Nearly half of South Africa’s economic activity vanished in the second quarter of 2020. Today’s confirmation by StatsSA of a 51% second-quarter GDP collapse only puts a number to what South Africans are already feeling – lost jobs, shuttered businesses, broken livelihoods.
One of the world’s longest and hardest lockdowns has kneecapped the economy. The consequences will be felt for years to come, and will be seen in many more unemployed people, many more living in poverty, and many more feeling hopeless in South Africa.
There is only one thing now that matters, if we have any chance of repairing this and avoiding worse damage: the government’s commitment to a wide-ranging programme of pro-growth economic reforms. And not just its commitment, but also the pace of implementation.
Without urgent progress on the government’s often-repeated reform plans, there will be no growth. Without growth, there will be no new jobs, and no way out of the economic spiral South Africa is in.
We do not need any more “recovery plans”. We have so many plans the country has “plan fatigue”. We have an embarrassment of plans. What we need is real reform. That is now all that counts.
It is undeniable that the ANC government’s obdurate refusal, over years, to implement structural reforms left the economy vulnerable when the Covid-19 crisis hit. The lockdown turned a pre-Covid recession into South Africa’s worst GDP contraction in history. If no immediate action is taken to push for substantive reforms South Africa will be forced to apply for balance of payment support from international finance institutions (IFIs) in the coming years.
South Africa can no longer afford to postpone reform. We either embark on structural reforms now on our terms or we surrender that prerogative to IFIs.