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Tuesday, 21 November 2023 08:42

SA has all the right people to take the nation on the right path |Mbeki.

By Lehlohonolo Lehana.

Former president Thabo Mbeki has admitted that the Harvard Report's findings about South Africa's economy were a cause for concern.

However Mbeki emphasised that South Africa has all the right people to take the nation on the right path. 

Mbeki was addressing an awards ceremony in Sandton, north of Johannesburg where he quoted a report from an international institution that looked at the current economic situation.

The report, Growth Through Inclusion in South Africa, seeks to explain why South Africa's economy has consistently failed to grow at the same pace as its peers, with horrendous social consequences.

The report is an extensive and detailed look at SA’s problems, compiled with contributions from many of the 50 employees at the Growth Lab, headed by perhaps the most respected development academic out there, Ricardo Hausmann.

The report is about 270 pages long and is a summary of nine academic papers based on two years of research. It's acute in its observations and its proposed solutions are profound. 

The report says "preferential procurement” has been a critical component of state collapse in the electricity system and at municipal government level. Amen. It cites an IMF report that preferential procurement raises government costs for goods and services by 20% — 3% of GDP — and has expanded the opportunities for patronage. 

The "tenderpreneur economy", it says, to the surprise of precisely nobody who has been paying attention, has benefitted "an exceedingly narrow few at the expense of the rest of society". It should be scrapped for state-owned enterprises, the report says. 

As for cadre deployment, the report is much more unequivocal, if that's possible. 

"The deeper causes of the crisis can be traced to political gridlock, ideological choices, overburdening through preferential procurement rules, and political patronage," it says. 

Mbeki said it is painfully clear that South Africa is performing poorly, exacerbating problems such as inequality and exclusion.

The economy's inability to create jobs is slowing worsening South Africa's unemployment and equality.

South Africans are deeply disappointed with social progress and dislike the direction the country is heading.

The importance of this report is that it reaffirms the domestic diagnosis of many of the government's critics with a trenchant analysis of the situation by one of the world's leading centres of development and economic thought.