OPINIONISTA: Covid-19 stimulus package will fail without fundamental structural reforms By Geordin Hill-Lewis
There is no doubt the R500-billion stimulus package announced by the government last week is necessary and welcome. But any economic stimulus, no matter how big, is only ever temporary. It is designed as a bridge to get families over the churning waters of the crisis that may otherwise sweep away their jobs and livelihoods.
Before the Covid-19 crisis, such reform was urgent. Now it is an existential requirement for the resuscitation and survival of our economy. If we do not take this chance to ditch anti-growth statist policies, we will guarantee a permanently lower standard of living for all, with many millions more living in poverty and unemployment.
The truth is we have already delayed reform for far too long. South Africans have been getting steadily poorer for most of the last decade. Every South African is on aggregate R7,000 poorer per year now than they were in 2014. This is an appalling failure of governance by any measure. In a country where 30 million people live in poverty, it is intolerable.
These reforms are important in and of themselves, but they are also necessary to shore up the support of the international funders who will play an important role in our recovery. Then the government must accept that Eskom’s monopoly on power generation must end and that independent producers must be allowed to compete. Despite repeated promises to get this done, there has been little progress to speak of. Yet, getting this one reform right would probably add more to economic growth than anything else.
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