South Africa’s greylisting to also stifle job creation plans

The effects of greylisting in South Africa will be felt in various sectors of the economy and that includes job creation, according to Youth Employment Service (YES) CEO Ravi Naidoo.

South Africa has been greylisting by the Financial Action Task Force (FATF), a global money laundering and terrorist financing watchdog, and this will stifle the country’s ability to do business globally, especially with EU members.

YES is a business-led collaboration that seeks groundbreaking ways, through innovation and technological best practices, to reignite the economy and give youth a dignified first chance.

Naidoo said that the greylisting, together with load shedding, would unfortunately also affect job creation.

He said studies showed that greylisting negatively affected capital flows into countries, with consequent effects on economic activity, growth, and employment levels.

“We have to enable businesses to grow and be profitable. However, this requires an environment in which businesses are confident to make long-term job-creating investments and greylisting will directly impact the levels of investment into our country,” Naidoo said per IOL Business.

He said that when it came to fixing the greylisting problem and ensuring South Africa exited it, the country could learn from Mauritius, who were able to have their listing lifted within two years by getting key stakeholders to work together.

“Interestingly, many of the challenges we face as a nation, like youth unemployment, also require collaboration. So, essentially, the solution we require to address greylisting is the same solution we need to address unemployment: sustained collaboration between key stakeholders,” Naidoo added.

According to Statistics South Africa’s Quarterly Labour Force Survey, South Africa’s unemployment rate eased to 32.7% in the fourth quarter of 2022, the lowest since the first quarter of 2021, from 32.9% in the prior period.

BusinessTech Africa understands that the number of unemployed persons rose by 28 000 to 7.753 million, the employed increased by 169 000 to 15.934 million and the labour force went up by 197 000 to 23.688 million.

Among sectors, finance (+103 000), private households (+54 000), trade (+52 000), and transport (+43 000) posted the largest job gains, while community and social services (-122 000) and construction and agriculture (-12 000 each) shed jobs.

NYDA CEO, Waseem Carrim described the greylisting as disappointing for an economy of South Africa’s size and scale.

“At a time when the economy is battling challenges on multiple fronts, it is another unnecessary blow,” Carrim said.

“These factors compound, severely impacting their ability to look for work. The greylisting adds to the multiple overlapping crises and deters much needed local and foreign investment which is needed to grow the economy and create jobs at scale.”

Carrim said economists have reflected that South Africa has taken a number of steps already to avoid greylisting and that if the country continued down this path, it could exit greylisting in 18 months.

“We must continue with structural reforms to fix the economy in areas such as energy, water, ease of doing business, and reducing the basic education drop-out rate. We must build on the positive work that has been started in Operation Vulindlela. In the interim, public employment programs and the repurposing of the Social Relief of Distress grant are effective mechanisms to cushion the economic challenges being faced,” he said.

CEO of Afrika Tikkun Services (ATS), Onyi Nwaneri a division of Afrika Tikkun specialising in recruitment, training, placement, and corporate transformation, said increasing the number of employed people, especially young South Africans, was one of the keys to driving development.

“SMMES have taken the brunt of power utility Eskom’s inability to supply electricity, as they have been unable to operate as a result of the blackouts. The impact of the blackouts on SMMES is not only detrimental to these businesses, but also severely caps job growth,” she reacted to President Cyril Ramaphosa’s address.

“Skills development initiatives have also been seriously affected as blackouts stall training programmes and make online learning almost impossible. For organisations like ATS, they have had to spend huge amounts of scarce funds on generator and diesel costs.”