Many have commented that our 30 years of freedom divided into two eras:
- a first half of remarkable transformation in which the economy and business leaped forward, benefitting from the end of apartheid and our reintegration into the global economic system;
- and then a second half of regression, with our state institutions hollowed out and declining economic fortunes.
By 2008, we were regularly recording economic growth of over 5%, we boasted an investment grade credit rating and had a sovereign debt:GDP ratio of 24% as well as an unemployment rate of just under 20%.
Per capita GDP had leapt from $3,786 in 1994 to $6,356 and would go on to peak at $8,800 in 2011.
This created a strong environment for business which rapidly evolved.
Major investment took place including mobile phone networks built across the country, making us one of the most connected populations in the world, while our financial sector became a continental giant.
Many SA firms became global titans.
Unfortunately, on just about every one of those indicators we have slid backward since.
Debt:GDP is now about 75% and growing.
We will not even manage economic growth of 1% this year and barely more than that next year.
Unemployment is at 32% while GDP per capita has fallen to $6,130.
The business environment has deteriorated sharply with energy availability deteriorating every year until this one, the logistics system severely underperforming and an alarming growth of extortion and corruption.
I found myself reflecting over the weekend on how the business and government relationship has evolved through these phases.
The default position of business is to get on with it, leaving government and politics to their own devices.
The post-Apartheid era was mixed.
Black economic empowerment was created to address the distortions of the economy.
The unspoken agreement seemed to be that transformation was the price to pay for growth, and established business was willing to pay it.
The Employment Equity Act in 1998 began the process of eliminating discrimination in the workforce and measures to redress past wrongs. Transformation charters were embraced by mining, financial services and others.
Business also benefitted from broadly market-friendly policies, the dismantling of Apartheid-era monopolies, and the opening of global markets.
We had abundant and cheap electricity, ports and railways were reasonably efficient, and a global commodities boom drove demand for resources exports.
*This column was first published in the Business Leadership South Africa (BLSA) weekly newsletter. The author Busisiwe “Busi“ Mavuso, is the CEO of BLSA.
*The views Busi Mavuso expresses in this column are not necessarily those of The Bulrushes
