Weary of the controversial Nkandla case against President Jacob Zuma, Economist Cees Bargeman urged South Africans to let go of the case and focus on what he termed more pressing issues which is to revive the fallen economy.
In his latest newsletter, Bargeman said finance minister Pravin Gordhan has a huge task of adjusting the economy while avoiding junk bond status and recession in 2016. He added that the country’s decline has been gradual tracing back to number of years of its deteriorating terms of trade, low mast business confidence, stagnation and then declining SARB leading indicator and lots more. To this, he believes that two or more quarters of GDP decline is unlikely to happen in 2016.
“One isn’t supposed to sleepwalk into recession. A modern social-democratic society with a vibrant market economy has far too much dispersed, restless energy for its activity to ebb away and it gradually being forced to a standstill, and then into falling away,” the economist said.
“Far too many of us are active, in millions of ways… which tends to succeed in overcoming even stormy headwinds, and to keep us going.”he said
Speaking further on the economic recessions faced by the country, Bargeman said the recession has led to what he described as an internal financial shock inducing many into fearful panic. “But we haven’t so far been shocked like that at all, despite the Zuma carnage”.
Bargeman added that though the Nkandla issue is a huge music the president must dance to, other issues like presenting a bill showing Zuma’s reckless spending and how it can be corrected of major importance.
“Zuma is apparently prepared to face some music over Nkandla, but why not present a bill, too, for reckless conduct unbecoming a head of state, needlessly causing our collective interest burden to rise overnight because some close friends needed a more pliable finance minister utterly unacceptable to the world of finance?” he said.
“It is one thing to drastically rearrange the budget numbers, quite another for the headwinds to the economy to recede.”
“Sidestepping the slide into recession, and stepping up activity levels implies more business risk-taking, pro-actively committing to doing more,” Bruggemans said. But that flies in the face of the primary reason why we have been backsliding since Zuma took office in 2009, he added.
“Our government’s political paradigm differs fundamentally with the way our economy is organised and does business. The government’s policy templates may make sense within its view of the world and how it wants to transform it, but it isn’t a practical tool.
“Instead, it is a destructive wrecking ball, preventing a quality public sector pulling its weight in delivering needed services, and actively demoralizing a productive private sector, inviting it into defensive withdrawal.”
Pointing out the importance of policy in the growth of a country’s economy, the economist said the finance minister’s brief does not extend to recasting the greater government policy paradigm that awaits a future generation of political leadership.
He therefore craved for utmost support for the minister tackling the change on fiscal budget reality by slashing spending and budget deficit while doing minimal damage to taxes and morale.
“To change the growth outlook, however, the world has to turn into a friendlier place, while domestically the political paradigm needs to get real,” Bruggemans said.