Over the past 23 years, South Africa has received approximately USD 20 billion (R272 billion) in foreign aid. After World War II, Europe received USD 120 billion (worth R1,278 trillion in 2014) through the Marshall Plan to reconstruct 18 countries.
This was done by changing regulations, encouraging an increase in productivity, the increase in labour union membership and the adoption of modern business practices. This averages out at the current equivalent of roughly USD 1.5 billion per country although some received a bigger slice of the pie.
The answer as to why South Africa has not been able to effectively use almost thirteen times this amount to transform our society from a highly unequal economy which was skewed in favour of white capital and government expenditure during the apartheid era, to one that has economically liberated the majority of people lies outside of traditional economic analysis. We require an economic transformation in the same way that Verwoerd and company were able to achieve for the Afrikaner community in just one generation.
Foreign Direct Investment (FDI) was supposed to roll into the country after South Africa chose to implement its own structural adjustment programme (SAP) in the form of the Growth, Employment and Redistribution (GEAR) policy. This choice was made after Washington Consensus dynamics determined that the Reconstruction and Development Programme (RDP) would potentially undermine the international liberal economic power structure. But it never did, not really.
This promise by the global community has been broken. Amounts invested by international business in no manner matches the sacrifices made by the national budget choices made for the people of South Africa during the 1990’s and has contributed to the economic stalemate we now find ourselves in.
Despite various economic policy interventions by the state; the most recent being the National Development Plan (NDP) and the setting up of three Ministries to manage economic matters and their various policy documents; we seem to be stuck without the possibility of increasing our economic growth rate in the foreseeable future.
Outside of corruption and irregular expenditure; which cannot account for all the financial resources lost to our country, social and political transformation projects in South Africa are being severely impacted by the lack of effective economic stewardship which includes a lack of understanding on how economies grow beyond just the statistical numbers.
Economics is and should be analysed from a perspective beyond rands and cents, imports and exports, growth domestic product, supply and demand and surpluses and deficit figures. Economics is the financial expression of the transactional choices we make as human beings.
International development best practice demonstrates that working from the bottom upwards rather than by employing trickle-down economics ultimately transforms a country’s economy. Evidence of this can be seen in the success of social accountability local government programmes in Brazil, an investment by the centralised economic committee in individual villages in China and the ability in India to manage an informal and formal economy simultaneously.
It does, however require national economic leadership to be able to juggle all these balls in the air at the same time. The Integrated Development Planning (IDP) was supposed to be the centre of bottom-up economic stimulation. These should lead to provincial plans, in turn forming a national plan. This is not, however, how the National Development Plan (NDP) was written and this factor perhaps explains the inertia around its implementation.
The lack of integration of hopes and dreams of communities into the overall economic governance of the country is the cause for a current lack of growth in the South African economy. These IDP’s lie gathering dust in municipal offices or have not even been downloaded from their websites. Communities do not hold local government to account for not implementing the stated expectations of the community. Individuals and organised groups are paralysed by the belief that nothing they do will change the way government works. They are also unable to lift themselves out of their own economic inertia.
Despite investments in communities in the form of grants and a myriad of loan facilities, there has not been much proliferation in the formation and sustainability of small and medium size enterprises which ultimately form the heartbeat of economic growth. It is local economic development and stimulation of businesses such as these that multiply inter-community trade. In turn, this leads to higher levels of employment releasing more money into the economy which in turn enables businesses of all sizes, including big business to grow and thus create more employment.
An entrepreneur needs to be mentally resilient to business risk, be able to manage cash flow effectively and be able to recover from business investment mistakes. A strong sense of self belief in one’s ability is essential.
Many South Africans, because of the trauma of the past have mental health issues, manifesting mainly in a poor sense of self-worth. It is vital that we understand that because inter-generational trauma is not considered as an input factor in economic analysis we don’t recognise the causes of damaged economic output leading to a series of collapsed initiatives that may repeatedly psychologically paralyse entrepreneurs and their communities.
The result of this is that the country’s leadership suffers the same ongoing trauma of self-doubt. This is manifested in the constant re-writing of economic policy and tinkering with economic governing systems and constant engagement with international economic forces and the kowtowing to big business interests. Why these well intentioned policies and structures do not deliver the hoped for results is lost in the determination to only look forward, instead of analysing how our present and future economic health is shaped by our painful past.
Despite the Truth and Reconciliation Commission’s (TRC) recommendations, the state has chosen not to invest economic and political resources in local social facilitation processes. These may well have enabled communities to work through their inter-generational pain (as victims and as oppressors) freeing up whole human beings.
South Africa needs mentally strong and healthy individuals who can become a nation of entrepreneurs. We desperately need them to stimulate economic growth which is more likely if they are psychologically resilient leading to improved management of the risk and stress factors inherent in running small to medium enterprises.
Economic health is usually measured in cold rational terms but we also need monitoring indicators to include our transforming human transactional experience to facilitate an economic growth increase that will lead to a surplus in the national budget.