By Rabelani Dagada
Other than a highly regulated market, poor policy implementation, corruption and high political risk, a major hindrance to rapid economic growth in SA is the size of the domestic market. As Peter Bruce has asserted in this newspaper, SA lacks adequate domestic demand to propel its manufacturing sector.
A careful look at the numbers on Statistics SA’s website suggests our population growth is slower than most other African countries, despite the fact the child mortality rate and HIV/AIDS-related deaths have declined substantially. It has also been reported that the white population in SA is declining due to several factors.
Developing countries that do well in manufacturing are those that have large populations. Nigeria was able to overtake SA as Africa’s biggest economy due to the combined buying power of its huge population. China has had to move from a policy of one child per couple to two children per couple to mitigate the ageing population phenomenon.
If SA wants to increase its domestic market, we should abandon our stringent visa regime. We should also tighten our porous borders, while allowing most Africans to legally enter our country to seek socioeconomic and tourism opportunities. There should be concerted efforts to increase intra-African trading.
Countries such as Italy and Germany have relatively small populations but were able to sustain their manufacturing sectors by focusing on European regional trading before going global. SA should have paid more attention to regional trading before becoming part of the ineffective Brics grouping.
*Rabelani DagadaPolicy fellow, Institute of Race Relation, a think-tank that promotes political and economic freedom.
Read letter on Business Day here
