SAV­ING SA FROM ITS BROAD­EN­ING SLIP­PERY SLOPE

Sunday Tribune - - BUSINESS REPORT -

DIS­COV­ERY chief ex­ec­u­tive Adrian Gore men­tioned at the re­cent Lead­er­ship Sum­mit that there is an el­e­ment of “de­clin­ism” – a pes­simism about the state of one’s coun­try – in South Africa, and that it did not ac­cu­rately rep­re­sent the sit­u­a­tion fac­ing our coun­try.

While Gore might be cor­rect that some things are im­prov­ing, it can­not be de­nied that we are on a down­ward slope, and that if we con­tinue to fol­low our cur­rent tra­jec­tory there won’t be any­thing left to trans­form.

Speak­ing at the Free Mar­ket Foun­da­tion on Oc­to­ber 31, econ­o­mist Dawie Roodt laid bare South Africa’s cur­rent fis­cal sit­u­a­tion and pointed out that, ac­cord­ing to the Trea­sury, our gross do­mes­tic prod­uct is ex­pected to grow by only about 1.7 per­cent in 2019. Com­pared to emerg­ing economies which in­vest an av­er­age 23 per­cent of GDP, South Africa’s fixed in­vest­ment per­cent­age is only 19 per­cent.

As a per­cent­age of to­tal GDP, the gov­ern­ment spends 29 per­cent. Po­lit­i­cal van­ity projects for which we sim­ply do not have the fis­cal room – the Na­tional Health In­sur­ance be­ing one ex­am­ple – are planned and all they ever re­sult in is in­creased bu­reau­cracy, in­creased gov­ern­ment size and ul­ti­mately lower growth.

Ac­cord­ing to econ­o­mist Njab­ulo Mh­lambi, the pub­lic sec­tor wage bill is R328 000 per civil ser­vant per year on av­er­age. This R587 bil­lion per year for over 2 mil­lion bu­reau­crats and of­fi­cials rep­re­sents al­most a third of the bud­get.

It was thus heart­en­ing that dur­ing his elec­tion cam­paign within the ANC, Pres­i­dent Cyril Ramaphosa promised to cut back on the size of the gov­ern­ment.

Fi­nance Min­is­ter Tito Mboweni also re­cently al­luded to the idea of re­duc­ing the size of the Cab­i­net from an as­ton­ish­ing 70 min­is­ters down to 25 or ide­ally 20.

But at the Jobs Sum­mit held on Oc­to­ber 4 and 5, Ramaphosa an­nounced a mora­to­rium on pub­lic sec­tor job losses. If the pres­i­dent in­tends to stick to this mora­to­rium, it will be a grave mis­take.

How do we re­solve this sit­u­a­tion? The gov­ern­ment must start by un­bundling and pri­vatis­ing, or liq­ui­dat­ing and clos­ing down, all our ma­jor state-owned en­ter­prises, such as South African Air­ways and Eskom.

The next thing the gov­ern­ment must do is re­peal dra­co­nian pro­vi­sions in our labour law. Third, there must be a whole­sale and com­pre­hen­sive re­view and re­peal of reg­u­la­tions. Last, the gov­ern­ment must al­low peo­ple to save money.

Chris Hat­tingh and Martin van Staden are re­searchers at the Free Mar­ket Foun­da­tion

Newspapers in English

Newspapers from South Africa

© PressReader. All rights reserved.