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By David Jacobs
The South African economy is today nearly triple the size it was when we embarked on our democratic journey. It is the result of 30 years of hard work and tough decisions taken amidst difficult challenges.
The economy inherited at the end of apartheid was technically bankrupt as a result of apartheid’s distorted policies. It was structured to serve the needs of a minority and focused on supporting corporations rather than people.
Economic growth was dependent on the gold price and as it fluctuated, especially in the 1980s, our exchange rate and ability to import goods suffered. The living standards of blacks remained dangerously low while those of many whites had also begun to decline.
In 1994 when the democratic government took over, it began a process to structurally adjust the economy through the Growth, Employment and Redistribution programme. At the same time, the Reconstruction and Development Programme was introduced to address the massive socio economic challenges.
These interventions were occasioned by a statement by then-President Nelson Mandela that debt service costs could not be higher than what we were spending on education because debt service costs were of the past and education of the future.
The prudent economic path pursued ensured that our economy improved dramatically with the transition to democracy and has been reasonably robust throughout the democratic era. This has enabled us to make strong inroads into transforming and creating an inclusive economy.
Addressing Freedom Day celebrations, President Cyril Ramaphosa said: “Through affirmative action, broad-based black economic empowerment, worker share ownership programmes and progressive labour laws, we have brought about transformative change in South Africa’s boardrooms, in workplaces and on the shop floor.”
Today more than half a million workers are part-owners of the companies they work for which represents about one in every 20 workers in the formal private sector. The proportion of black people in top management increased from 6,0 percent in 2001 to 17,0 percent in 2021 and at senior management level from 9,0 percent to 15,6 percent over the same period.
As we celebrate 30 Years of Freedom, we do so knowing that workers have over our democratic journey enjoyed rights including trade union workplace organising, collective bargaining, equal pay for equal work, health and safety, affirmative action, skills development, the right to strike and the right to peaceful protest.
The introduction of the national minimum wage in 2018 raised the earnings at the time for more than half of the country’s labour force. This made a real difference in the lives of ordinary South Africans and into transforming the apartheid era wage structure we had inherited.
We have used the benefits of the economy to further the redistribution of public resources to meet the basic social needs of our people. While we still have a long way to go before we can declare that all South Africans share the wealth of their own country, we have made substantial progress and are determined to do much more.
Over successive democratic administrations we have implemented progressive economic policies that have seen more people than before meaningfully participating in the economy to support their families. While employment increased since 1994 from eight million in 1994 to over 16.7 million today, we are acutely aware that it remains our greatest and most pressing challenge. Work continues in earnest to dismantle the structural legacy that hampers job creation while at the same time scale up temporary work opportunities through our Expanded Public Works Programmes to support employment.
More recently, the Presidential Employment created over 1,2 million opportunities, reaching every province and district in our country. It included the country’s biggest youth employment programme that saw 235 000 young people placed as school assistants in 23 000 schools in the country.
The COVID-19 pandemic significantly derailed our planned economic advances, what began as a health crisis escalated into an economic one that severely impacted businesses and livelihoods. We saw economic activity drop 51 percent in the second quarter of 2020 and more than two million people were forced out of work.
This massive knock would be devastating for any nation, but this compounded centuries of deep-rooted structural issues inherited from our fractured past had an overwhelming impact on the economy. It has taken immense effort from government, under the stewardship of President Cyril Ramaphosa, and our social partners to deal with the repercussions, many of which are still with us today.
Spurred on by interventions through our Economic Reconstruction and Recovery Plan (ERRP), we have managed to claw back the economy to pre-COVID-19 levels. Our recovery has been remarkable given the enormity of the challenges we have faced since early 2020.
In reviving our economy, we have been on a deliberate path to reclaim our investment credibility and attract new investment into the country. Since the first South Africa Investment Conference in 2018, South Africa has attracted more than R1.14 trillion worth of investment commitments through the South African Investment Conference.
Our overtures have translated into foreign direct investment of R1.1 trillion between 2019 and 2023 compared to R312 billion in the prior five year period. These investments start a cycle of economic activities that leads to employment and economic activity so that we can deal with the triple challenge of poverty, unemployment and inequality.
Despite our many successes, the grievous ills of our apartheid past still cast a long shadow over our economy. Decades of institutionalised discrimination has led to disparities in wealth and opportunities which still remain with us. We are also emerging out of a very challenging period where policy missteps, the disastrous effects of state capture and 2021 July riots worsened our challenges.
While we are not where we would like to be on the economic trajectory we envisioned, our efforts in a short space to reverse more than 350 years of discrimination and injustice, has created strong inroads to create a more inclusive economy.