Bloemfontein - What will Eskom do if the World Bank does not accede to its application for a $4bn loan?

This was one of the questions posed to MBA students at the University of the Free State by independent analyst and guest lecturer JP Landman.

"Probably ask China for a loan," said a student.

Landman reckons this may well be government's Plan B to obtain the funds to build the power stations.

That is also why Landman thinks the World Bank will approve the loan.

If there's one thing that the British and the Americans fear, it's that South will turn to China.

He pointed out that after the Soccer World Cup South Africa will still need to spend money on infrastructure such as roads, schools and electricity, and it will therefore have to borrow more on the capital markets.

Landman believes the perception that South Africa is letting its infrastructure fall into disrepair is not entirely correct.

The recession has cost South Africa at least six years of job creation, he explains.

This is the dilemma that President Jacob Zuma's government has to resolve and it currently appears there is a lack of political will to take the risks required to achieve higher growth.

In terms of wealth, South Africa reflects some of the world's greatest disparities. It is also becoming clearer that our political decisions are wholly unable to efface this social divergence.

In South America, says Landman, countries seeking political solutions to economic problems ran up against runaway inflation, and no one there now believes in allowing inflation and interest rates to rise indefinitely.

The SA government is doing enough to boost people's incomes, but the solution lies elsewhere.

Economic Development Minister Ebrahim Patel, Landman says, is missing the point. You can't create more jobs in an economy that stays the same size. The best way to create jobs is to stimulate investment.

The glue that keeps a society together is its sense of social cohesion, of shared values.

Economic growth makes such social transition possible, Landman points out - but for that South Africa needs 3% or more growth a year.

- Sake24.com

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