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Now is the time to transform our economy for good

The writer says the impact of Covid-19 and its aftermath will require a shift - a rebalancing of sorts particularly from an economic standpoint.
The writer says the impact of Covid-19 and its aftermath will require a shift - a rebalancing of sorts particularly from an economic standpoint.
Image: 123RF/dolgachov

In the South African perspective, there has been but a single life-changing socioeconomic crisis in the past century with the kind of legacy it is believed the coronavirus will have, and that is apartheid.

With this in mind, the impact of Covid-19 and its aftermath will require a shift - a rebalancing of sorts particularly from an economic standpoint.

The devastation brought on by the outbreak is nothing short of a global tragedy on human lives. Emerging markets and economies such as ours have endured the brunt of asymmetrical pressure, leaving us no options but to explore practical measures to reset our economy.

The first and arguably the most crucial step is to get people back into economic activity. Resuming this, in the context of a public-health system capable to detect and respond to new cases, something the SA government must be lauded for, is crucial in restarting our economy.

Although considered a leading emerging economy on the African continent, globally we are a developing country and face the same socioeconomic challenges as other emerging markets in our region. This position means we need to ensure not to get "left behind" when the global economy recovers.

The government's unprecedented R500bn Covid-19 economic stimulus package to mitigate the pandemic is similar to stimulus packages already effected by developed countries such as the US, Germany and the UK. President Cyril Ramaphosa's interventions, specifically the R100bn that will be set aside to protect and create jobs and the planned R70bn in tax relief measures will garner the necessary preservation of entrepreneurs.

However, more strategic tactics in leveraging these interventions to make the SMME sector the bedrock of the SA economy are pertinent. If there is one thing this pandemic has exposed, it is the basic need to transform our economy from a labour-focused one to be SMME-oriented.

As a labour-intense economy, 25 days of non-activity, limited capacity and production have further cornered what was already an imprisoned economy in recession.

The constraints on key sectors such as mining, textile, and manufacturing has meant the economy was never positioned to adequately adapt to the complete or partial shutdown.

This makes an economy structured on the proliferation of SMMEs catalysed to create employment at a similar scale to the major sectors a mandate that we should undertake. If we can build our SMMEs to operate at this level of capacity and be a substantial GDP contributor, then we could genuinely be on a recovery path towards creating a level playing field for businesses in a post-pandemic world.

Even though no one has been spared the carnage, the reality is, it's been the small to medium-sized businesses in specific industries that have demonstrated the agility to continue operating within the regulations of the lockdown, even by means such as digitising their services or having their employees work from home.

In contrast, the larger labour-intense sectors have been hit the hardest, with no doubt of pending retrenchments looming to further deepen economic woes. Entrepreneurship at a large scale and exceptional growth of our SMME sector is only one way of accomplishing a resilient economy.

The way we choose to emerge from the economic devastation is an opportunity to address the mistakes of the Codesa negotiations, that focused so much on transitioning political leadership, while neglecting the radical economic transformation needed by our people, then and now.

*Zungu is CEO of Pacinamix which specialises in integrated marketing and human capital solutions, and how to ensure we are ready for our new business and economic normal.

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