SA on the cusp of economic rebound

Thursday, March 24, 2022

"Now isn’t the time for pessimism."

By Jeff Radebe

Despite the geo-political tension in Eastern Europe, the global economy appears to be on a firm path to recovery after a period of turmoil caused by the COVID-19 pandemic.

While some of the hardest hit economies including ours remain vulnerable, emerging green shoots in our economy give us comfort to assert that the worst of the pandemic is certainly behind us.

As President Cyril Ramaphosa alluded to in his recent State of the Nation address (SONA), South Africa is alive with opportunities and it is time for contrarians to embrace the opportunities coming our way. Post-COVID and as our industries are rebounding, we envisage a vastly transformed economic order in which sustainable and equitable economic growth will become a dominant theme.

Most encouraging is the gradual but steady realignment of supply chains across the globe which were disrupted at the height of the pandemic. This is cause for optimism, and make no mistake, our economy will re-discover its lustre.

A unique but key character trait of our country and its people is our ability to persevere and rise above our challenges even in the face of adversity.

As the Economic Reconstruction and Recovery Plan – government’s economic blueprint unveiled by President Ramaphosa in 2020 begins to take root, we are optimistic that the various infrastructure development projects such as construction of bulk water infrastructure, construction of new road networks, energy capacity expansion plans, improvement of our port infrastructure among others, present great opportunities for sustainable as well as inclusive growth.

This provides a great opportunity for our country to create a new crop of Black Industrialists, women including youth entrepreneurs who for long were consigned to the periphery of productive sectors of the economy. In addition, the planned auction of spectrum, which is now closer to reality will usher in a new technology and competitive pricing regime in SA’s telecoms landscape.

Other than increased access to broadband, we expect communication costs to come down enabling for a competitive positioning of our economy. Needless to remind, our country is endowed with abundant natural resources and renewable energy sources. This ably positions us to adapt to the green revolution.

In addition, our natural resources, solar, wind, biomass for power generation – skills and technological capacities put us in a prime position to take the lead in the hydrogen economy and the green hydrogen value chain for the benefit of our people. Our ultimate objective is to position our country as a leading supplier to the global green market.

Most important, the development of the hydrogen industry will be a key enabler in South Africa’s just transition to a decarbonised future. It has been proven that Hydrogen has the potential to decarbonise various industrial sectors and we as government intend on getting involved in the development of those catalytic projects needed to develop this new industry.

In this regard, government has officially launched a road map to identify high-level outcomes for a South African hydrogen economy. The Hydrogen Society Roadmap will serve as a national coordinating framework to facilitate the integration of hydrogen related technologies in various sectors of the local economy thereby stimulating economic recovery in line with objectives of the Economic Reconstruction and Recovery Plan.

There is scope in this strategy because in developed economies, hydrogen is already powering commercial buses. It is our hope that in the not-too-distant future, locally manufactured cars will be powered by green hydrogen.  And the fact that it can be used in many commercial applications including welding metal to dying fabrics to making electronics, plastics, and fertilizers makes for a compelling case for early adoption.

That said, the pronouncement last month by the South African Reserve Bank at its monthly policy meeting to the effect that the local economy would register a 1.7% growth this year is cause for optimism.  

To achieve this growth, we are cognisant of the need to inject massive capital into the economy, which effectively ties in with objectives of the South African Investment Conference (SAIC). In his foresight, President Ramaphosa in 2018 committed to raising over R1.2 trillion worth of investments over a five-year period.

Since its launch, SAIC has raised R774 billion in investment pledges to date. Off key significance, this annual gathering of business titans and government leaders has always served to provide a reality check as to whether the private and public sectors are living up to their commitments in helping the country address the triple challenges of unemployment, poverty, and inequality.

We are therefore hopeful that the 4th edition of this event scheduled for the 23-24th March in Johannesburg will serve its purpose. We are also hopeful that the conference will nudge us closer to achieving the investment target set by the presidency in 2018.

As the President summed it up in his SONA address, now is not the time for pessimism. It is time for business especially the private sector to come to the party and show us what they are made off so together we can forge a sustained partnership and rebuild our economy.

*Jeff Radebe is SAIC Presidential Envoy.

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