The closer South Africa gets to the national election of 2024 the louder the political noise will get. Many voters will be entertained, horrified, and entranced by politicians making outlandish and unachievable promises, shouting at each other, pushing for space to talk, shoving others aside, posing with babies, and generally begging for attention. In this heightened climate, it will be easy for many to be seduced by the theatrics and the empty words uttered by men in baggy suits standing behind podiums and promising us things.
The political noise is the circus that accompanies elections. The serious, consequential, stuff is in the numbers. Unfortunately, the numbers don’t look great right now. South Africa is a country sinking into debt while its economy has stalled. This reality was most vividly expressed by the Sunday Times newspaper at the beginning of September with a front-page headline that read, simply: “SA IS BROKE”.
Years of economic mismanagement, failure to exploit opportunities that were presented to us, unprecedented load shedding, the Covid-19 pandemic, corruption, and other factors have brought the South African economy to its knees. And, as we learnt from Bill Clinton’s 1992 run for the US presidency: “It’s the economy, stupid!”
So, here are the numbers that should matter for those who want serious solutions to our problems and to all voters. In February 2023, when Finance Minister Enoch Godongwana tabled his budget, he optimistically told us that the economy would grow by 1.4% this year through to 2024. He was wrong. Actual growth hovers around zero. The African Development Bank forecasts South Africa’s economy to grow by just 0.2% in 2023 while the SA Reserve Bank projects we will only grow by 0.4% if we are lucky. Government wants to stabilise South Africa’s debt level at 70% of GDP, but it has already increased to 72%.
So, we have an economy that is not growing (with official youth unemployment at 45,3% in the second quarter of 2023) while the country sinks deeper into debt. The SA Revenue Service warned in September that corporates had taken such a beating from the poor economy that tax collections had plummeted. Tax collections in the first five months of 2023 are R22bn short of February’s budget estimates and data suggests a full-year shortfall of about R50bn as corporate income taxes dropped and VAT refunds rose.
On a recent visit to South Africa, the International Monetary Fund’s first deputy MD Gita Gopinath warned that the cost of servicing government debt could rise from 19% of state revenue in 2023 to 27% by 2028 — more than twice the health budget — if the government does not take firm action on its profligate spending.
Now, add to this the fact that the Mail and Guardian reports that by 2026, Eskom will have received close to R500 billion in government bailouts in less than two decades.
“The power utility will be given more than half of this amount over the next three years through the R254-billion Eskom debt relief programme, which also happens to be the biggest bailout in the country’s history,” it said.
The bottom line? As the Sunday Times put it so succinctly, we are broke. The key question to all politicians as they go out to campaign, should be this: “How are you going to solve this mess?”
Nothing else really matters. The 2024 election is South Africa’s “economy election”. If the politicians South Africans vote for don’t have the plans and skills to get the economy back to the winning ways of 2006, when we were at 6% GDP growth, then they don’t deserve to be elected.
If political parties and candidates have no coherent plan to fix the economy, then there will be no fixing the broken municipalities, ending unemployment and poverty, lessening the inequality between the rich and poor, stopping emigration, and dealing with the many other challenges we face. Pledges to establish a National Health Insurance and set up a Basic Income Grant for the poor will remain empty election promises because there will be no money to fund such projects.
Without fixing the economy, most of the words that are already spouting from politicians’ mouths are just election noise and should be ignored or dismissed. The real election is in the numbers. That’s where readers of this newsletter should be looking as they choose their representatives.
It’s the economy, stupid.
This challenging economic landscape highlights the importance of legal expertise in fields like civil litigation attorneys and property law attorneys in Johannesburg and Cape Town. Legal professionals, especially notaries in Johannesburg and notaries in Cape Town, play a crucial role in navigating the complexities of notarial services during these turbulent times. Their expertise is invaluable in dealing with the legal implications of economic decisions and policies.
Contact us today for expert legal assistance in these areas.
Get the latest updates in your email box automatically.
Subscribe to our Newsletter
Estate Agent Training
Bond & Transfer Calculator