Re-elected Minerals Council South Africa President Mxolisi Mgojo reiterated South Africa’s need for significant structural and institutional reform – if it is to realise its true economic and transformational potential.
Speaking at the Council’s 130th ‘virtual’ annual general meeting on 27 May 2020, Mgojo said that while the COVID-19 challenge has impacted the country’s economy, the underlying poor economic performance and significant structural weaknesses of the South African economy were evident even prior to the enforced reduction in economic activity from late March.
“The country’s dismal growth performance, rising fiscal deficits and public sector debt, declining investment, rising unemployment, and rising inequality all contributed to a very challenging economic situation. Challenges related to corruption and state capture, institutional decay, red-tape, policy uncertainty, etc., all served to create this challenging situation.
“The improvements to governance structures at SOEs, the good work of the Zondo Commission of Enquiry into State Capture, certain policy reforms, and the Presidential Investment and Jobs summits have contributed towards a better economic environment,” he said.
Mgojo further warned that Eskom’s financial challenges remained, and its operational performance would become vulnerable once a more normal level of economic activity resumed.
And he noted that Eskom’s travails were only one of a range of causes of South Africa’s broader economic crisis: “The new government was too slow in its first two years to get to grips with the structural changes that were, and are, needed. We now face a deep economic recession with reduced business activity, reduced employment and consequently, reduced state revenues, combined with the need for huge social and business support measures,” he said.
The consequences of COVID-19, and the successive ratings agency downgrades, have made previously recommended economic restructuring measures even more urgent, he added, noting that the Minerals Council has already begun discussions with DMRE Minister Mantashe and President Cyril Ramaphosa on how the mining industry can assist in getting the economy back on track with the necessary structural reforms in place to invigorate the economy.
“More than ever, these times demand co-operation, understanding and a united effort to rescue our industry, our country’s economy and our population’s overall health and welfare from the deepest crisis we and our world have seen in most of our living memory. We commit to doing our part in every sphere,” Mgojo concluded.