Statements by the DA, and articles by Max du Preez and Antoinette Slabbert (both for Moneyweb) and Bloomberg
The DA’s viewpoint, by its leader, Mmusi Maimane
14 August 2015
On Wednesday, our deputy president stood in the National Assembly and said, with no irony, that “if there is a government that is concerned about jobs in our country, it is the Jacob Zuma government”. He also told us that our economy is heading in the right direction and that we have nothing to worry about.
This is very much a minority view held by the president, the deputy president and a handful of loyal ministers. Everyone else is in agreement that the South African economy is in a dire situation. We’ll be lucky if we can break through 2% GDP growth this year, following a dismal 1.5% last year.
This is very grim news for the nearly eight and a half million South Africans who don’t have work and are desperately counting on a swift economic turnaround to stimulate the creation of jobs. At 2% growth, this is not going to happen. Instead, the steady decline in employment that we have seen since Jacob Zuma took office in 2009 will continue.
Expect to hear many more explanations from government about “external economic pressures”, and the time it will take to recover from the 2008 global economic downturn. But you need only compare our sluggish growth in recent years to that of other developing economies – including those in Sub-Saharan Africa – to expose this for the hollow excuse it is.
Most of our problems in stimulating growth have nothing to do with global conditions. They are our own doing and can only be solved by us. Through a crippling combination of the electricity crisis, labour market volatility, ill-conceived legislation, spiralling government spending (our public sector wage bill is set to reach a staggering R470 billion in the next three years) and policy uncertainty, we have managed to suffocate entrepreneurship and send investors elsewhere.
Where other developing countries have managed to lower their interest rates to encourage growth in start-ups, we cannot do so because of government-induced price pressures.
The problem now is that the challenge of turning the economy around appears so daunting and the leadership from government so vague, that we seem to be paralyzed in our response. Trapped like a rabbit in the headlights of the oncoming economic and jobs crisis, our government is unable to act.
But, like any huge problem, the only way to tackle it is by doing so one piece at a time. If you break the problem up into all its contributing challenges, you can plan and implement a response to each of them.
And so I would like to place on the table five steps that we can implement right away, that will halt our slide and begin the long process of economic recovery and meaningful job creation. These steps are aimed at recognising and supporting our big job creators, and ensuring that the doors to their businesses remain open.
The DA has a comprehensive economic policy that we will implement the minute we set foot in the Union Buildings, but the millions of excluded South Africans don’t have the luxury of time. These five steps are what can, and should, be done right now. It is crucial that our government starts working together with us to rescue our economy before it’s too late.
We must immediately solve the energy crisis
Over the past seven years, our insufficient and unpredictable electricity supply has played the biggest role in our economy’s failure to recover. Economists put the cost of load-shedding on our economy at over R200 billion per year, and even President Zuma himself admitted on Tuesday that it is costing us 1% economic growth per year.
In the long term, we need to break the Eskom monopoly and completely re-look our energy plan, taking recent advances in renewable technology into account. But in the short term we can address both supply and demand to ensure a stable electricity supply with the least amount of disruptions to businesses.
On the supply side, the Department of Trade and Industry must immediately make available R500 million of its budget to purchase industrial-size generators for manufacturing industries so that they can keep their factories open and productive. This generator programme should specifically target labour-intensive small to medium-sized manufacturing companies, and should be combined with initiatives to improve energy efficiency in these companies’ manufacturing processes.
On the demand side, we need to look at load-curtailment agreements between electricity suppliers and large consumers. By shifting some productive activity to off-peak periods, and by pre-determining reduction in consumption, we can manage any periods of electricity shortages in a far more effective manner.
Then we must also immediately reintroduce the Independent Systems and Market Operator (ISMO) Bill – which will remove the operation of the national grid from Eskom and place it with a separate state-owned entity – and we must walk away from the ill-considered nuclear deal.
We must protect two of our most valuable sectors: tourism and mining
ANC policies and regulations have caused untold damage to both these crucial sectors of our economy. Together, tourism and mining contribute two million jobs to our economy and, if we are to stave off further job losses, we need to urgently re-look these harmful policies and regulations.
The new visa regulations are already proving to be catastrophic for our tourism industry, with overseas arrivals down by 7% in the first quarter of 2015. Arrivals from one of our most important strategic markets, China, are down 38% in the same period. Tourism has the potential to grow like no other industry, and it is estimated that one South African job is created for every 12 tourists that arrive. Unfortunately, the reverse is also true, and if we’re turning away tourists in numbers, we’re also killing thousands of jobs.
