The university’s business school released its policy uncertainty index for 2023 on Wednesday, citing the country’s persistent power cuts and low economic growth as domestic issues hampering economic growth.
Melting candle coins equating to a flopping economy. Picture: Pixabay.com
JOHANNESBURG – The North West University Business School said South Africa’s policy uncertainty remains elevated amid a range of domestic issues.
Some of the main issues are the country’s persistent power cuts, the state of disaster on electricity and low economic growth.
The ongoing Russian invasion of Ukraine, as well as the recent banking crisis in the United States are also among the global geopolitical factors that have eclipsed efforts by the South African government to improve the economy.
The business school released its policy uncertainty index for 2023 on Wednesday morning.
NWU Business School Policy Uncertainty Index 1Q 2023 rises 2 record of 71.7 from 53.2 in 4Q 2022/higher than during Covid-19/negative factors greatly outweighed positive ones – biggest single factor electricity crisis/situation reversible if right policies & projects implemented
‘ Raymond Parsons (@RWKParsons) March 28, 2023
The scale rose to a record level of 71.7 from 53.2 in the fourth quarter of 2022.
Before the latest reading of 71.7, the highest that the policy uncertainty index has ever been since its inception in 2016 was 60.9.
The high levels of such policy uncertainty affect investor and consumer sentiments.
Policy uncertainty has continued into the negative territory, despite a well-received budget framework by Finance Minister Enoch Godongwana in February, where Treasury committed to urgently tackling the energy crisis.
Other red flags that have made matters worse include industrial action by the public sector, violent crime, corruption, and the decision to greylist the country.
Unsurprisingly, the report found that the biggest negative factor has been the electricity crisis.
READ: Electricity Minister says work to solve energy crisis already begun
The index gives South African policymakers an indication of how to better manage the effects of policy uncertainty on the economy.
The report warns policymakers not to renege on agreed solutions to help boost confidence in the country.
It also adds that next week’s Presidential Investment conference may be a good place to start to assure investors.
