1.8% growth will not solve unemployment – IRR
24 February 2022
“South Africa now pays grants to more than 46% of the population.” This line in Finance Minister Enoch Godongwana’s 2022 Budget speech perfectly encapsulates the situation into which the ruling party’s ideological and policy choices have forced South Africa.
The 2022 Budget confirmed the weak state of South Africa’s economy. Treasury forecasts an average GPD growth rate of 1.8% over the next three years. This falls far short of the levels required to address an unemployment rate exceeding 46%. The country will fall further behind its emerging-market peers and competitors.
Policies such as expropriation without compensation, the National Health Insurance, expanded race-based labour legislation (in the form of the Employment Equity Amendment Bill), and Localisation Master Plans, will not save South Africa. On the contrary, they will make things worse.
The respite offered by a commodities boom is temporary. And the benefits from said boom would have been higher had the government’s Transnet monopoly and hostile legislation not inhibited the country’s export and trade potential for many years now.