Two important events on South Africa’s calendar – President Cyril Ramaphosa’s Opening of Parliament Address, as well as the Monetary Policy Committee meeting of the South African Reserve Bank (Sarb) are important signposts for what lies ahead for the economy.
Mfundo Nkuhlu, the chief operating officer of Nedbank, said this yesterday while speaking at the Nedbank Top Empowerment Conference held on the eve of these two big events.
He said, “We look forward to the president’s address as to the key priorities of the Government of National Unity (GNU) as shaping what lies ahead, particularly, in the economy and the empowerment agenda.”
Nkuhlu said Nedbank saw increased geopolitical risks with 60% of global nations going though elections.
He said if politics had meaning, it must be about decisions that allocated resources in the economy, as the economy also empowered and impacted the lives of citizens.
South Africa was now grappling with election outcomes against an environment in which the economy was experiencing significant challenges.
“The economy has battled to grow above 2%. In some quarters, South Africa is referred to as a 1% economy, Nkuhlu said.
Nedbank too has forecast that the South African economy will grow at 0.9% for the full year.
This insight came a day after the the International Monetary Fund predicted South Africa’s gross domestic product would grow by 0.9% this year in spite of the improvement in the logistics sector, supply of electricity, and the suspension of load shedding.
Despite the changed political environment with GNU, “South Africa is not out of the woods”.
He said South Africa continued to experience a sluggish economy characterised by sticky levels of inflation, with inflation sitting at above 5% and outside the Sarb’s inflation target it sought to achieve.
“This means interest rates are likely to be higher for longer, which is a tough message to households struggling to make ends meet,” Nkuhlu said.
Nedbank expected that interest rates would remain flat when the MPC held its meeting today.
However, Nkuhlu said as inflation reduced in the period ahead, it would lead to a significant reset in the economy, supporting a higher level of growth to tackle the challenges of unemployment.
Despite GNU, South Africa faced underlying structural challenges that the new government still needed to address, such as power supply, and logistics, among others, he said.
Phumzile Mlambo-Ngcuka, the former deputy president of South Africa and current chancellor of the University of Johannesburg, said, “It is a problem that South Africa is the most unequal country in the world. The government can’t address this alone, it needs society, the private sector and all organisations to work together.
“Not addressing this major issue that our society faces, contributes to unemployment and poverty. The voters (in the elections) have called on all the parties to come together to address this issue. People are in politics for the people not for themselves. Let’s stop the noise. Let’s come together and address these issues,” she said.
Mlambo-Ngcuka reflected on her experience of being involved in peace talks in Sudan and Ethiopia, when citizens could not talk to each other in a country, when people were fighting with their own government…
“The moral of the story is never to get to this point. GNU offers us an opportunity to talk together in unity for the sake of the people. It offers us an opportunity to address our (South African) policies and the mistakes that we have made. No one has a silver bullet, but together we have an opportunity to address these issues. We have lots of possibilities. There is just not enough political will to address theses issues significantly,” she said.
Mlambo-Ngcuka said 30 years of democracy gave South Africa time to reflect and to ensure the next 30 years were different.
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