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Rebuild is necessary for the future for economy to improve

by Luqmaan Rawat

Johannesburg – In the past three years South Africa’s economy has been decimated. First Covid-19 closed the economy and as soon as that eased up, the riots and floods brought the recovery progress to a standstill. Although recovery seems impossible there are viable solutions. 

While the floods brought great devastation to the area, it might have also given us our answer. Patrick Bond, political analyst and Professor of Sociology at the University of Johannesburg, believes the floods showed us how over reliant we are on the export markets and the vulnerability of the economy.  

“To me the answer here [KwaZulu-Natal] is the answer to the whole country and that is a public works strategy … The community groups here have a term – a just transition to rebuild places but not in the old capital – high machinery and carbon intensive – high pollution mode but with a just transition to get the workers into a production that will meet their needs … A genuine just transition that will take us out of this over reliance on exports of high carbon minerals and metals and other products that will now become vulnerable.” 

Reliance on coal will be a killer of the economy 

South Africa’s firm stance on coal could come back to bite them. January 2023 will see a new carbon tax being implemented which will severely hurt the amount of revenue South Africa will get from exports. It could also mean that Toyota may decide to not reopen their plant as it would be far too costly to export their cars from South Africa.  

“It’s called the carbon border adjustment mechanism. It’s a climate tax, a sanction really on South African exports because our energy embedded in the exports is so carbon intensive, 90% coming from coal … Our major Western partners will say ‘hey, your carbon intensive energy embedded in your products disqualifies you and we are putting a tax on you’ and you are no longer competitive.” 

The failure of Transnet and the economy

Images of containers laying across the highways are due to the breakdown of Transnet. Normally these containers would have been going by train to their destinations. Now trucks are used to haul these containers from the ships to the logistic parks to retail stores. This creates an unnecessary amount of carbon emissions which Bond believes is responsible for the Durban floods.  

Transnet has been operating on an “irrational system” for many years. Its road to rail policy has only increased carbon pollution and Bond has welcomed the suggestion from the Minister of Transport that rail should be reintroduced. The main problem Transnet faces, as do many others, is theft and criminality. Their coal exports have gone down by about 10 million because of cable and rail lines being stolen, said Bond. 

Corruption of corporations 

South Africa is ranked 70th most corrupt country out of 180 countries on Transparency International. While that comes as a shock to no one, the real problem is corporate corruption, explained Bond. Our businesses are usually ranked between first and second most corrupt.  

“The real problem is corporations. I am specifically thinking of the multinationals and these big Western multinational corporations … I do think we should be stressing about regulating our companies. They are on a capital strike. They are not investing. So where are their profits going? We know the answer. They’re going abroad and this is called illicit financial flows through all manners of tax dodging.” 

Bond pointed out that before 2014, President Cyril Ramaphosa’s companies were guilty of using these measures to dodge taxes.  

The Eskom Turkey Deal  

There are currently talks of a deal between South Africa and Turkey. The deal would see us buying electricity from Turkey in an effort to combat load shedding. This deal is a ridiculous strategy and would only cause further problems, said Bond.  

“That particular deal is so bad that even Eskom doesn’t want it. It’s going to lock in South Africa for more than R200 billion for some 15 years. The company would be basically putting in three huge ships and filling it with liquified natural gas. It will feed us into a vulnerable situation in the world economy where we’re going to be having high greenhouse gas inputs into our exports which will then attract sanctions.” 

Destroyed and ageing infrastructure 

Some see the destroyed infrastructure as a loss, but Bond sees it as a chance for a better rebuild. It is the perfect time to innovate, create and replace the current infrastructure with something better.  

The rebuilding phase will create new jobs for those who are unemployed. They can learn new skills and help in developing the country. However, this all depends on how much demand there is from the government to actually want to rebuild, said Bond.  

The rebuild is a time to plan a just transition to help the country navigate its way into the 21st century. To create renewable energy sources, better rail lines, better infrastructure and improve the economy. This can only be achieved if the country comes together and understands what the needs for the future are. Listen to Patrick Bond speak to Julie Allie here.

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