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Opinionista

The government must introduce the urgent structural reforms our economy needs to grow

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Alan Winde is Western Cape Premier.

We need to protect all strategic partnerships – from the East to the West – so our economy can be steered back onto a shared path of prosperity. If we are to change South Africa’s trajectory, we have to invest in enabling more investment, not strangling it.

This year has been tough for South Africa, and with the harsh fiscal realities revealed in the most recent Medium-Term Budget Policy Statement, in the short term it will be tougher.

But here in the Western Cape we are showing that despite significant odds we can change the province and this country’s trajectory. Rather than fiddling at the margins, which seems to be the current national government approach, our position as the Western Cape government is to do everything possible to grow the economy and enable more jobs.

And one of the key ways to do that is to proactively look beyond our borders to build and strengthen partnerships. A key example of this is the African Growth and Opportunity Act (Agoa).

Our country has had to endure the worst year of load shedding to date. The cost of living continues to place immense pressure on our citizens. Crime remains a tragic reality. And on top of all this, we find ourselves in a fiscal crisis that threatens crucial healthcare and education services.

One vital requirement for meaningful economic growth is deepening international relations and protecting critical trade agreements and trade preference programmes like Agoa.

It is the residents of the Western Cape, in particular the poor, who in moments like this are foremost in my mind.

As the Western Cape government, we equip ourselves with the data and evidence required to better understand and respond to the issues that we know are foremost for our residents: ending load shedding, finding a job, and feeling safe.

Data from the 2023 Western Cape Provincial Economic Review and Outlook (Pero) shows that:

  • Employment in the province increased by 6.3% in the first quarter of the year;
  • With national employment levels still 1.2% below pre-Covid-19 pandemic levels by the first quarter of 2023, young South Africans have borne the brunt of the country’s economic contraction; and
  • In the second quarter of 2023, the unemployment rate among young people in the Western Cape was 31.2%. This is lower than the national rate of more than 45%.

The Pero reflects the ups of our economy:

  • Between 2012 and 2022 the Western Cape saw cumulative real export growth of 42.4%; and
  • The province’s robust agricultural sector accounts for more than half of the entire country’s exports.

It also confirms the downs:

  • The Western Cape is estimated to have lost between R48.6-billion and R61.2-billion in real GDP since load shedding was first introduced. In 2022, the real GDP lost to the province was estimated at R8.2-billion; and
  • The Western Cape’s passenger rail service is on the decline. It transports fewer than 50,000 passengers daily, down from 600,000.

The 2022 Census also gives us valuable insights into what we need to do to ensure the Western Cape’s full potential and that of its residents are realised. With a population of more than seven million, the pressure continues to mount for us to keep delivering for our residents.

With data and evidence leading our decision-making, we can better understand where we need to do more for our residents and economy. We can plot and plan for the future with the needs of our citizens and the economy top of mind.

One vital requirement for meaningful economic growth is deepening international relations and protecting critical trade agreements and trade preference programmes like Agoa.

The Western Cape government has been vociferously advocating for South Africa to remain within the Agoa fold. Data and evidence again show that Agoa is working for South Africa and the Western Cape particularly, as shown above, for our agricultural sector.

I went as far as leading a provincial government delegation to the US in June 2023 to meet congressional officials to plead the Western Cape’s case as to how beneficial Agoa has been to the economy. Data and evidence again show that Agoa is working for the Western Cape. Under the programme:

  • South Africa’s exports to the US grew at an average annual rate of 12.98% from 2002 to 2022;
  • The Western Cape’s exports to the US grew at an average annual rate of 14.76% over the same period; and
  • The US held the second-largest share of the Western Cape’s global exports (8.2%) in 2022.

In the build-up to the recent Agoa summit and in continuation from meetings in June, I engaged with a delegation of US congressional representatives, including members of the Ways and Means Committee whom we met in Washington, who were visiting South Africa to attend the Agoa summit.

We met the delegation at a citrus farm near Stellenbosch, a fitting “boardroom” amid clementine and lemon tree orchards, to showcase the Western Cape’s abundant agriculture sector. It served as another opportunity to underline how important Agoa is to agriculture, its stakeholders and workers, as well as the broader economy, not only in the province but in South Africa.

We need to protect all strategic partnerships – from the East to the West – so that our economy can be steered back from the brink onto a shared path of prosperity, and so that we can address the issues foremost in our residents’ minds.

Read more in Daily Maverick: US Senator Chris Coons proposes immediate review of SA’s Agoa eligibility

We know that if we are to change South Africa’s trajectory, we have to invest in enabling more investment, not strangling it. There is a clear alternative to address the serious fiscal challenges facing South Africa: introduce the urgent structural reforms our economy needs to grow, as well as ensure that decisive political steps are taken to counter negative investor sentiment in the market.

The national government also needs to reconsider some of the unsustainable and unfinanced policy commitments which it continues to make. When faced with tough choices, there can be no greater priority than ensuring the education and healthcare of our citizens and protecting the most vulnerable among us. 

In the Western Cape, we are changing that trajectory. Our Growth for Jobs strategy has its sights set on the future. It is a comprehensive, all-encompassing approach to economic growth that seeks to dramatically stimulate market growth through exports enabled by international trade ties like Agoa. DM

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  • Annemarie Hendrikz says:

    Using your own words, by my standards you are definitely still “fiddling in the margins” when it comes to providing decent and affordable housing for so many Western Cape citizens. Yes to building and cherishing some partnerships – how about those partnerships including respectful ones with communities who deserve to have their constitutional rights addressed at greater speed?

  • ian bowes-taylor says:

    good day, what i would like to know is…… what is meant by ‘ structural reforms’ we hear about it all the time but i dont see a plan to change ‘this’ to ‘ that’ . if a structure has to be changed , then you have to brake it down and rebuild it or alter it in some way. so what must be done?

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