The jovial political economist JP Landman has never been shy about naming South Africa's problems plainly, and delegates at the Forestry South Africa (FSA) AGM in June were treated to an entertaining talk.

His keynote, titled "From sweet spot to sour spot", traced the country's slide from the fiscal sweet spot of the early 2000s to the present sour spot, where debt is high, GDP growth is lower than population growth, and the 3% inflation target is very tough to achieve.

The bet was lost

It is the third time Landman has addressed an FSA audience. Delegates who recall his earlier AGM appearance in 2023 remember him saying he would bet “a case of South African wine, not French champagne”, that the private sector would eventually break Eskom's generation monopoly.

Delegates were delighted, and he was surprised, when the industry once again demonstrated its moral fibre by paying its dues and presented him with a case of South African wine.

The debt slide

Landman's starting point was government debt. Under Trevor Manuel, debt as a share of GDP fell to around 24% by 2008, a low point that gave the state room to borrow cheaply and invest. That figure has since more than tripled, with the Treasury's own projections placing it at nearly 79% of GDP for the current fiscal year.

GDP vs population growth

The second leg of the sour spot argument was growth. Average annual GDP growth over the past decade has been well below 1%, and below population growth, so GDP per capita has been falling rather than rising. When the economy grows more slowly than the population, poverty, unemployment and inequality worsen.

Growth, he argued, will come not from easy money, such as lower interest rates, but from higher productivity, which depends on structural reform. Landman listed the sectors where the state still holds the reins too tightly: telecoms, electricity, rail, ports, water and municipalities. In each case, his argument was the same. Growth picks up when state monopolies make way for private-sector participation.

Non-alignment

On foreign policy, he reiterated Michael Peter’s introductory remarks that the centre of global finance, manufacturing and trade has shifted decisively towards China in recent decades, at the expense of the United States and other traditional manufacturing powers. Landman's recommendation was non-alignment, maintaining the relationship with the US where it still works while building deeper trade ties with the East.

Loadshedding will be back

On energy, Landman pointed delegates to the newly approved Integrated Resource Plan, IRP 2025. Eskom is set to retire a significant chunk of its coal capacity in the years ahead, and the plan relies heavily on new gas-to-power capacity to fill the gap. Landman said it will not happen, as the energy landscape has already moved beyond a purely state-led fix. His advice was “take advantage of the gaps and secure your own supply”.

He was emphatic that, through Operation Vulindlela, the private sector can partner with the state to improve service delivery. “Organised business has a crucial role to play. Your voice must be heard,” Landman asserted. He singled out the FSA for praise, telling delegates that the organisation “punches well above its weight” in getting the sector's voice heard.

He also made the case for patience in research and development. Productivity gains from R&D, new technology and innovation rarely show up in the next quarter's numbers, but he argued they are the one investment South Africa cannot afford to skip.

Sweet spot

Landman concluded by saying that South Africa can return to the sweet spot if it sustains economic growth of around 3% a year, against population growth of roughly 1.3%, for three consecutive years. Another condition for growth is an open society that enables the economy to adapt and grow.