NEWS & ANALYSIS

Ramaphosa just preserving white interests - EFF

Fighters say stimulus package has nothing to do with overall structural changes of economy

EFF STATEMENT ON RAMAPHOSA ECONOMIC STIMULUS PACKAGE

Friday, 21 September, 2018

The EFF notes the economic stimulus package announced by President Ramaphosa in an attempt to salvage an economy that is based on the preservation of white monopoly interests. Ramaphosa has announced nothing new, but an attempt to repackage old neoliberal economic plans that have proven futile; they have failed to grow the economy and create sustainable jobs.

The stimulus package has nothing to do with the overall structural changes of the economy. The promise of radical economic transformation which he made noises about prior to being elected President has been compromised at the table of cosmetic changes to an economy whose essence is the marginalisation of the black majority from the country's wealth.

The stimulus package announced, which is in any way thin on details, is no doubt continuing with more of the same misguided trust in private sector investors to take lead in resolving economic challenges. The so called growth enhancing economic reform did not make any concrete mention of the strategic role of the state in the productive sectors of the economy. Instead, the state continues to be positioned as a consumer that must continue to procure services from the private sector, including in areas that could leverage its buying power to develop industries.

The South African private sector has proven in the last 20 years that even with growth enhancing policies such as GEAR, AsgiSA and the recent NDP, they prioritise profits at the expense of creating sustainable jobs and resolving the growing inequality. A recent example is the youth employment tax incentive that Ramaphosa has now extended to 10 years. Since it was announced, more than R6.3 billion was claimed mainly by labour brokers yet youth unemployment between the age of 15 - 24 has skyrocketed from 62.6% to now 67.1%.

The two-economic sectors that Ramaphosa thinks will lead to job creation, i.e. mining and agriculture, despite their nominal growth, have consistently lost jobs mainly because of mechanisation. There were more than 50 000 fewer jobs in the mining sector in 2017 than in 2008, and more than 140 000 jobs have been lost since 1994. Any attempt to revitalise the mining sector in its current form of ownership and business model will only increase shareholder returns on undeserved profit.

Even effort to withdraw the MPRDA is nothing but an attempt to please white monopoly captains of industry not to benefit workers or for South Africans to share in the mineral resources. In 1975, the agricultural sector used to employ well over 1.4 million farm employees and domestic workers in the farms. These figures have consistently declined year on year to well under half of 1 4 million.

It is not a revelation that the current fiscal space does not allow for new spending and government cannot equally afford to borrow. It is equally not news that this stimulus package is going to focus on reprioritisation because for many years now government has been doing that, taking money from one program to the other.

Any attempt to reprioritise within the budget without consideration of the failing, corruption embattled and not stainable procurement model is doomed to fail.

Government spent R7 billion in private security services, RI .5 billion in cleaning services and half a billion in gardening services amongst other services which are outsourced at an inflated price.

The first form of reprioritisation should have been to insource all these workers, create sustainable employment that will cut the fat in the budget.

In addition, to establish an infrastructure fund without a state-owned construction company that will have the responsibility to build all the infrastructure required is not new and is not sustainable. The experience of 2010 World Cup infrastructure that continue today even at the smallest scale is that, private construction companies will continue to collude, inflate prices and treat workers badly to avoid medical aid and pension responsibility while the industry remain untransformed.

The Department of Basic Education failed to spend well over R2 billion in 2017/18 on school infrastructure because of reliance on outsourcing. state construction company, together with state-owned banks, should be entrusted with the responsibility to lead infrastructure development from a municipal level, through a labour absorptive model which will create immediate jobs for those shovel ready infrastructure projects.

Any stimulus package which fail to address structural long-term changes to the apartheid economy is nothing but a gift of more profits to those who continue to benefit from the economy while poverty, inequality and unemployment deepens.

These include politically connected business people who, together with ANC politicians prefer to keep the tendering system for selfish self-enrichment.

Finally, the supposition that a stimulus economic package will succeed under capitalist economic relations is illusionary. The ANC has not cogent and clear ideas and plan on growing the economy. Pampering Private Capital will never be the solution to South Africa's economic stagnation.

Since 1994, the ANC's philosophical approach to economic growth and sustainability has been on pleasing private capitalist interests and such has not brought forth sustainable economic returns. The EFF's clarion call for State led industrial expansion and economic growth therefore becomes the only logical conclusion to South Africa's problems. Capitalism has failed to uplift majority of South Africans and anything done within its logic will not bring about any stability to the people of South Africa.

Statement issued by the Economic Freedom Fighters, 21 September 2018