The SA economy is on a backwards slide - Mmusi Maimane

DA leader says current BEE legislation not the solution when it comes to redress, and will not result in broad-based empowerment

Job creation through economic growth

18 May 2015

Note to Editors: The following speech was delivered by the Leader of the DA, Mmusi Maimane MP, at a business breakfast hosted by the American Chamber of Commerce in South Africa

Ambassador Gaspard

Honoured Guests

Ladies and gentlemen

Thank you for giving me the opportunity to address you this morning. 

It is a great pleasure to be able to engage with the American Chamber of Commerce.

The United States has been a long-standing ally of South Africa, and through initiatives such as the African Growth and Opportunity Act (AGOA) and PEPFAR, has played an integral role in stimulating our economy and uplifting our people.

While China may have overtaken the US as South Africa’s largest trade partner in volume, the US remains an incredibly important partner for our future growth and development.

I refer to “future growth and development” for under the lacklustre and confused leadership of the ANC, our economy has failed to reach its true potential.

South Africa’s economic history is fraught with injustice and economic growth that served one race over another. This history is borne out of pre-1994 growth fuelled by minerals, a large dependence on cheap labour, and an oversupply of energy that served a small group of businesses. 

The post-1994 government began with the objective, under our great icon President Nelson Mandela, of building a non-racial society. 

Our challenge today is to build an inclusive economy, while addressing historical injustices and becoming a competent international trading partner. 

But our success has been constrained by policy incoherence. If South Africa is to be prosperous, it is critical that we have a singular, focused economic plan. Many have cited the National Development Plan in this regards, yet its implementation has not been forthcoming. 

The indicators paint a bleak picture of our economic success. Estimated GDP growth for 2014 was 1.4%, down from 1.9% in 2013. It is forecast at 2.0% for 2015, well below the 5% required by the NDP to create a real dent in unemployment.

As a result of our underperforming economy, unemployment in South Africa currently stands at 36.1%. Of those who are unemployed, 66% are young people.

It is without fail, that if South Africa is to prosper, we must build economic infrastructure that opens up opportunities for more. Here in Gauteng the rollout of E-tolls is an economic strangler, while the Presidential Infrastructure Coordinating Committee (PICC) has produced poor results in terms of the development of infrastructure.

Yet the ANC government has given up on the people of South Africa. Instead of focusing their resources on solving the unemployment crisis, they are caught up in a program of corruption and crony capitalism.

While South Africans suffer the constant burden of load shedding, inferior healthcare and education, the President lives secure in the comfort in a publicly funded palace.

As a result of the endemic corruption and the mismanagement of state-owned enterprises, such as Eskom, and the organs of state responsible for growing our economy, such as the Department of Trade and Industry (DTI), investor confidence is sliding and South Africa has been subjected to ratings downgrades by all of the major ratings agencies.

This situation is simply not sustainable and has major implications for South Africa’s future as an investment destination.

More importantly it has the potential to derail our democratic journey and social stability.

During his 1992 presidential bid, Bill Clinton campaigned under the slogan of “it’s the economy, stupid.”

Former President Clinton understood that of all the issues voters care about, the ability to find a job and support one’s family is first and foremost amongst their needs.

Continued high unemployment among young people is the single biggest challenge facing South Africa today.

The longevity and vitality of South Africa’s constitutional democracy is dependent on its ability to grow the economy and create job opportunities for those who remain excluded from the economy, especially the young.

The biggest failure of the ANC has been their inability to provide quality education and skills development for young South Africans. Our education system is leaving young South Africans not only unemployed, but in fact unemployable.

We have to address this problem as a matter of urgency, as unemployment among young people drives socio-economic problems such as substance abuse, criminality and xenophobia.

Accordingly, one of my primary focus areas as DA Leader will be the issue of youth unemployment. Winning the battle and reducing the number of South African youth out of work is critical in building a better tomorrow for South Africa’s children.