To prevent further job losses, we must urgently reconsider the two contentious regulations that are responsible for the sharp decline in arrivals. We must repeal the requirement for in-person biometric visa applications, and we must suspend the requirement for an unabridged birth certificate when traveling with children until a proper study into the full extent of child trafficking has been done.
Mining accounts for more than half our exports, and ripples in the mining sector are felt far downstream in the manufacturing sector. While the mining industry is in need of urgent structural reforms, we can stem further job losses in the interim with three interventions:
We must stop re-empowering once the government-stipulated B-BBEE ownership has been reached. Repeating this whenever B-BBEE owners sell their shares does nothing for broad-based empowerment and chases investors away.
We must amend the Mineral and Petroleum Resources Development Act (MPRDA) to address issues around export blocking and price control, as well as state take-overs of mines.
We must agree not to indiscriminately raise the B-BBEE ownership level until we’ve reviewed the success of current empowerment provision.
We must do all we can to support small businesses
The DA’s views on small businesses and entrepreneurship are in line with the National Development Plan. We agree that this is where the bulk of our new jobs will come from, and it’s also the best way to fight apartheid’s legacy when it comes to business ownership. Whereas large enterprises operating in our low-growth environment are all about cost containment, SMMEs are the real absorbers of labour.
Government’s narrow focus on procurement as a tool for stimulating small businesses has had the opposite effect, as we continue to see low levels of entrepreneurship along with many failures of start-ups. Instead, the focus should be on financing, along with non-financial support, for SMMEs that show good growth potential.
Immediate steps should include tax incentives for business mentors; increasing B-BBEE points for skills development, mentorship and job creation; establishing one-stop Opportunity Centres where government support in the way of advice, business registration and training can be found; developing a streamlined Development Finance Institution to provide grants, equity and loans; and establishing a Red Tape Reduction Unit to help small businesses deal with the regulatory burden by identifying archaic and obsolete regulations.
We must reform our labour market to protect both the employed and the unemployed
Our labour policy must balance the protection of workers’ rights with the need to build flexibility into the labour market so that businesses find it easier to create jobs. If we fail at finding this balance – as is currently the case – we end up protecting the employed at the expense of the unemployed.
In order to create a stable labour environment that boosts investor confidence, we must amend or repeal certain parts of the Labour Relations Act (LRA). This includes restricting collective bargaining agreements to the entities who were party to agreement, getting rid of “closed-shop” agreements that only serve to entrench majority unions, and not allowing majority unions to agree with employers on minimum thresholds for union representation.
Then we also need to democratise the strike balloting process – with a 14 day strike notice period and a secret strike ballot – as well as ensuring that unions take responsibility for unprotected, violent strikes.
We must assure investors, through policy certainty, that we’re open for business
The ideological competition and confusion in the Tripartite Alliance is the biggest source of our policy uncertainty. While we are meant to be following the National Development Plan as our long-term policy framework, the introduction of contradicting plans such as the New Growth Path and the National Democratic Revolution have rendered this virtually impossible.
The lack of confidence in our economy can be clearly seen in the dwindling levels of foreign investment. In June, the Fitch ratings agency warned that “policy proposals currently under discussion could have an adverse impact on growth, if implemented”. We cannot afford any further adverse impact on our already struggling growth, and so it is crucial that we reconsider a raft of poorly conceived bills currently before parliament.
These include the Private Security Industry Regulation Amendment (PSIRA) Bill, the Promotion and Protection of Investment Bill, the Licencing of Business Bill, the Mineral and Petroleum Resources Development Act (MPRDA) and the Expropriation Bill. Only by amending or repealing these damaging pieces of legislation will we restore investor confidence and create job opportunities.
There is no denying that our economy is in a grave state, and that our government has so far been toothless in fighting rising unemployment. But this doesn’t mean we can’t turn things around. With the right urgent remedial action, we can bring back investors and see small and medium businesses thrive.
In the meantime, the DA will continue to work in Parliament to build the kind of inclusive economy that expands opportunities to all South Africans. We won’t stop fighting to amend, repeal or scrap the various pieces of legislation that threaten to drag our economy further down and cost thousands of South Africans their jobs.
