In 1994 we started our democratic era with the lofty goals of uniting our diverse people by removing racial and sexist divides and – through the Reconstruction and Development Plan (RDP) - creating a strong, dynamic and balanced economy. Between 1995 and 2004 Gross National Growth averaged 3%. The apartheid legacy of high inflation, political instability, policy uncertainty and negative investor sentiment were erased and reversed.
The Growth, Employment and Redistribution (GEAR) Plan in 1996 further allowed growth to continue through tight monetary policy and reduced government expenditure. During the Accelerated and Shared Growth Plan (ASGISA) which was implemented in 2005 growth reached levels of 5,3 in 2005 and 5,4% in 2007. Then the wheels came off, not coincidently with the inauguration of President Zuma in the same year.
The seeds of our undoing were however sown earlier in 2002 with the thinking behind first version of the Mineral, Petroleum Act and in 2003/4 and with the narrow based Black Empowerment Act and then the 2011 Broad Based Black Economic Empowerment Act (BBBEE) in 2011. The Preferential Procurement Framework Act of 2005 further tilled the ground for the corruption that followed. The intercession of these acts removed the normal incentives that drive investors to invest in the mining industry and entrepreneurs to start businesses because racial based quotas now applied.
All the lofty ideals of removing racism from our economy were dashed and once again we became a society infused and obsessed with racialism. While the economy started to slow down the urgency of climbing on to the gravy train increased -- driven by greed and the credo that the way to emancipation was through the ballot box, i.e. political power. Under the Zuma administration the abuse of political power reached a crescendo and political power continues to protect the abusers from prosecution.
Now, even the man in the street, fed a constant and mouth-watering dose of facile populist solutions, wants to climb on the bandwagon of political looting. Even the ANC in its desperation to hold on to political power, has now succumbed, presenting the offer of free land as the new panacea for poverty.
What then do we make of President Ramaphosa’s new economic plan to get the economy back on a growth path?
Well the Jobs Summit has come and gone, and the queues of jobless continue to grow. Yesterday we reached a new record low. The Investors Conference has come and gone, and the pledges look promising, but won’t be forthcoming unless the restrictive labour and empowerment laws, the unhinged power of the unions and the corrosive breakdown of institutions is arrested.
The aim to prioritise manufacturing and revive this sector will be more difficult to achieve in an environment of rising labour, electricity, and water costs and of rising interest rates. The weak currency makes it prohibitive to invest in productive capacity which is all sourced overseas and has to be paid for in hard currency.
The ideological and political goal of supporting Black Industrialists, smacks of the same populist policies purveyed by the EFF is not sustainable as they have to function in the same dysfunctional business environment, unless they can compete in the international markets.
Youth unemployment is a tragedy. The empowerment of youth needs a radical rethink and review of how they are trained. Offering free university education to all, aside from putting the fiscus under unbearable strain, is not going to create employment - at most it may create the ability to think and then to become entrepreneurs, but this is unlikely without previous work experience. We need to create artisans with practical skills and the institutions and frameworks for the transference of these skills. Ramaphosa’s plan is short on detail and this could be its undoing.
Developing and investing in Infrastructure is an obvious target, because it creates work opportunities for engineers, installers, labourers and suppliers. It contributes efficiencies to the economy. But it suffers from the blight of corrupt procurements processes due in no small part to empowerment practices which result in inflated prices being paid for goods and services. The ultimate limitation is lack of funding. After paying for welfare for 17 million people and for free university education the pot is empty. The Department of Water and Sanitation is bankrupt and saddled with huge debts. Sanral, Prasa and almost every other government department involved with infrastructure have no funds and are poorly run. Incompetent ministers and loyal cadre deployees still rule the roost and are inimical to any success of this plan.
The growth opportunities offered by tourism is a no brainer and only government ineptitude will hinder it delivering.
Whilst the Digital Revolution clearly offers opportunities for growth our youth have been poorly prepared by the education system to compete on an international level, which will bedevil our opportunities to extract full value in this field.
To grow again, we need to rid ourselves of corrupt ministers and public servants and hold corrupt officials accountable. They must pay for their crimes - enough of impunity! We need to rid ourselves from populist rhetoric and facile solutions. We need to revert to thinking of all our people as citizens and break the mould of thinking about putting the interests of one racial group above others.
To grow again we need pragmatic rather than ideological solutions to real problems. We need clear pragmatic policies to guide mining and business with a minimum of government interference. We have all the treasures of mineral wealth to be the world’s leading miner as we once were and we have the treasures of scenic beauty to lure millions of tourists to grow at over 5% to fully employ all our youth. If only….