No child should be left behind in a country that guarantees access to education as a constitutional right. Instead of focusing on pass rates, we need to focus on the quality of education to ensure that our children are well prepared to enter that economy.

This demands competent teachers, well equipped classrooms, and children that are frequently tested on their numeracy and literacy skills.

Ladies and gentlemen,

On 10 May South African democracy came of age as we celebrated the 21st anniversary of the inauguration of President Nelson Mandela.

Yet two decades of democracy have failed to deliver on his dream of an inclusive and equal society.

It is clear that the ANC’s lack of coherent and consistent economic policy is hurting our economy and has failed to lift millions of South African out of poverty.

Since President Zuma came to office, 1.435 million more South Africans find themselves without jobs.

To counter his economic failures the President has done little more than resort to populist rhetoric. 

Just weeks after returning from a meeting of the World Economic Forum in Davos in January, where President Zuma attempted to market South Africa as an investment destination, he announced planned legislation in his State of the Nation Address to limit foreign land ownership.

Statements like this do great damage to investor confidence in South Africa as they paint a picture of economic policy uncertainty. More importantly, they do nothing to solve the unemployment crisis.

It is incumbent on us to arrest the backward slide of the South African economy if we want to achieve President Mandela’s dream of an equal and inclusive society.

We have come a long way since the fall of Apartheid, but after 21 years of democracy we still find a Berlin Wall between the excluded and the included in our economy.

The enemies of our country remain poverty, unemployment and inequality.

Freedom is the engine of progress, but there can be no freedom without opportunity. 

So long as our citizens – and, particularly the youth – are denied a fair chance to get ahead in life, the freedoms enshrined in our Constitution are meaningless.

But I can tell you today that the DA has a vision backed up by a clear plan to kickstart South Africa’s economy. We want to get more young people to work, and restore our country to its rightful position among the great nations of the world.

In the coming weeks we will be engaging with citizens across the country about our vision.

Today, I would like to share part of that vision with you, as I believe that organisations such as AmCham will play a vital role in building a prosperous South Africa for all.

Our vision is underpinned by the new Values Charter that we adopted at our Federal Congress on 10 May.

The Charter, which now serves as the preamble of our constitution, is based on the values of freedom, fairness and opportunity.

The DA is fighting for an inclusive future where the opportunities available to South Africans are determined by their ambition and willingness to work, as opposed to the circumstances of their birth.

The DA firmly believes in the need for redress, acknowledging that the legacy of the past still determines opportunity in the present.

Our vision is for a South Africa where a child born in a township will have the same opportunities as a child born in a wealthy suburb.

To unleash the potential of the future we need to shrug off the yoke of the past, this is how the dream of a rainbow nation will be realised.

The current BEE legislation is not the solution and will not result in broad-based empowerment.

Instead of prioritising overall economic growth and job creation, the ANC has attempted to rectify the inequality and injustices of the past through programs focused on re-empowering individuals, the plan to create 100 black industrialists being a case in point.

The announcement by Minister Rob Davies that the DTI would be looking to decrease the points allocated for employee ownership schemes is contrary to the spirit of broad-based empowerment.

BEE must be measured by the opportunities generated for black advancement. The only way in which we will be able to empower a broad section of our society is by expanding the economy and creating more jobs.

We must promote long-term investment in staff training and mentoring to increase diversity in upper management, and introduce incentive-based systems to employ more people.

The key is to focus on the development of small black-owned business and entrepreneurs that will create jobs on a grass-roots level.

This requires investment in projects aimed at equipping small business with the tools to succeed, and the establishment of a National Venture Capital Fund to assist black-owned start-ups to get off the ground.

We must focus on empowering young people who are excluded from the economy with the tools to either find jobs, or to set up their own business. The desire and ambition of young people to become active contributors to the economy is an ocean of untapped potential, but this will only be unlocked through a capable state with a sound vision for our economy.

