Page 7 - AfrElec Week 26 2022

AfrElec ECONOMY AfrElec

Moody’s lead analyst for South

Africa has high hopes for economy

SOUTH AFRICA High commodity prices triggered by the Rus- the agency remains short of the levels needed to
sia-Ukraine war are good for South Africa’s maximise tax compliance. However, improved
economy, as is the ongoing tax revenue service SARS performance should bring tax revenue
reorganisation, and a fiscal consolidation drive, more into line with budget forecasts, and com-
Aurélien Mali, Moody’s lead analyst for the pliance will continue to improve from 2023,
country, told The Africa Report in an interview according to research from Moody’s in May.
published on June 28. Africa’s most industrialised country remains
The ongoing reorganisation of the South in a “low-growth trap,” hampered by poor infra-
Africa Revenue Service (SARS), from being an structure and the performance of state-owned
instrument for corruption to a credible tax col- electricity supplier Eskom and logistics utility
lector, will help boost state revenue and public Transnet, Mali says.
confidence in the government, he said, adding Power generation at Eskom remains well
that “it will take time” for SARS to return to its below 2019 levels, resulting in long outages
level of competency before former president countrywide. The utility “can’t function by
Jacob Zuma came to power in 2009. continuing to accumulate unpaid municipality
Zuma was removed in February 2018 on debts” and the state will need to find a solution,
charges of corruption and using, together with he says.
his associates, state institutions including SARS Unemployment, at about 35%, remains very
for self-enrichment. high despite a slight drop in the first quarter.
A commission of inquiry into corruption dur- Investment, notably in mining, is being held
ing his time in office has said that SARS “offers back by infrastructure failings, Mali says.
one of the clearest demonstrations of state cap- Rail operator Transnet is “working badly” and
ture as observed in other SOEs and state institu- is hampered by theft and sabotage, while exports
tions”, while competent officials were purged in are held back by weak port performance. “These
favour of compliant replacements and a “pattern are not things that can be fixed quickly,” Mali
of procurement corruption” took hold. said. Coal exporters recently complained that
Mali, speaking to The Africa Report from they are relying on trucking the product to ports
Dubai, dsaid government efforts on fiscal con- for export to Europe since Transnet is failing to
solidation over the last two years mean that timeously move it.
“the fiscal outlook has improved.” Civil serv- Higher commodity prices triggered by the
ants’ salary increases, one of the main drivers of Russia-Ukraine war are providing a tailwind for
public spending over the last decade, have been public finances, creating a window of opportu-
restricted to less than inflation, he notes. nity for further reforms, Mali told The Africa
SARS commissioner Edward Kieswetter, Report. “This,” he said, “is going to continue to
appointed by Zuma’s successor, Cyril Rama- play favourably for South Africa.”™
phosa in 2019, recently said public confidence in

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