According to StatsSA, as at Q2 2021, South Africa’s unemployment rate stood at 34,4%, this represents 7.8 mil people without jobs out of a labour force of 22,8 mil. This is 7.8 mil people, excluding their close and extended families, who are not able to have a guaranteed meal because they have no income. How then is the problem of unemployment to be solved, especially for women? Investment in infrastructure is certainly one way to address this problem. Perhaps the most famous economic recovery program was the one introduced by President F.D. Roosevelt to revive the US economy when the country experienced a depression between 1929 and 1933. The program came to be known as the “New Deal” and was characterised by the three Rs, namely: Relief for the unemployed; Recovery of the economy back to normal levels and Reform of the financial system to prevent a repeat of an economic depression. To relieve unemployment, the New Deal involved a wide-ranging infrastructure delivery program which created thousands of jobs as people got to work to build new roads, bridges, airports, among others.
Deloitte (2021) describes infrastructure as government-owned "physical framework of an economy" and we all know that SA is in desperate need of various types of infrastructure. Think, for instance, of access to drinking water and sanitation, Chapter 2 of South Africa’s Constitution states that “everyone has the right to have access to sufficient food and water.” Delivery of water and sanitisation to citizens will require a large investment in relevant physical framework which should bring with it jobs which will go a long way in alleviating the unemployment menace.
Of course public infrastructure investement, like private investement, requires capital and some of the options open to the government of President Ramaphosa are: an increase in taxes however, with corporate taxes at 28% and individual tax that can attract as high as 45% in marginal taxes (depending on income levels) many would argue that South Africa already has relatively high tax rates; another funding option is the issuing of bonds and yet another is borrowing from organizations such as the World Bank however, a strong argument can be made that SA is already highly endebted, with our debt to GDP ratio at 77%, as at 2020.
It is my opinion that President Ramaphosa must act with urgency and launch South Africa's own version of the New Deal, separate from the National Development Plan, which so far has failed to deliver on its promise.
Our Politicians must show
political will to create effective government !!!
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