The South African economy needs transformation urgently to pull it out of stagnation. In fact, there are specific areas that need urgent attention if we want to reach our full economic potential as a country. Consumer confidence is hampered by rising costs of living and purchasing power is dwindling with escalating Petrol costs as the consumer has to prioritize spending on transport over other good in the buckets.
At the time of releasing this particular article (week leading to the 2018 MTBPS (Medium Term Budget Policy Statement) by new finance minister, we are waiting to hear if the new minister will make some new pronouncements that could have new stimulating targets.
Perhaps we need to revise how we set our targets and examine our state of mind that informs our ‘standards setting’ lenses. What if fear, prejudice and low self-concept, have all shaped and informed our collective practice in ‘standardizing’ targets. There are two critical points of departure to correct this sub-targeting:
a) First The economic center that should be custodian of high-level targets should be clearly defined. The institution that is a leader of the economic policy in our country, responsible for driving a disciplined fiscal and monetary policy should be clearly known, as it were.
Is it Department of Economic Development? Is it a Trade and Industry? Is it Treasury or Nedlac? Or are all of the above responsible for one section or the other in terms of policy direction? The SARB and its relation to these institutions, Who is setting the targets in the economic cluster?
The announcement of Mr. Tito Mboweni as new minister of Finance will hopefully correct this first error of our economic center dis-order.
b) Secondly, the current targets that we have are too low. I am one person who believes that any form of targets have a psychological impact on people in charge of implementation, execution and delivery.
The current reality of unemployment in South Africa is between 27.1% and 28,%, excluding those who have quit looking for jobs, and if we include that number, it flirts with 34%. Our targets of ‘reducing’ these figures still remains on double digits, (e.g 24% or at most just below 22%). At what point would we ever have projections that gun for one digit figure like 9% or 7% in reducing unemployment, to say the least. Low targets.
Reduction of Gini-Cofficient also flirts with 0.6 to around a percent. Such a low target, why not double digits on this one? 14% or even go to 35%.? Low target.
Bring GDP to the equation, 0.7 % first quarter 2018, and revised projection of the same year, third quarter reaching the “high target” of 2% for 2018/2019 respectively? Common, why not a push back to between 4 to 6%? or above? We’ve done it before, Why do we always aim so low?
Could our aiming so low be the reason why we reach such average targets and standards? I can go to many sectors and pull volumes of examples for this case of low targeting.
Targets for grades for high school Maths and Science students, our annual targets of Phd graduates in engineering as well as the number of Chartered Accountants we produce as a country. Do these targets assist us in achieving the goals we have set out in the NDP and other provincial Growth Paths?
I think revising some of our targets, keeping an eye on what is real but at the same time aiming for more, can have a huge psychological effect in motivating and removing self-imposed obstacles that have engulfed our collective memory as an economic community.
China has achieved tremendous results in the last fourthly years in the East Asian community of ‘developmental states’. Coming out of dark ‘years of revolution’ to compete with the US as number one economy in the word. Part of this achievement has the ‘targets’ as an impetus for growth and development.
The same can be said about Rwanda, just 19 years ago that county was coming out of a horrible ethnic genocide. Today Rwanda boast one of the success story in the African continent in many prefects. They aimed high, set above average targets and managed to trigger their potential and outperform states that had already found their political sand economic ‘independence’ on the African continent. Their secret was setting good and ambitious targets for themselves and thereby releasing their potential.
Article by Sir. Israel K Mkhize