Former finance minister Pravin Gordhan believes "unwise" political decisions have sent the economy into a downward spiral -- but hope remains as long as Treasury can rebuild investor confidence.
We are still waiting for Finance Minister Malusi Gigaba to come up with proposals to the current economic crisis which includes going into a recession and the latest downgrade by Moody's. He cancelled a press briefing on the economy on Monday after the bad news last week.
While we wait, HuffPost SA asked his predecessor Pravin Gordhan, axed in President Jacob Zuma's Cabinet reshuffle, what advice he could offer.
The message was blunt: "We as different sectors of South African society need to confront and appreciate the truth for what it is. We haven't done enough to create a climate of confidence to grow the economy and jobs", said Gordhan.
Gordhan, who is now a member of Parliament's portfolio committee on public enterprises, said the country seems to be "dominated by short term issues" as well as what's emerged from the leaked Gupta emails on state capture.
"We have been negatively affected by unwise political decisions," Gordhan said. "We seem to be dominated by short term issues and others which have risen from state capture reports."
He said South Africa is not building on its "well-recognised strengths" in sectors like tourism and innovation, for example.
"It is very clear that these are areas where we need movement," Gordhan said. "We have well recognized strengths we are not building on like in the innovation and in tourism and in several other areas"
Here are the three things Gordhan said need to happen to rebuild investor confidence:
1) "We need reform in the management and governance in SOEs [State Owned Enterprises]"
2) "We need delivery on infrastructure projects."
3) More certainty in policy-making. "We need a move in policy uncertainties, for example in the mining sector."
Last week, the country's economy took another knock when ratings agency, Moody's, downgraded South Africa's sovereign credit rating to BAA3 (one notch above junk status) with a negative outlook. Some of their reasons were the weakening of the country's institutions, sluggish economic growth, slow implementation of structural reforms and policy uncertainty.
In a statement after the announcement, the ANC called on government, the private sector and organized labour to use the downgrade as a catalyst for greater urgency in working to alter the country's economic trajectory and boost confidence in the economy.
Treasury was adamant that its urgent priority is reigniting confidence as well as reclaiming and maintaining the investment grade ratings.
'This is not the time for business bashing'
Business Unity South Africa president Jabu Mabuza said although he is not prepared to point a blaming finger on any individual, the business sector will remain at the ready to contribute towards any solutions brought to the table.
Mabuza said it is difficult to pursue growth in a recession but it is important to recognize that South Africa needs to rebuild confidence in its leadership, its institutions and its policy-making.
"For example, the impact of SOE debt on the country's balance sheets is detrimental. The time is not now for business bashing, we need to recognize the need for partnerships and collaboration... The minister [Gigaba] will have to do a lot more," Mabuza said.
Mabuza was with Gordhan in London last year on an investor roadshow when Zuma asked called for Gordhan and his deputy, Mcebisi Jonas, to immediately return to South Africa.
Analysts said the road to recovery will require going back to basics.
More stability needed
Economist Mike Schussler said South Africa's economic stability will be put as further risk if government expenditure cannot be brought under control and if the "rules of the game" keeps changing.
"Treasury needs to be more stable. Scandals like in Nkandla, Eskom and Transnet work outside the rules and regulations required for economic stability. Businesses need a lot more certainty. Government debt is also going up," Schussler said.
"We are not talking about doing brain surgery, there are basic things that need to be fixed. No magic wand can be waved to fixed this. Investors want to see implementation."
Financial wellness researcher Johann van Tonder said reforming the economy is not only about investor confidence, but also about consumer and business confidence – of which there is a lack.
He said there have been numerous plans set out in the past 20 years to grow the country's economy, but the problems lie in the implementation of these plans.
"Government comes up with policies and plans with no economic impact study. We have all the plans, all the radical terms and advisors, but no actual model. Most populist remarks are being made without evidence. We need to fix the structure of the economy first," van Tonder said.
"We need to fix the basics: unemployment, trust between various sectors and corruption. We need sustainable, long-term solutions not quick fixes."
Gigaba is expected to deliver his solutions for getting the economy back on track later this week. He will do so after he meets with the Economic Cluster on Tuesday with the objective of developing a comprehensive response programme to the economic challenges.