Because we believe that a South Africa built on the values of Freedom, Fairness and Opportunity for all is still well within our reach.
Mmusi Maimane
DA Leader
Also read: Make Ramaphosa the CEO of SA Inc
by Max du Preez, in Moneyweb today
Poor Jacob Zuma. Even when he does something right he gets crucified. But don’t feel too sorry for him.
The prospect of massive job losses in the mining sector, the deteriorating value of the rand, the energy crisis and almost daily reports of the collapse of State-owned enterprises have led to an unprecedented sense of pessimism across South Africa in recent weeks.
The national mood became so dark that one expected the government leadership to stand up and say something to the nation. Which was exactly what Zuma did this week with his unusual ‘update’ on his State of the Nation address.
Yes, this kind of intervention should have taken place in Parliament, but we can’t blame Zuma for doing it at a press conference. If he had gone to Parliament he would simply have been shouted down by the EFF, interrupted endlessly and asked to “pay back the money”.
There wasn’t a lot wrong with what Zuma said in his progress report. He was correct to remark that our crisis wasn’t unique in the world. Of course he had to focus on the positive without denying the negative. As head of state he had to give us some hope that the slippery slope we’re on is actually not as steep or slippery as most South Africans seem to think.
Sadly, Zuma’s progress report intervention was a failure. If anything, it made many of us even more depressed.
I was looking for signs that he had a grip on the scope and nature of our problems; that he had at least some understanding of the nature of our economic woes and possible ways out.
There were no such signs. He read his statement haltingly in a manner that suggests he had no hand in writing it. His eyes followed word after word strung together in sentences and his mouth mechanically formed those words.
I found myself wondering who was responsible for the content of the statement he was reading. Was it the Minister of Finance, the Minister of Trade and Industry, the Minister of Economic Development or some ‘inter-ministerial committee’? Did the second-in-command have a say in it?
Well, on Wednesday we did hear from Deputy President Cyril Ramaphosa in Parliament. The difference could not have been greater.
Apart from deftly warding off fierce attacks from the opposition, Ramaphosa spoke fluently and with authority on government’s decision to lessen the impact of new visa regulations on tourism and on the Chinese model of managing State-owned enterprises (Watch this space!).
This man’s considerable talents are wasted right now. He could be of so much more value to the ANC and the country.
The reality is that Zuma is the boss in the ANC. He is entrenched in all structures. His Zulu-speaking constituency is indispensable to the party. He is a master party manipulator. He’s not going anywhere – at least not until the ANC’s elective conference in mid-2017, perhaps right up to 2019 if he gets his way.
So how does the ANC keep him as Number One and still make full use of Ramaphosa?
Just a slight shift, I would suggest. Allow both men to focus on what they’re really good at.
Zuma should become more of a ceremonial president: a figurehead, a father figure, with Ramaphosa becoming more of a prime minister. No need to change the Constitution. This should simply be an arrangement, like Nelson Mandela had with his ‘prime minister’, Thabo Mbeki. That arrangement worked very well, I would say. Similar arrangements in other democracies have also worked.
Some may argue that we already have such an arrangement. Sure, when Zuma was very sick during the middle months of last year Ramaphosa did act as the de facto head of the executive, and few ordinary citizens noticed.
It is also true that Ramaphosa has been given a multitude of tasks, such as making peace in South Sudan and Lesotho, overseeing efforts to ameliorate the energy crisis and saving State-owned enterprises – a bit of a presidential dogsbody, in fact, but no clear mandate to play a leading role in the executive.
Chapter 90 of the Constitution states: “The Deputy President must assist the President in the execution of the functions of government.” Indeed. We just need him to have a little more power in doing that.
We need Ramaphosa to be a CEO working with the president or chairman of SA Inc.
But this is pure fantasy. There are too many in the ANC, including Zuma, who are scared of Ramaphosa building up too much of a power base. There are too many cabinet ministers, especially people like Blade Nzimande, Ebrahim Patel, Rob Davies and Jeff Radebe, who I suspect would hate to answer to Ramaphosa.
Let’s not forget that the battle for Zuma’s successor is now in full swing, especially after the Women’s League indicated that they want a woman (read: Nkosazana Dlamini-Zuma) rather than the natural candidate, the deputy president, to succeed Zuma.
Dream on, business people.
