Red tape impedes economic growth
[{“type”:”text”,”content”:”This statement comes from the State of the Nation Address (SONA) delivered by president Ramaphosa earlier this year. Agriculture in particular is affected negatively by too many regulations. If this issue is not addressed, it will continue to have far reaching implications for economic growth in South Africa. Drastic steps are required to free up the economy to overcome the devastating impact of the Covid-19 pandemic.nnThe Covid-19 pandemic affected South Africau2019s economic growth in the first quarter (Q1) of 2020 but had a far more severe impact during the level 5 lockdown in April, which limited the countryu2019s economic activity. These economic disruptions saw a 17% year-on-year decline in the gross domestic product (GDP) in the second quarter (Q2) of 2020, followed by a 14% improvement in the third quarter (Q3).nnGDP growth reached 1% and 1,2% in Q1 2021 and Q2 2021 respectively. As a result of this rebound, in the year to June 2021 the GDP grew at a faster rate than at any time since the early 2000s. Still, it remained 1,4% smaller than before the pandemic. The largest contributors to quarter-on-quarter growth in Q2 of 2021 were transport, personal services, and trade industries. nnThe economic downturn brought about by Covid-19 also led to a contraction in the number of business establishments. According to the small enterprise development agencyu2019s (SEDA) SMME quarterly update (2021), the number of SMMEs in South Africa declined by 11% (289 000) year-on-year from Q1 of 2020 to Q1 of 2021, falling from 2,61 million to 2,33 million. nnPoverty in South Africa has grown significantly with the impact of the pandemic and economic shutdowns. According to the NIDS CRAM 5th wave research, in April/May 2021 approximately 10 million people and 3 million children were in a household affected by hunger. nnWhile some households have managed to recover from the initial devastating effects of the pandemic and hard lockdown, a large proportion remains economically vulnerable, with the danger of longer-term consequences such as child stunting that may affect not only childrenu2019s current situation but also their future development, human capital, and labour market prospects.”,”position”:0,”id”:”ydN1DMuI9jPVZdby”}]