KNYSNA NEWS - Economist Duma Gqubule visited Knysna recently and sat down with the Knysna-Plett Herald to comment and share some thoughts on the recent VAT increases and the overall economic outlook for South Africa.
Gqubule, a black economic empowerment expert who was hosted by well-known Knysna businessman Geoff Brown on the weekend of 24 February, was actually in town to discuss the establishment of a think tank locally, to explore and research economic opportunities for townships and black communities, and find innovative solutions for these communities along the Garden Route – in partnership with Brown.
“We want to understand these communities better, and tap into their amazing economic potential. We will research the profile of communities and decide on partnerships through which townships and black communities can benefit,” Gqubule said.
Commenting on the recent VAT increase announcement, of 14% to 15%, Gqubule said that it is "disappointing" and that South Africa is heading for a third recession.
“This is the worst economic crisis in post-apartheid South Africa. Since 2007/08 the outlook has not improved and unemployment will increase by 3.2-million people, which translates to a total of 9.2-million South Africans without jobs – 41% of black South Africans will be unemployed,” said Gqubule.
“But there's still some hope,” he added, saying that effective measures were still possible and could be easily initiated.
Disconnect in SA's top structure
“In my opinion, the VAT increase and impact on the budget lacked imagination and creativity, and was without inspiration. Two out of three rating agencies have downgraded South Africa and we should have addressed this issue.”
He said there appears to be a disconnect between president Cyril Ramaphosa and finance minister Malusi Gigaba.
“The forecast by the president was simply too optimistic, whereas the finance minister gave a more realistic overview. So the first impression you get is, does the president speak to the finance minister.”
Gqubule added that he is concerned about the slow GDP growth, and that there is an urgent need to find emergency measures to stimulate faster growth.
Among his suggestions is that a central meeting should be held by government where the inflation target should be suspended and growth should be prioritised, which would encourage and interest cut.
“Government does not have this capacity alone, that is why it is vital for the public sector to partner with the private sector and embark on shovel-ready projects, and this will induce and compel growth, as is the case overseas.”
Gqubule is adamant that urgent discussions are necessary as the VAT increase would hit the poor the hardest, and the fact that the president's salary has been increased shows an obvious and clear disconnect between a leader and his people.
“There are a number of factors that must be collectively looked at, and South Africa still has time to escape harsh economic conditions, provided there is a clear vision and a common goal between government and the private sector to the betterment of our citizens.”
Gqubule's wealth of experience
• Duma Gqubule is also the founder of the Centre for Economic Development and Transformation (CEDT), and has spent the past two decades as a financial journalist, analyst, adviser and consultant on issues of economic development and transformation. He was educated at Lovedale in the Eastern Cape, Waterford Kamhlaba in Swaziland and Aberdeen University in Scotland where he studied economics.
He first worked as a financial journalist for most of the country’s leading publications, including Business Day, Business Report, Financial Mail and Finance Week. His work also featured in international publications including Fortune Magazine, the Institutional Investor and Africa Today.
He was part of a panel that advised Ebrahim Patel, the minister of Economic Development, on the Walmart investment in Massmart. He served as a member of the Congress of South African Trade Unions (Cosatu) Panel of Progressive Economists and a board member of Naledi, the Cosatu think tank.
He was also editor of the book Making Mistakes, Righting Wrongs: Insights into Black Economic Empowerment, which reviewed the country’s economic development and transformation policies during the first decade of democracy.
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