Good policy choices can save us

SHIFTING GEAR: GOVERNMENT NEEDS TO CHANGE ITS PRIORITIES

Negative attitudes to business lead to more regulation, not more growth, says Ann Bernstein. Moneyweb

The stats are well-known – and frightening: over 35% of South Africans live on less than R500 a month. At least 9.3 million people are unemployed. Nearly 40% of South Africans between the ages of 15 and 34 are inactive. Compounding this, our GDP is growing at below 1% per year.

Speaking at UCT’s Graduate School of Business last week, Centre for Development and Enterprise’s Ann Bernstein noted that these realities lead to the high levels of inequality in society. But it needn’t be this way.

“The problem is that growth is not this country’s priority. Government says it wants growth, but it wants other things as well. It wants to have state-led development. But if you look at Eskom or SAA today you have to seriously question the capacity of state-led development.”

Policy choices

Government’s also ideologically divided and has adopted competing growth plans.

“Why does South Africa still have so much poverty and inequality 22 years after apartheid? The reality is, we are in a multiple set of crises of our own making,” she said, adding that “while the apartheid legacy is appalling and the global economy isn’t really helping us, SA’s own policy choices undermine our growth prospects.

“However, if bad policy choices got us here, we can make different policy choices to change the future. Government has to place accelerated growth and employment at the top of the policy agenda …”

Role of business

Focussing on growth also means recognising business’s role. “South Africa cannot be progrowth and anti-business at the same time… Negative attitudes to business lead to more regulation, not more growth,” Bernstein argued.

“You have to expand the private sector, because the more competition there is, the more chance you have [to open] space for newcomers… This country spends far too little time thinking about how to get more new firms that will be created and invested in by black South Africans.”

Unisa’s Professor Vusi Gumede argued the lack of trust between business and government must be resolved.

“You can have a lot of debate about whether market-led development is what we need or if business is the answer, but the most critical issue is that we need a consensus.”

The voice of business

Critically, the private sector must get better at arguing for its role and explaining its value in society, and must formulate a more constructive relationship with government.

“Market-driven economic growth, regulated by an intelligent, capacitated state is the only way I can see that we can get to scale,” Bernstein said.