Charlene Smith
President Thabo Mbeki is expected to provide an outline of his new government’s economic policy, and proposals for the implementation of an “African renaissance”, at next weekend’s World Economic Forum (WEF) in Durban.
The forum, according to briefing papers issued to delegates, is predicting a more flexible stance on inflation under Mbeki, more aggressive steps to attract foreign direct investment, but continuing job losses, pressure on foreign reserves, further declines in per capita income, and growth in the gross domestic product unlikely to move above 1% to 1,5%.
This year’s forum, with 400 delegates, including presidents Frederick Chiluba of Zambia, Festus Mogae of Botswana, Elson Bakili Muluzi of Malawi and Jaoquim Chissano of Mozambique, as well as King Mswati III of Swaziland, is expected to be smaller than previous WEF Southern Africa forums.
The smaller make-up of the conference is part of a deliberate strategy to move away from the “talkshops” Mbeki complained of at least year’s Namibian forum, to hard- working meetings over three days that plot action plans to try and restore stability and economic growth to the region.
Briefing papers compiled by Oxford Analytica before the forum suggest that Zimbabwe has little chance of economic recovery unless International Monetary Fund (IMF) and donor support is re-established. The IMF refused to release a $53-million tranche to Zimbabwe last year after disputes with President Robert Mugabe.
In Namibia, WEF analysts predict that, although Swapo will win this year’s election, “a new opposition party and a low turnout could significantly erode support for the government.” And in Angola it sees no end to the civil war still ravaging that country.
WEF analysts issue some cautionary notes. They say: “South Africa’s policy-makers, who had acquired considerable experience in dealing with foreign capital shortages and their growth-constraining consequences, entertained the hope and expectation of major growth-enhancing inflows.”
Nonetheless, they note: “Huge backlogs in infrastructure and service provision in housing, education, health, transport and other spheres represent great opportunities for investment and economic development.”
They say that policy changes and improvements in “economic fundamentals still fall far short… [in particular] privatisation and regulation of the labour market.
“The government has consistently declined to commit itself firmly to a policy of privatisation (which could be expected to encourage foreign direct investment and boost the foreign exchange reserves as well as government revenues). It has preferred to adhere to an ad-hoc, case-by-case process, over which the unions are perceived to exercise an effective veto.”