Business Maverick

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Analysis: Patel’s plan may be detailed, but still wrong

Analysis: Patel’s plan may be detailed, but still wrong

It is actually rather frightening how a policy and a vision – the creation of hundreds of thousands of jobs – that enjoy almost universal support in South Africa, can be so jeopardised by fundamentally flawed thinking on the part of government and more specifically the ruling ANC. It’s all a bit like a top athlete, in peak condition, cemented into the starting blocks. By STEPHEN GROOTES.

As you might have noticed, this website is capitalist in philosophy. And over the last few months we’ve been heavily involved in the debate over how best to create jobs in our economy. It’s an issue on which we hold some fairly passionate views. Last week, President Zuma used his State of the Nation Address to remind everyone that business had to be involved in job creation. In Parliament on Tuesday economic development minister Ebrahim Patel made us very happy, “The state will clearly play an important role in the new growth path,” he said, “but we can only achieve the 5 million new jobs if we unlock the employment-creating capacity in the private sector”.

The occasion was the debate in the national assembly about government’s plans for the year. If Zuma had promised us details from his ministers, well, Patel stood up to deliver them. In a speech, like Zuma’s, that was aimed at charting that middle line between business and labour, it was Patel’s job to put some skin of the bones of the vague outline sketched by Zuma.

Implicit in Patel’s speech is the realisation that, “Private investment is held back…by constraints and bottlenecks in energy, transport, water and communication infrastructure”. True enough. Unfortunately there are two major aspects that he also didn’t mention. Labour laws and the argument about nationalisation. Nowhere in his address does Patel mention labour laws. In a speech that is all about jobs, there’s no mention of labour legislation. It’s not something you can duck unfortunately. This makes the speech read like a plan to get more investment. When it’s supposed to be about creating jobs.

There is plenty of detail on how the move from analogue television to digital telly will create jobs (if you have DStv you don’t need to worry), how we’ll manufacture 170,000 solar geysers for low-cost housing, and how the Industrial Development Corporation will make R5 billion available for investments in the agro-processing industry.

Most impressive are plans for a R15 billion integrated metals plant that will beneficiate titanium, zirconium, vanadium, magnesium and silicone – 7,000 jobs in one go. It sounds wonderful, like science-fiction quite frankly. We’ve been here before, being the test-bed for a great new technology that will solve all our problems. Remember the pebble bed modular reactor, that was supposed to be a world first? In the end it just cost us a fortune.

But that’s really beside the point. Why spend R15 billion on mineral beneficiation when no one wants to invest in our mines. The fact is that until the ANC finds a way to rein in Julius Malema and his nationalisation claptrap, this will not be a place anyone of significance will spend really significant money. It is that simple.

One area where Patel absolutely has our support is in the state-owned enterprises arena. He said, “Our mandate… is clear, speed up the core areas, build roads and railway lines, construct power stations, provide flights that link us to key economic zones, reduce the cost of broadband…”

Well yes, that of course would help. But we were under the misapprehension that that was already the point of the SOEs. Why else do they exist if they are not to build roads and railway lines? So then we start to get back to the nub of the issue. While it is good to get the SOEs to help sort out our economy’s bottlenecks, again politics has made that all but impossible. It’s because of the in-fighting at Transnet that our railways are stuffed, which means our mines are stuffed, which means they can’t employ more people, which means that more people go hungry, which stores up more anger in places like Ermelo in Mpumalanga, which erupted this week. There really is a clear link between the looting of the parastatals, the mistakes made in the past at places like Eskom and human suffering. It is that simple.

At the same time there’s currently a presidential review of the parastatals. And the people doing the review still have until the end of the year to make their recommendations, which will then go to Zuma. And as we all know, the final decision will be made by the ANC NEC. As a result, there will be no certainty on what will happen for some time. So people at the SOE’s can’t even plan to start working on these bottlenecks.

There is a strong view in parts of the ANC that a bigger state is a good thing. That like China it would somehow allow the economy to be planned, to be bigger. They forget that we have a human rights culture here, that the people will not wear it if someone tries to tell them they cannot move from this area to another. They also forget another vital point. The Chinese have a capable public service. Their leadership is mostly recruited from engineers. We simply do not have any of that. If we can’t print proper passports, we can hardly try to plan what is currently a capitalist economy. They are also, of course, just plain wrong.

Patel is a good, clever man. He is far to the left of this website sure, but he has good ideas that deserve to be thoroughly discussed. More importantly, he’s consulted and thought very hard about what will work and what will not. In a way, if the state was competent, if we knew that none of his plans would be polluted by politics, he would get a partial thumbs up from us. Perhaps, just perhaps, it could be worth a try. Sadly, we fear that such is the nature of our politics at the moment, that we’ll find a way to stuff up even the best plan. And we also know that the best way to generate economic activity, which generates jobs, is to set the people, and the companies they own and work for, free. As even he recognises. But is unable and unwilling to do. DM

Grootes is an EWN reporter.

Photo of Ebrahim Patel courtesy of Mail & Guardian.


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