Co-op­er­at­ing to com­pete

Finweek English Edition - - Openers - Not pri­vati­sa­tion that’s needed but com­pe­ti­tion

THE IN­DE­PEN­DENT DEMOCRATS has more than 100 eco­nomic and so­cial so­lu­tions to th­ese short-and long-term chal­lenges, along with our “Top Ten So­lu­tions” – all of which are avail­able on our web­site. The global eco­nomic cri­sis and the po­ten­tially neg­a­tive ef­fects it will have on South Africa’s eco­nomic de­vel­op­ment prospects re­quire in­no­va­tive so­lu­tions, the will to im­ple­ment them and bold lead­er­ship from gov­ern­ment.

This cri­sis is oc­cur­ring at a stage in our de­vel­op­ment his­tory where our coun­try is still bat­tling with per­sis­tently high lev­els of un­em­ploy­ment and roughly half of our pop­u­la­tion still liv­ing in poverty. While SA has re­cently en­joyed a long pe­riod of growth, the In­de­pen­dent Democrats be­lieves it hasn’t been par­tic­u­larly im­pres­sive, given many other emerg­ing economies have been able to grow at a far more rapid rate over the same pe­riod.

This pe­riod has also been char­ac­terised by high com­mod­ity prices that SA wasn’t able to fully cap­i­talise on be­cause of cer­tain in­fras­truc­tural con­straints. The ID would there­fore fo­cus on fix­ing the in­fras­truc­tural and hu­man re­sources con­straints in our econ­omy for the du­ra­tion of this pe­riod of low global growth so that we can max­imise our growth op­por­tu­ni­ties when the cy­cle turns again. We’d en­sure we con­front the struc­tural ob­sta­cles in our econ­omy, such as its highly mo­nop­o­lis­tic na­ture, so that fu­ture growth can be more eq­ui­table and de­liver ben­e­fits to all South Africans.

It’s with those ob­jec­tives in mind that the ID pro­poses a mas­sive up-scal­ing of our pub­lic in­fra­struc­ture build pro­gramme. We need to re­pair and build new roads, in­vest in new sew­er­age plant, build an ef­fi­cient pub­lic trans­port sys­tem and, most im­por­tantly, bring on line new en­ergy gen­er­at­ing tech­nolo­gies. We must en­sure we re­duce the cur­rent im­port in­ten­sity of that in­fra­struc­ture de­vel­op­ment, with the aim of build­ing up lo­cal in­dus­tries and stim­u­lat­ing job cre­ation.

One par­tic­u­lar sec­tor where that can be em­ployed is the re­new­able en­ergy sec­tor, where the ID be­lieves it has the po­ten­tial to be­come a world leader. That will not only re­duce our cur­rently high car­bon foot­print but with the right in­dus­trial pol­icy also cre­ate hun­dreds of thou­sands of jobs. In 10 to 15 years, Ger­many has cre­ated 250 000 jobs in that in­dus­try. Th­ese will be jobs in a di­verse range of in­dus­tries across the value chain, such as steel and glass man­u­fac­tur­ing, plumb­ing, elec­tri­cians and tur­bine de­sign and man­u­fac­tur­ing. The ID fur­ther main­tains we have to give young peo­ple a greater stake in SA’s econ­omy. Our ed­u­ca­tion sys­tem has also failed to equip our youth with the nec­es­sary skills to be­come pro­duc­tive work­ers, with the re­sult that 70% of young South Africans can’t find work. Over the short term the ID would in­tro­duce a wage sub­sidy for first-time work seek­ers be­tween the ages of 18 and 25 to give com­pa­nies in­cen­tives to hire them.

In the long run it’s im­per­a­tive for us to im­prove the out­comes of our ed­u­ca­tion sys­tem and the ID has detailed so­lu­tions on how that can be achieved. We can’t leave one school unat­tended in our ef­forts to en­sure ac­cess to elec­tric­ity, wa­ter and san­i­ta­tion and the pro­vi­sion of li­braries, func­tion­ing sci­ence lab­o­ra­to­ries and free In­ter­net con­nec­tiv­ity.

The ID would re­duce the cost of do­ing busi­ness in SA and in­tro­duce a com­pe­ti­tion pol­icy more pro-ac­tive in en­sur­ing free eco­nomic ac­tiv­ity.

In ad­di­tion, we need to open up key sec­tors to com­pe­ti­tion, such as telecom­mu­ni­ca­tions. The ID be­lieves it’s not pri­vati­sa­tion that’s needed but com­pe­ti­tion in or­der to se­cure ef­fi­ciency and lower prices. For ex­am­ple, by re­duc­ing the mo­nop­oly power of State en­ti­ties, such as Eskom and Telkom, an ID gov­ern­ment would cre­ate the right mar­ket dy­nam­ics for a re­duc­tion in the price of tele­coms, which is cur­rently one of the high­est in the world.

We’d gear fi­nanc­ing in­sti­tu­tions to­wards chan­nelling re­sources to small, medium and mi­cro en­ter­prises. In ad­di­tion, greater sup­port must be given to po­ten­tial en­trepreneurs, par­tic­u­larly in poorer com­mu­ni­ties. In that re­spect the ID ad­vo­cates the es­tab­lish­ment of one-stop shops in poor com­mu­ni­ties, where en­trepreneurs can be given the nec­es­sary as­sis­tance to start up small busi­nesses.

How­ever, in or­der for the lat­ter to be sus­tain­able, con­sumer de­mand needs to be in­creased in re­source-de­prived ar­eas. The ID would there­fore in­tro­duce a min­i­mum in­come grant, which would be given to all poor South Africans who cur­rently fall out­side the so­cial se­cu­rity net. The fund­ing for that grant will be raised through the tax­a­tion of cigarettes and al­co­hol, as well as cer­tain lux­ury goods.

Fi­nally, the ID will de­velop our ru­ral ar­eas, where poverty is at its worst, by in­tro­duc­ing a com­pre­hen­sive ru­ral de­vel­op­ment pro­gramme that would in­clude the pro­vi­sion of ba­sic ser­vices, roads and tech­ni­cal sup­port for small-scale farm­ers. We’ll work to cre­ate sus­tain­able liveli­hoods and lo­cal mar­kets, where small-scale farm­ers can sell their pro­duce.

The ID be­lieves SA is en­ter­ing the next stage in its de­vel­op­ment path, where the eco­nomic down­turn will re­quire ex­panded gov­ern­ment ex­pen­di­ture to make up for de­creas­ing pri­vate sec­tor in­vest­ment and con­sumer de­mand. We’d in­crease the deficit to just un­der 3% in or­der to in­crease gov­ern­ment spending.

The ID’s so­lu­tions in­volve in­vest­ments in key ar­eas that would both pro­vide as­sis­tance for mil­lions of poor South Africans as well as po­si­tion us to max­imise our fu­ture growth op­por­tu­ni­ties.

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