South Africa must become competitive in the global economy and build on our strategic partnerships with countries such as the United States. 

The renewal of AGOA with the full inclusion of South Africa is key to this. I am aware that AGOA has been extended in the Senate for 10 years just days ago and is likely to come before the House of Representatives in June, but I am also well aware that South Africa’s position in AGOA is increasingly fragile.

No South African wants to see us excluded from AGOA, but the compulsory review of South Africa’s economic policies which is now included in the Bill does not bode well for our future benefit from this programme. 

Our government has in recent years flirted with policies that tamper with property-rights, intellectual property protection, and investor protection. If we are excluded from AGOA, the ANC government will only have itself to blame. 

Last year AGOA was responsible for $1.7 billion in export revenue for South Africa.

The US imported $55 million in fruits and vegetables, $51 million in wine and beer, and $48 million in tree nuts. The US government estimates that agriculture exports could be expanded by as much as $175 million.

The initiative has been greatly beneficial to both the US and SA, creating an estimated 100 000 jobs in the US and 62 000 jobs locally. Approximately 30,000 of these jobs were created in the automobile industry.

I am convinced that this only represents a fraction of AGOA’s job creation potential, but in order to fully utilise the opportunity it represents we need to make certain policy changes.

We need to make it easier and more cost effective for foreign-owned companies to set up operations in South Africa. 

In order to become a more attractive investment destination we must slash red-tape surrounding the migration laws that prevent skilled foreign nationals from migrating to South Africa, and streamline the processing of applications for work and residence permits.

We also need to do away with punitive exchange controls that deter international investors and relax strict labour laws that drive up costs.

The DA believes that workers’ rights should be protected, but that the law needs to incentivize the hiring of more people.

Inflexible labour regulations serve as a barrier to entry into the labour market and prevent job creation. The DA is often accused of being opposed to unions. We support the role of unions but we simply cannot have unions overreaching their mandate. 

Furthermore, we need to address the major skills shortage that exists in South Africa. Improving the skillset of jobseekers will greatly increase their likelihood of finding a job, but also open up opportunities for companies in search of skilled labour.

On a more fundamental level we need to invest in infrastructure development. This means breaking ineffective state-owned monopolies over key services such as those held by Eskom and Telkom. 

Our economy will not grow so long as we are without a reliable electricity supply and access to broadband internet.

Energy is the lifeblood of our economy yet South Africa’s current policy is woefully misguided and ineffectual.

Instead of investing in a trillion rand nuclear deal that we cannot afford and that will take decades to be completed, we need to ramp up investment in renewable energy projects and break Eskom’s monopoly over electricity generation and supply.

This will not only alleviate the strain on the national grid in a relatively short space of time, but decrease our dependence on fossil fuels. Yet the Minister has delayed all attempts to fast track legislation that would allow for the introduction of much needed competition in the energy sector.

I cannot emphasise enough how important it is that we get the basics right if we want to unlock our full potential. But in order to do so we need to replace our corrupt and ineffective government with one that places the needs of the people first.

Looking at many challenges facing our economy, and in fact our country, it is easy to become disillusioned and despair about the future.

But I am optimistic for I believe that all South Africans share the desire to make our country work.

Over the coming year, leading up to the local government elections in 2016, the DA will be campaigning to unite like-minded and hard-working South Africans who share our vision for South Africa.

They have seen what we are capable of in the Western Cape, where a DA government is setting the standard on service delivery and the eradication of corruption. We are creating more opportunities for millions of South Africans, building momentum toward victories in strategic metros such as Nelson Mandela Bay, Tshwane and Johannesburg.

Governing well in these economic hubs and key investment destinations, will serve as base from which the DA will launch a challenge to the ANC on a national level in 2019.

And we will succeed, sooner or later, because our party is guided by solid values and not the search for the spoils of power.

The DA is the future of South Africa. 

I thank you.

Issued by the DA, May 18 2015