Johannesburg, 4 June 2019 – The 3,2% drop in South Africa’s Gross Domestic Product (GDP) in the first quarter of 2019 demonstrates, much more than anything else, that the country needs more than the now-routine lip service paid by the country’s political leadership to economic growth and the euphoria which greeted Cyril Ramaphosa’s ascendancy to the presidency last year, SEIFSA Chief Executive Officer Kaizer Nyatsumba said today.
Mr Nyatsumba said this major drop – the largest in a decade – is concrete evidence, if any were needed, that merely talking about a new dawn without having the courage to tackle the country’s myriad challenges would not suffice.
“This terrible news shows that the tremendous amount of goodwill that greeted President Ramaphosa when he assumed the country’s interim presidency last year – and came to be known as ‘ramaphoria’ – may have been misplaced. It is clear that we were so punch-drunk from the terrible leadership offered by President Jacob Zuma that we got carried away as a country and assumed that that ugly past was behind us.
“Regrettably, however, it has been during the Ramaphosa presidency that South Africa experienced a recession last year, and now comes the depressing news that our economy has shrunk by its biggest margin since 2009. We have previously been told about an economic stimulus to reinvigorate the economy, but no evidence of that has been seen so far,” Mr Nyatsumba said.
He said that the situation called for bold leadership from President Ramaphosa and his Government, and not just mere soothing words, and required that tough decisions were taken speedily to reverse the malaise confronting the country.
“President Ramaphosa has now obtained a mandate from the electorate; he and his team can no longer continue to fiddle while the country burns. We are currently confronting a growing economic crisis, which has the potential to get completely out of control. Tough leadership, as opposed to tepid leadership and mere rhetoric, is called for,” he said.
Mr Nyatsumba said it was deeply regrettable that, instead of being engines for growth, South Africa’s State-owned companies like Eskom and South African Airways – whose CEOs were forced by circumstances beyond their control to step down within days of each other – were allowed to teeter dangerously on the brink of collapse simply because “our political leadership does not have the courage to do what needs to be done”.
Mr Nyatsumba said SEIFSA would be seeking an urgent meeting with Trade and Economic Development Minister Ebrahim Patel and his colleagues within the economic cluster of Ministers to discuss the concerns of the metals and engineering sector, which is a vital part of manufacturing.
Meanwhile, SEIFSA Economist Marique Kruger said the decline in the GDP is disconcerting to businesses that continue to face headwinds amid spiraling operational expenses and rising intermediate input costs underpinned by high petrol prices and electricity costs.