Gaps be­tween ANC rhetoric and gov­ern­ment pol­icy

Afro Voice (Western Cape) - - Opinion & Analysis - Yonela Diko is a me­dia and com­mu­ni­ca­tions spe­cial­ist

ON OC­TO­BER 25, Min­is­ter of Fi­nance Malusi Gi­gaba de­liv­ered his maiden medium-term bud­get pol­icy state­ment (MTBPS) at the Na­tional Assem­bly which was widely seen as hon­est and well-ar­tic­u­lated, de­spite lack­ing spe­cific ac­tions on what the min­is­ter will take to get us on sus­tain­able growth tra­jec­tory.

Once again how­ever the state­ment re­vealed the numb­ing gap be­tween ANC rhetoric on eco­nomic pol­icy and what we ac­tu­ally say in gov­ern­ment. These are self­in­flicted gaps which move from pop­ulist nar­ra­tives as we criss-cross the coun­try cam­paign­ing and the re­al­ity and se­ri­ous­ness of gov­ern­ing a mod­ern econ­omy.

The con­tra­dic­tions were soon clear on the ques­tion of Min­ing Char­ter and nu­clear deal post-state­ment. Gi­gaba was clear that busi­ness and gov­ern­ment need to en­gage on the Min­ing Char­ter un­til mid­dle ground is found.

Min­is­ter of Min­eral Re­sources Mosebenzi Zwane feels that he has ex­hausted this path and busi­ness only seek their way or no way and gov­ern­ment, in the end, must gov­ern. Gi­gaba also made it clear that at this stage of the econ­omy, we do not have enough eco­nomic ac­tiv­ity to re­quire nu­clear en­ergy. We ac­tu­ally have huge en­ergy ex­cess. The nu­clear op­tion is there­fore counter-in­tu­itive at this stage. It was only the fol­low­ing day that the new Min­is­ter of En­ergy David Mahlobo told the coun­try that the nu­clear op­tion is go­ing ahead.

The re­al­ity of all coun­tries to­day is that they are all com­pet­ing to be the big­gest re­cip­i­ents of for­eign di­rect in­vest­ment (FDI). For South Africa, that FDI needs to help us move away from over-reliance on nat­u­ral re­sources for ex­ports and avoid a com­plete shift to­wards the elit­ist fi­nan­cial sec­tor. We need the mid­dle ground, a thriv­ing man­u­fac­tur­ing econ­omy that can pull our peo­ple out of un­em­ploy­ment and poverty, par­tic­u­larly for our young peo­ple.

The pri­or­ity of the ANC gov­ern­ment to­day is restor­ing a strong econ­omy and de­liv­er­ing the much-needed jobs above all else. Eco­nomic growth is crit­i­cal for any coun­try be­cause it in­creases public fi­nances and re­duces un­em­ploy­ment among other things.

A re­duc­tion in gov­ern­ment debt as the econ­omy grows helps us im­prove our GDP/debt ra­tio, and help us im­prove in­vestor con­fi­dence. As long as our state-owned en­ter­prises are bleed­ing the state in­stead of an­chor­ing the econ­omy and as long as ir­reg­u­lar ex­pen­di­ture con­tin­ues to be a yearly drain in our fis­cus, we are not go­ing to suc­ceed in im­prov­ing our public fi­nances and show in­vestors we are a coun­try that lives within its means.

South Africa is cur­rently suf­fer­ing from his­toric low lev­els of in­vestor con­fi­dence. We have very low lev­els of con­sumer con­fi­dence. The re­sult is very low lev­els of eco­nomic ac­tiv­ity as busi­ness and con­sumers pull back from the mar­ket.

The lack of busi­ness in­vest­ment, as many have told us, is not be­cause of low lev­els of liq­uid­ity but be­cause busi­nesses are not con­vinced of re­turns if they ex­pand and build more busi­nesses. Con­sumers are also tak­ing less debt and buy­ing less be­cause of anx­i­ety about their own fu­tures and that of the coun­try.

The ques­tion then that Gi­gaba had to an­swer was what mea­sures the gov­ern­ment could take in or­der to get back in­vestors and con­sumers into the mar­ket place. The gov­ern­ment has a few tools at its dis­posal in or­der to re­boot the econ­omy and ig­nite both busi­ness and con­sumer con­fi­dence.

There are spe­cific things we can do to re­boot in­vestor con­fi­dence in our econ­omy and Gi­gaba touched on all the right but­tons. The first step in get­ting the needed in­vestor con­fi­dence is to make the right in­vest­ments that will en­sure a much more pre­dictable fu­ture with a pos­i­tive out­look.

It goes with­out say­ing that ev­ery­one would like to get a sense that our gov­ern­ment pri­ori­tises ed­u­ca­tion and re­search, both in in­vest­ment, in de­mand­ing bet­ter re­turns from those in­vest­ments and re­design­ing cer­tain as­pects of our ed­u­ca­tion pro­grammes in or­der to build a pool of fu­ture busi­ness lead­ers.

