Unite to drive growth
Policy certainty, structural reforms and an efficient public service will improve SA’s economic health
Constrained financial resources and limited room to raise additional taxes, together with increased needs such as housing, subsidised university fees, national health care and pension fund provisioning, mean the private and public sectors need to unify behind a strategy to aggressively drive economic growth.
SA is not immunised from the global economy, with its litany of uncertainties that include Brexit, terror attacks and the election of Donald Trump as the US president. Though the country managed to weather the 2008 economic downturn, it didn’t ride that wave by making it easier to conduct business with and within SA.
A greater focus on structural reforms, policy certainty and a more focused public service would improve SA’s economic health.
In these highly uncertain times, many of SA’s trading partners are facing political and economic difficulties, and their current inward focus is likely to affect the economy. To minimise that impact, SA needs to ensure that it is highly attractive to its trading partners and potential investors.
It is heartening to see the closer and more constructive working relationship that has developed between business, labour and government. The effort put into ensuring that SA is not downgraded and the plans currently under way to turn our economy around should be acknowledged, encouraged and celebrated. Unified, they can continue to work together to accomplish an investor-friendly, growth-orientated economy by agreeing on structural reforms and policy certainty that will boost economic growth and create jobs.
To achieve its financial goals, government needs to spend more prudently and increase its tax revenue, while bearing in mind the severe unemployment and poverty in the country.
The base of SA taxpayers is small, consisting of about 1.1m people. One of the most effective ways to capture tax from a broader base is through an increase in Vat. To avoid burdening the poor, tax exemptions would have to be provided while essential foodstuffs should remain untaxed.
The public-sector wage bill is a burden on the fiscus. Government has attempted to create jobs instead of establishing a more enabling environment for entrepreneurs and the private sector to generate employment. High wage increases in the public sector have not necessarily led to an efficient public service. Government needs to get more bang for its buck by focusing on improved service delivery.
Reducing service delays as well as unnecessary red tape will reinvigorate the business environment.
A zero-tolerance approach to corruption and the leakage of government funds is necessary to ensure excessive spending of much-needed financial resources is prevented. Government routinely overspends on tenders. This is often due to fraud, as both the public and private sectors have conspired to abuse the tender process by colluding on prices, establishing monopolies and engaging in anticompetitive behaviour.
Hopefully a more closely allied public and private sector, with a cohesive goal to uplift the economy, will reduce such unscrupulous behaviour.
There is enough money to achieve the country’s goals and meet its needs if revenue is collected efficiently and spent effectively. Doing so requires commitment by the private and public sectors to put the needs of the citizens of SA first.