Also read:
Leadership vacuum hobbles SA’s SOEs
August 14 2015 at 08:05am
By Mike Cohen and Liezel Hill, Bloomberg, Comment on this story
Johannesburg – Rudderless and cash-strapped.
That’s the state of South Africa’s biggest state-owned enterprises, known as SOEs, after the government failed to heed warnings from its advisers about a lack of leadership, oversight and strategic vision. The companies supply about 95 percent of electricity to Africa’s most-industrialised economy, run railways and ports and operate the national airline and postal services.
“Too many bad decisions have been taken regarding certain SOEs, leading to critical business performance failures,” Raymond Parsons, a professor at the North West University Business School in Potchefstroom, west of Johannesburg, and a former head of the country’s biggest business association, said by email. “The government has either been unwilling, or unable, to take the tough decisions needed.”
South African Airways, oil and gas company PetroSA Ltd and the South African Post Office collectively lost more than R20 billion in the past two financial years, while Eskom Holdings SOC Ltd is failing to meet demand for power, which has resulted in rolling blackouts almost every second day on average this year. The four companies, along with the Passenger Rail Agency of South Africa, have acting chief executive officers.
South Africa’s state entities are central to the success of the government’s 20-year development plan to boost growth and cut a 25 percent unemployment rate. State companies are set to invest R362 billion over the next three fiscal years to help spur an economy that’s battled to gain momentum since a 2009 recession.
Inadequate, unstable
“To a large extent the ability of South African industries to compete globally is influenced by the effectiveness of our SOEs,” Mark Cutifani, the CEO of Anglo American, said in a July 30 speech in Johannesburg. “We are being constrained by expensive, yet inadequate and unstable electricity supply and by capacity limitations on state-run rail links.”
While a panel appointed by President Jacob Zuma in 2010 to review their performance recommended a strategy overhaul, new rules for appointing board members and a clearer funding approach for state companies, the government took no immediate action and the management oversight of several of them has deteriorated.
SAA, which last made a profit five years ago and is surviving on government guarantees, has had five CEOs in the past three years. Eskom, battling to plug a R191-billion funding gap, has had six CEOs in a decade. Its last permanent leader was replaced in March after six months in the job, while the chairman resigned two weeks later.
Governance failure
Keeping the companies under state control has given the ruling African National Congress a greater influence over the economy and the appointment of key personnel.
The management flux is “a huge governance failure”, Lumkile Mondi, an economics lecturer at Johannesburg’s University of Witwatersrand who served on the state review panel, said.
“Where you have short-term appointees, you are basically saying to the private sector ‘don’t make long-term decisions’,” he said by phone. “The biggest loser is our economy.”
PetroSA’s loss widened to about R15 billion last year after making the biggest-ever impairment by a government company. Its chairwoman Nonhlanhla Jiyane quit in July, a month after CEO Nosizwe Nokwe-Macamo and chief financial officer Lindiwe Mthimunye-Bakoro were suspended due to the company’s poor performance.
‘Revamp them’
Transnet SOC Ltd, the rail, ports and pipeline operator, is an exception, having been profitable for more than a decade. Its CEO, Brian Molefe, and Chief Financial Officer Anoj Singh have been seconded to run Eskom.
“Not all state-owned enterprises are going through difficult times,” Deputy President Cyril Ramaphosa told lawmakers in Cape Town on August 12. “A few of these state-owned entities are operating in difficult markets. We are determined to revamp them.”
Laws are being drafted that will regulate how state company CEOs are appointed, according to Public Enterprises Minister Lynne Brown.
Stable management is required as a matter of urgency, said Shaun Nel, a spokesman for the Energy Intensive Users Group of South Africa, which represents 31 of the country’s largest electricity users.
“The importance of the SOEs to the economy cannot be underestimated,” he said by email. “While particularly Eskom and Transnet retain good technical staff, maintaining operations and delivering their mandates is hampered by indecision and executive turn-over.”
* With assistance from Amogelang Mbatha in Johannesburg
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Antoinette Slabbert
Ja but don’t you know that before 94 in the Apartheid era there was nothing and the ANC built the SA that exists today……..
World is in crisis and SA part of it – Zuma
Government plans to increase economic growth by 0.8%.
Antoinette Slabbert | 11 August 2015 17:38
It is not all doom and gloom in South Africa, President Jacob Zuma said at a media briefing on Tuesday. He was giving feedback on the implementation of a nine-point plan that he said could accelerate economic growth by 0.8% in the short term and 1% in the medium- to long term.