An in­vest­ment in ed­u­ca­tion must be ac­com­pa­nied by a plan of scal­ing down our South African So­cial Se­cu­rity Agency (Sassa) pro­gramme so that as part of the fruits of ed­u­ca­tion, we can show that many peo­ple are mov­ing out of Sassa pro­grammes into sel­f­re­liance and fi­nan­cial in­de­pen­dence. A coun­try with a fu­ture ed­u­cated pop­u­lace and less gov­ern­ment sup­port pro­grammes is a coun­try worth in­vest­ing in.

The sec­ond thing our gov­ern­ment needs to look at is our reg­u­la­tory frame­work. A reg­u­la­tory frame­work that is cum­ber­some, te­dious and un­friendly pushes in­vestors back. A reg­u­la­tory frame­work must come with cer­tain guar­an­tees, con­sis­tency and clar­ity so that busi­nesses can fo­cus on the busi­ness ac­tiv­i­ties, on out­wit­ting their com­peti­tors and on find­ing gaps of ex­pand­ing their reach.

Part of the clear reg­u­la­tory frame­work is the pro­tec­tion of work­ers who form the con­sumer base of the coun­try. It is ridicu­lous that there must be no fair wage mark in the mar­ket as a con­di­tion for more em­ploy­ment. That has never been proven any­where in the world. What ends up hap­pen­ing is an ex­ploita­tion of work­ers, slow­ing down of pro­duc­tiv­ity, strikes and vi­o­lence caused by worker dis­sat­is­fac­tion.

It also breeds the mon­ster of ex­treme in­equal­ity, which later causes re­sent­ment and more chaos.

Wits Univer­sity re­leased a re­port a year ago which right­fully sug­gested that a na­tional min­i­mum wage be­gin­ning at be­tween R3 500 and R4 600 a month, and the in­creased buy­ing power it would cre­ate, would stim­u­late the econ­omy. This has right­fully been adopted at Ned­lac. This means no em­ployer is al­lowed to pay a worker less than this min­i­mum amount.

This is easy to ap­pre­ci­ate. If you gave R10m to one man, he might spend two or three mil­lion of it. But when you give R10 000 to 1 000 peo­ple, all of them will spend their ten thou­sand rand and the econ­omy will get the whole 10 mil­lion that would have been missed by the econ­omy were it given to one man.

These heav­ily skewed pay gaps be­tween ex­ec­u­tives and em­ploy­ees is there­fore detri­men­tal to the econ­omy.

In times of eco­nomic down­turn, it is also wise for the gov­ern­ment to con­sider eas­ing its tax bur­den on busi­ness as an in­cen­tive for busi­ness growth.

Most im­por­tantly how­ever is a tar­geted gov­ern­ment ex­pen­di­ture, par­tic­u­larly a heavy in­fra­struc­ture spend that will serve to stim­u­late the econ­omy while mak­ing crit­i­cal in­vest­ments into the fu­ture.

In essence, gov­ern­ment has to fill the void left by busi­ness in or­der to keep the eco­nomic ac­tiv­ity up to a point where busi­ness comes out to the mar­ket. In­fra­struc­ture in­creases pro­duc­tiv­ity by en­abling busi­nesses to op­er­ate as ef­fi­ciently as pos­si­ble. As it would nat­u­rally fol­low, in­fra­struc­ture spend­ing cre­ates jobs as work­ers must be hired to com­plete in­fra­struc­ture projects that are green-lighted.

Our roads need great over­hauls ev­ery­where you go, com­pro­mis­ing the ef­fi­ciency of com­merce. There re­mains com­mu­ni­ties and towns with­out re­li­able elec­tric­ity sup­ply and one can imag­ine busi­ness losses that are caused by such reg­u­lar out­ages. The most im­por­tant in­vest­ment though in South Africa is the need to do a com­plete over­haul of our rail­way in­fra­struc­ture.

We have dis­cussed be­fore that if we can have a world class, re­li­able rail­way trans­port across the coun­try, we can move much of the goods trans­ported by big trucks on our roads to rail, thereby un­bur­den­ing our roads of the heavy ve­hi­cles, sav­ing us money on road main­te­nance and, more im­por­tantly, re­duc­ing ac­ci­dents on our roads which are also a big drain on our fis­cus.

What the ANC needs to fi­nally come to terms with is the re­al­ity that we con­tinue to be a con­tra­dic­tory or­gan­i­sa­tion both in pol­icy and rhetoric. On one hand we ac­knowl­edge the role of busi­ness in cre­at­ing jobs and re­duc­ing poverty, on the other hand our so­cial­ist pos­ture and our rev­o­lu­tion­ary ethos, sug­gest an at­ti­tude that sees busi­ness as an en­emy of the peo­ple, ex­ploiters, abusers of labour, self­ish profit driven cru­saders who must be stopped through reg­u­la­tion and threats.

Busi­ness is never sure what the ANC is re­ally up to and weather ANC sees busi­ness as friend or foe. It’s time for us to send a clear message to busi­ness.

It is time to close the gap be­tween our po­lit­i­cal and gov­ern­ment rhetoric.


GROWTH AND STA­BIL­ITY: The pri­or­ity of the ANC gov­ern­ment to­day is restor­ing a strong econ­omy and de­liv­er­ing the much­needed jobs above all else.

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