the collective coffin.”
Bruggemans therefore called for sustainable breakout policies, as intended by the National Development Plan (NDP), but so so far cynically abandoned ‘while hailed with wild abandon’.
“If it is still to be a while, expect further sinking a la Brazil (-4%),” the economist said. He said that an economic revival has its very own preconditions that have not yet even begun to be met.