The underrated SA economy

Looking at the 1.5% GDP growth story in context

These are terrible things, with the economy only growing by 1.5% last year and possibly not much more this year. But is it the full story?

Is there possibly another story behind these many stories that one needs to understand, too, so that this 1.5% growth story may be understood in context?

After all, unlike Russia or Brazil, our GDP isn’t actually dropping by 2%-3% annually? Unlike Greece, it hasn’t dropped by 25% these past six years? Unlike Syria’s economy, it hasn’t ceased to exist? Unlike Zim, it hasn’t been Dollarised?

We actually continue to have an economy, employing at least 9 million people full time at large registered business or other organisation employers. And overall, StatsSA reports at least nearly 16 million people economically active (according to the Quarterly Labour Force Survey based on household surveys).

All these people aren’t imagined. In the popular parlance, they are ‘engaged’ economically, populating offices & high ways, beavering away, paying tax, stamping documents & generally making themselves useful.

Or so they think.

eskomlogoSo how is one to see 1.5% growth annually without distorting the prism?

One way of doing so, getting popularized of late, is to imagine. For imagine we didn’t have an Eskom electricity constraint, that we still had the surplus buffer capacity, that power stations didn’t crumble unexpectedly, that we didn’t labour under this embarrassing reality of having to ration available electricity through load shedding. Denying some people their electricity who as a consequence could not produce, and consequently became statistically idle for that moment?

Some people have applied their minds to these things, and it has been reported that the economy would have grown 1.2% faster if ‘normality’ in electricity had prevailed last year. Imagine, not doing 1.5% but 2.7%?

But if that is the case, the analysis can perhaps be extended? Imagine we didn’t have an AMCU mining union causing havoc last year in platinum? Or Num & AMCU brotherly doing so together this year in gold mining? Or Numsa last year in manufacturing & the motor trade. Or…..you get the drift? What would the GDP growth rate then have been like?

At a pinch, I would say these worthies knocked 0.5% off GDP last year. In other words, in their absence, imagined, faster mining, manufacturing & motor trade activity growth would have made possible an overall GDP growth rate 0.5% faster than realized. When added to the idled electricity saga, it suggests GDP could have done 3.2%. Nearly as fast as in the good old days.

It gets better still. If we didn’t have the Ministers of Mining, Land Affairs and Agriculture that we have, but had Ministers who actually tried to inspire deep confidence among our primary producers, by having greater certainty of tenure in their imagined property rights, wouldn’t we have had more productive investment in these sectors? If so, how much would that have added to our imagined GDP design speed? Another 0.5%? Could we have done 3.7% instead?

sabc-newsAnd going around the public sector generally, as much local government dispersed over many municipal locations, as provincial governments and great Departments of State where millions are known to toil daily. If they had spent their allocated capex budgets, or merely paid their private suppliers on time (say once a month, the last day of the month would have been dandy, every month, though), or paid their municipal accounts, or their Eskom accounts, so that the outstanding amounts wouldn’t be so horrific (R100bn to municipalities, R20bn to Eskom, you couldn’t invent it even if having enough imagination?), the economy would surely be in better nick?

For imagine the reduced stress & strain at so many small suppliers, and big ones, every day, week, month. Having to pay SARS, having to pay employees, but not getting paid outstanding bills, living hand to mouth to foot? It must be terrible, a severe strain on the central nervous system, creating irritableness, road rage even, martial breakdown, responsible for children being unhappy & doing poorly in school, becoming dropouts, and adding to the long-term unemployment problem (or worse, joining a political party like some we all know & clamouring for their own opportunity to join the gravy train).

Think about it. That must be worth another 1.5% on GDP growth annually if not labouring under such constraints. That would have got us to 5.2% GDP growth last year, in fact even outperforming the National Development Growth target, without having to make it up, as we now do daily?

Imagine? What we would look like at 5.2% GDP growth annually. But perhaps far more importantly, lift the veil and look beneath it. Beneath these few constraints. What do you see?

A beavering economy. Steadily stamping documents, busily engaged, going places. All 15.8 million of them, daily, most of them fully occupied, too many only a few hours here & there, but then a teacher can’t always be at her post? There are political meetings to address, shopping to be done, girlfriends to be visited.

 

elder-ladiesThe social calendar tends to be a full one even if the workweek isn’t. This shouldn’t be begrudged. The males call it golf. And it is better to be at the golf course worrying about the office, than be at the office worrying about the golf.

It is true. Think away the inconvenience of load shedding, a few inconvenient Ministers causing personal havoc, the odd Union keeping output from being achieved, and we get a much better picture what the rest of the 15.8 million are up to daily. They are at work, beavering & motoring & rubber stamping, as they have for years.
Many may be depressed, going by anti-depressant sales. But for that you have medication. It doesn’t hold back the economy that they fill in confidence survey forms poorly, or make overseas investments. Instead, they all report for duty, daily, more or less sober & awake, & beaver & motor & rubber stamp.

graphSo wake up, smell the roses, aside of a few rotten apples, be they Ministerial or power station maintenance people or accounts people not paying bills or unions missing in action, the rest of us are beavering at a steady clip, the same steady clip we have maintained for years, decades even.

For where the #¥@$ do you think that 1.5% growth rate came from last year? Someone was at his post. All 15.8 million of them, more or less, sober or not.

They are there this year as well. And will be there next year, too. Count on it. We have a happy ship, despite the anti-depressant popping. Pass the word.