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JEREMY MAGGS: Ahead of the Thursday State of the Nation Address (Sona), and in a report just released by the presidency, the official view is that despite a decade of poor economic performance, the scourge of Covid-19 and daily blackouts, much has been done to improve the lives of South Africans during President Ramaphosa’s office.
So let’s weigh in now with an expert assessment as I talk to Adrian Saville from the economics consultancy Boundless World, he’s also attached to the Gordon Institute of Business Science (Gibs). Adrian, based on the Leave No One Behind 2024 review report and the mentioned initiatives, how would you assess government’s overall performance then in improving the lives of South Africans during what has been a very difficult term?
ADRIAN SAVILLE: Jeremy, if you take a very long-term view and you compare South Africa today to 30 years ago, on many fronts, the country is in an infinitely better place. We don’t live in that country that used to exist. I think particularly from a perspective of political participation and civil liberties.
But when we take a crisper lens and apply metrics that include employment levels, economic engagement, incomes per person, inequality, and social and economic exclusion, then it’s very, very hard to make a case that the government has done a good job under Cyril Ramaphosa’s most recent presidency.
JEREMY MAGGS: Let’s talk about that economic engagement, Adrian. The report mentions R1.5 trillion in new investment commitments, more than R500 billion already infused into the economy. Those are big numbers. How do you evaluate the impact?
ADRIAN SAVILLE: Well, they’re numbers and it’s policy speak or it’s political speak. The easiest way to assess this is to get away from the storyboard and the narrative and just go and look at the published economic statistics that come from the South African Reserve Bank (Sarb), and when you take that sober lens to the GDP numbers, it’s evident that South Africa’s been in an investment drought for the better part of 15 years.
The last time we truly had buoyant investment spending, the type of spending that would fuel fast and inclusive economic growth, you have to rewind all the way to the build of the highways and airports and stadiums around the time of the World Cup 2010.
JEREMY MAGGS: So what I’m hearing you saying is that the numbers might be impressive, but when it comes to translation into tangible economic development and job creation at a scale that was anticipated, that really has failed to transpire.
ADRIAN SAVILLE: Ja, you’re saying it differently and perhaps better than me, but it’s exactly that. It’s all well and good to make an announcement that X billion or X trillion has been promised or pledged, and we need to do a couple of things with that.
Firstly, we have to make sure that we are not double counting. In other words, are these promises that already existed, are we just vocalising what was already committed. That’s the first aspect of double counting.
The second is, and I don’t mean to infer that there’s any sort of deceit in this, but you would expect politicians to be talking a big game, and where we need to adjust the numbers is not just how big is the investment spend, but over how many years, so that we can translate this into a per year investment amount.
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Then importantly, is the investment spend replacement investment spend or is it new investment spend in addition to replacement investment spend. That’s where my cynicism comes in here is when we reverse out of the big number, the R1.1 trillion, and go and look at the actual investment spend per year over the last five, ten years, the numbers are simply missing in action. That investment spending just doesn’t exist.
JEREMY MAGGS: Adrian, then the report goes on to the Just Energy Transition Investment Plan (Jet IP) and here are the numbers, US$12 billion in financial pledges, secured through partnership. So the evaluation of the potential impact of this plan on South Africa’s energy sector and economy should be a good one, given that we are still experiencing high levels of load shedding, but again, that hasn’t necessarily translated into anything tangible.
ADRIAN SAVILLE: Well, here let me be a little bit more cheerful, Jeremy, there is an extremely robust policy framework, if South Africa has really shone on one front, pun not intended, but if we’ve shone on one front, a light to point to would be the renewable energy public-private partnership framework. That really has been impressive, and it’s translated into new investment spend, and by definition we can say it’s new investment because that infrastructure didn’t exist historically. So it is new projects, new investment spend, it’s green fields. If this is carried out effectively,
I think it points to a South Africa that could be not in no load shedding, but perhaps in a consistent state of Stage 1 load shedding perhaps as soon as the end of this year or early next year.
JEREMY MAGGS: Just a final one, then. The obvious question is all very well in that respect, but is this going to address long-term energy security concern and reduce the frequency of daily blackouts?
ADRIAN SAVILLE: So my last observation about a permanent state of Stage 1, that seems to be more realistic now, and what I mean by permanent state is multiple years, five years, 10 years.
As things stand, it’s hard to see a complete reversal or elimination of load shedding. But what we have on the table takes us to a far healthier state of relatively consistent energy supply where we’d live in a Stage 1, rather than the uncertainty of is it going to be three, four, or five.
A permanent Stage 1 is infinitely better, even though it’s not perfect, it’s infinitely better than the uncertainty of is it three, four, or five.
JEREMY MAGGS: Stability means that we can plan better. Adrian Saville, thank you very much indeed for the very succinct analysis. I do appreciate it.
