SA must use exports to arrest unemployment!

Our economy, as measured by GDP, is showing a healthy growth. In fact, the economy has shown positive growth since the third quarter of 2009 and recent economic data from Stats SA show that the economy grew by 3.2% in the second quarter of this year. Yet, this growth does not seem to have a positive impact on the employment figures, indeed for the year to end June 2010, the unemployment rate in South Africa increased by 1.7% to the current figure of 25.3%. The formal sector, which excludes the agricultural sector and by far the largest employment sector of the economy has shed 5.5% of its workforce over the one year period ending Jun 2010.

In my view, in order for our economy to grow at a rate where more jobs are created than are being lost, the economy needs to be export driven. The economy of China and those of other Asian countries have experienced accelerated growth based mainly on a robust export strategy. But focusing on exports, presumes that South Africa has something of value which the world wants. Yes, we may export a lot of primary, unprocessed goods but in order to make significant revenues from exports, we would need to export more of the secondary and tertiary goods. What South Africa needs is one or more major big ideas, to tip the scales in the rights direction. The Asian countries found the big ideas in the development and manufacturing of technical equipment and motor vehicles. Imagine if South Africa could develop and manufacture a low-cost vehicle which can be exported to other third world countries. SA needs to grow the value of its exports if the unemployment rate is to be arrested.