The plan was first announced in his State of the Nation Address in February and covers a wide range of topics.
Asked whether South Africa is in crisis, he said the world has been in crisis since 2008 and South Africa is part of it. In comparing South Africa’s performance with that of other countries in Africa, one has to keep in mind that other countries did not have to deal with the legacy of Apartheid, he said.
He said few other countries could have done what South Africa has done in the 21 years since its democracy, with policies aligned to the poor firmly in place. He said the country has good policies, but struggles with implementation.
“South Africa is a dynamic and open country. People can say what they want. People can dream and get up and say the country will fall, and it will be broadcast. It is not true. These are very complex challenges we are dealing with,” he said.
Zuma said government is committed to 5% economic growth in 2019 and last year’s 1.5% growth is some distance from that ambition. Despite the low global growth, economic growth in South Africa is expected to increase steadily to at least 3% over the next three years as electricity constraints are expected to ease.
The electricity deficit is currently costing the country 1% in economic growth, Zuma said.
He said the nine-point plan is the result of looking inward for growth opportunities.
Mining job losses
Zuma said possible job losses in the mining and steel industries are a serious concern for government and all parties should work together to prevent it. He said wage negotiations cannot ignore the current context and proposals have to be realistic in the light of the low economic growth locally and globally.
When the global financial crisis hit in 2008 all sectors got together and created a Jobs Fund that facilitated training for workers to find alternative employment. This worked and set a precedent for dealing with the threatening job losses, Zuma said. Government, business and organised labour will discuss the way forward, he said.
He said mining remains a critical component of the economy and government wants to retain it as the backbone of the economy. He said following Minister of Mineral Resources, Ngoako Ramatlhodi’s meeting with stakeholders on August 5, a task team will report back on ways to save jobs and find alternatives to job losses in the mining industry.
The Presidential Business Working Group mandated government and the Chamber of Mines to seek an amicable solution outside of the courts for the notion of “once empowered, always empowered” in the Mining Charter, he said.
Zuma said it is critical to normalise labour relations and Deputy President Cyril Ramaphosa is leading the interface between business and organised labour.
“Consensus on a working definition of a national minimum wage has been reached at Nedlac,” he said. “Other mechanisms to reduce workplace conflict include an agreement to develop a code of conduct for strikes, lockouts and compulsory arbitration by the CCMA.”
Regulatory efficiency
Zuma said among the critical points discussed at the Presidential Business Working Group last week is the need to improve regulatory efficiency and reduce delays for investors. Government will continue with its special economic zones to facilitate investment in key localities, while a pilot ‘one stop shop’ for local and international investors has been set up at the Department of Trade and Industry.
Zuma said the centre would improve the investment climate and enhance the ease of doing business by identifying bottlenecks, removing administrative barriers, reducing regulatory inefficiencies, setting up norms and standards, improving turnaround times, coordinating and fast-tracing all investment enquiries.
Government is planning a review of legislation pertaining to small businesses in an effort to reduce red tape for them, Zuma said. It is further working towards the implementation of a 30% set-aside policy to support small businesses and co-operatives and increased access to markets and finance for them. A new unit in the Department of Planning, Monitoring and Evaluation will further investigate cases of late or non-payment of small businesses where they have submitted legitimate invoices within 30 days.
SA economic growth
The Presidential Business Working Group agreed that, together with the nine-point plan, South Africa should also be more pro-active and awake for opportunities, for example new markets opening up as a result of growth in Africa, Zuma said.
“Growth in the sub-Saharan region is expected at 4.5% in 2015. As the region develops, it will require industrial supplies. In this regard, our industrialisation policy is not misplaced, especially since Sadc (Southern African Development Community) is also focusing intensively now, on finalising the industrial policy for the region. We will continue working within the African Union and Sadc to participate in the establishment of the continental free trade areas and to boost the industrialisation strategies of the continent,” the president added.
He said government is also very concerned with complaints about the new visa regulations and formally announced an inter-ministerial committee under the leadership of Ramaphosa to address the unintended consequences on the tourism industry. The ministers of tourism, home affairs, trade and industry, social development and small business development all serve on the committee.
According to the Presidency’s Chief Operations Officer, Lakela Kaunda, the Presidency will in future do more regular briefings as a way of accounting to the country.
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