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Finance Minister Enoch Godongwana has painted a grim picture of South Africa’s stagnant economy.
Godongwana addressed an RMB and Sunday Times business breakfast on Thursday morning
following the tabling of the national budget in Parliament the previous day.
In his speech on Wednesday, he said South Africa’s near-term growth remained hamstrung by lower
commodity prices and structural constraints. He revised the GDP growth forecast to 0.6% from the
0.8% predicted during the 2023 Medium Term Budget Policy Statement (MTBPS).
He said this was his modest way of telling South Africans that the economy has been almost
stagnant for 10 years. “We didn’t tell you that on average, for a decade, the economy has been
almost stagnant, growing at about 0.8% with a population during the same period at about 1.4
million. What does that tell you? Per capita, we are becoming more and more poorer; we didn’t
want to tell you everything about ourselves,” Godongwana told the business sector.
The minister said the situation had been exacerbated by the continuous power cuts. “The World
Bank has done a study which suggests that would it not be for electricity; our economy would be far
better in shape and size.”
He said Transnet and logistics have become a new headache for his office and that the Treasury is
trying to avoid the mistakes made with Eskom. “One of the things we shouldn’t do in dealing with
the Transnet issue. We shouldn’t repeat the Eskom template. It is a bad template. What we did with
Eskom was put money into Eskom right through, hoping that fixing Eskom would fix the electricity
problem instead of saying, let’s fix the electricity problem at the same time as we fix Eskom. “It took
us time to deregulate the generation sector and make sure that we can have electricity from other
providers because the Eskom problem is bigger than we think,” said Godongwana.