With a failing economy, South Africa is not meeting its goals, despite its resources and capabilities

Climate action, cybersecurity, food security, energy transition and the healthcare system – these are just five of the many global risks the world is facing. The year ends with an unprecedented two wars unfolding simultaneously – Israel-Gaza and Russia-Ukraine – dragging with them the global economy and a risk that some countries might be sucked into these conflicts! 

The global economy is hit by constrained vital international trade routes in the Panama and 80km Suez canals due to the El Niño-induced worst drought since 1950 and a spate of attacks by Yemen-based Houthi rebels on cargo vessels, respectively. This is already affecting global supply chains in the run-up to the festive season when demand is at a peak. More than half of container shipments by volume, linking Asia and North America, from the Pacific to the Atlantic, was scheduled to cross both canals in the third quarter, with only 167 ships (compared to 238 in the same period last year) crossing in the first week of December. 

The first manifestation of this catastrophe will be an increase in fuel prices. This will put strain on the Strait of Hormuz between the Persian Gulf on the north and the Gulf of Oman in the southeast. The Strait of Hormuz provides the only sea passage from the Persian Gulf to the open ocean and is one of the world’s most strategically important choke points. Oil tankers carry about 17 million barrels of oil each day through the Strait, or 20% to 30% of the world’s total consumption.

In South Africa, despite its enviable mineral resources, highly diversified economy and productive capabilities, State Capture continues unabated, and amid the energy and water crises, the national economy is losing international competitiveness and investment grade, as state capacity collapses. Key sectors like utilities, manufacturing and mining have seen a notable decline, on top of municipal financial distress and spatial exclusion, thereby increasing the cost of capital to the whole economy with little social progress but stubbornly high levels of unemployment which lead to increasing levels of poverty and inequality. 

Read more in Daily Maverick: Scenarios point to a gloomy economic outlook for SA

Read more in Daily Maverick: Gloomy outlook for SA after economy contracts by more than expected in third quarter

As the economy fails and service delivery grinds to a halt, we face deteriorating social indicators and declining levels of public satisfaction with the status quo. The country is not accomplishing its goals of greater good, common purpose, nation building, social cohesion, inclusion and transformation.

So, what needs to be done? 

South Africa can beneficiate its natural resources much more, better leverage its industrialised economy and global trade advantages as significant assets, harness its abundant sun and wind resources, address state capacity and spatial exclusion, revitalise the rural areas and townships by making them more attractive for BIG business owned by local entrepreneurs, because African businesses must ultimately graduate. Progress is impossible without transformation. African people need to lead by example, educate our own children, create our own jobs and support our own businesses. DM