I don’t think the average South African has comprehended just how much debt the government must raise this year. Of the R1.8-trillion that government is planning to spend, 43% is going to be paid using debt. That’s because tax collections have plummeted this year. It is why government is borrowing from every available source, including the R70bn loan it concluded last week from the IMF. That loan, by the way, is not even 10% of the total that government will be borrowing.

Obviously, this situation cannot continue. The more we borrow, the harder and more expensive it becomes as lenders look to be compensated for the higher financial risk South Africa presents. We need to be reducing our risk profile. And there is only one possible way to do that: economic growth.

There needs to be an urgent focus on getting the economy back into the kind of shape that would increase the amount that can be collected in taxes. Increasing tax rates is dangerous as South Africa is already above world averages so businesses and workers that are mobile simply relocate, compounding the decline in economic activity. What we really need is economic growth. There are no alternatives.

So when anyone expresses outrage that we are borrowing from the IMF, I have to ask why they aren’t outraged about the things that led us to this point – the many policy own goals that we have scored and our slowness in taking the steps forward that will get us back onto a growth path.

We have been promised a “phase 3” of the economic response to the Covid-19 crisis for some time. We thought we would hear the details before the supplementary budget last month, but we are still waiting. In a televised address on 21 April, President Cyril Ramaphosa described the three-phased economic response, saying:

The third phase is the economic strategy we will implement to drive the recovery of our economy as the country emerges from this pandemic.

Central to the economic recovery strategy will be the measures we will embark upon to stimulate demand and supply through interventions such as a substantial infrastructure build programme, the speedy implementation of economic reforms, the transformation of our economy and embarking on all other steps that will ignite inclusive economic growth.

We will outline this in coming days.

It has been many days since. There has been progress on the infrastructure build programme, with a list of projects gazetted last week, though we still need detail on how they will be financed and when procurement will begin. But the other reforms and transformation to ignite economic growth appear to have taken a back seat. We cannot wait. Without a clear recovery programme more businesses will give up hope of a recovery and simply close. A coherent and effective plan for phase 3 would help business sentiment and give people some hope.

And there is no mystery on what the recovery plan should include. Some that have been spoken about for far too long are:

• Achieving policy certainty for the mining industry. The revised mining charter and amendments to the Minerals and Petroleum Resources Development Act have been up in the air for over a decade. While we wait, no mining company is going to invest to expand. We have missed out on billions of investment, jobs and taxes.
• Finalising spectrum auctions and digital migration. We complain about high data costs which are a drag on the whole economy, but we have been waiting for over a decade for the obvious steps that will allow data costs to come down. By giving cell networks more spectrum we can take a giant leap forward in data availability to improve the economy.
• Energy reform. Last week the National Energy Regulator of SA finally concurred with the process of acquiring 2,000MW of emergency power. While Nersa is an independent regulator and should act accordingly, this step seemed to take an unnecessary amount of time. We are also still waiting for clarity on when the round five bidding for the REIPPP programme will take place, with suggestions now that it will only be in the second half of 2021. This could have been done years ago. Eskom’s unbundling also needs a clear timescale and commitment. Energy reform could be linked to a green industrialisation strategy that sparks a major new industry in related manufacturing. We came close before the REIPPP was hit by politically driven delays, leading to businesses closing down and lost jobs.
• Finalisation of land reform and amendments to section 25 of the constitution. It surely doesn’t need saying that no one invests if they are unsure about their long-term property rights. We need land reform, but we also need clarity for investors. Section 25 has been debated for long enough. We must finalise and move on to set down an investor friendly Expropriation Act as quickly as possible. Until we do, billions of investment won’t happen.
• We want SMMEs to be a major part of the economic recovery and they can be if the business environment is made easier for them. Cut red tape on everything from tax registrations to regulations around hiring staff. We want to make it as easy as possible for small businesses to comply with the law and to hire people.

Many other reforms have been set out by National Treasury in its “Economic transformation, inclusive growth, and competitiveness” paper that would trigger inclusive economic growth. South Africa has recommitted to the policy changes envisaged in that paper as part of its letter of intent it provided to the IMF.

I think we all agree the time for talking is done. We are a country beset with policies but we are completely unable to turn them into reality. We must now become obsessed with implementation. It is the only thing that matters. No one is listening to government promises any more, because we have waited for so long.

Business is ready and waiting to support the process wherever it is asked. But we are also waiting for the environment that good policy would create where we are all able to confidently invest in the knowledge that a brighter future awaits us.

One of the strongest set of reactions to news of the IMF loan was the view that: “It’s all going to be stolen.” And while the IMF loan is conditionality free, it does come with intense global scrutiny: just where the money flows will be watched closely, I wrote in Business Report last week. The scepticism illustrates the crisis of confidence in government. It cannot underestimate the decline in trust over the past decade. Repairing that will only come with delivery on promises.

Despite the repugnance of profiteering from the social and economic crises resulting from the Covid-19 pandemic, corruption sadly continues to flourish. The looters of the Covid-19 relief funds need to meet swift justice, I wrote in my Business Day column last week. That’s the only way for society as a whole to have confidence in the state and its ability to shield us from the worst of the Covid-19 pandemic and to rebuild the economy. Its another way government can start to claw back the trust it has lost.

This is a weekly newsletter from BLSA CEO Busi Mavuso.

BLSA is a business organisation that believes in South Africa’s future and shares the values set out in the Constitution. In 2017, BLSA signed a contract with South Africa, committing business to playing its part in creating a South Africa of increasing prosperity for all by harnessing the resources and capabilities of business in partnership with government and civil society to deliver economic growth, transformation and inclusion.