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Government’s love-hate relationship with business has consequences for the poor

Thembinkosi Gcoyi is the Managing Director and Co-founder of Frontline Africa Consulting. He is a former South African Diplomat and has served as Economic Counsellor at the countrys Embassy in Beijing, China. He also runs a blog on his firms website - He may be contacted at [email protected].

The publication of the amended Mining Charter by the Department of Mineral Resources has sent shivers down the spine of the mining industry. Speaking to Members of Parliament last Wednesday, the Chamber of Mines decried the lack of proper and earnest consultation by the Department of Mineral Resources in amending the Charter.

Predictably, the Chamber of Mines has threatened to take government to court should a credible process to incorporate their views not be embarked on in the short term. Most of us can probably predict how that will go, given government’s record in these things over the last few years.

Tragically, the refrain of lack of consultation is fast becoming a standard complaint about government’s policy-making modus operandi – this at a time when there is broad consensus about the untenable economic situation South Africa currently finds itself in, with all three major credit ratings agencies having now downgraded the country.

There is also a growing ambivalence about the ability of policy-makers to understand the balance of economic forces in the world and to appreciate that South Africa is not as special as many of us have tended to believe. The truth of the matter is that South Africa is a small market in a small corner of the world with no significant competitive features relative to its peers in South East Asia, South America and, for that matter, other parts of the African continent. Contrary to our delusions of grandeur, we are but a small and insignificant player in world economic affairs. Tough decisions about whether to keep or bring money to our market are likely to be made in the negative if we continue to behave as if capital, white or otherwise, owes us a favour. Things will get worse with no guarantee that they will get better soon enough to salvage the hopes of a generation.

The question to ask, amid all the noise, is whether or not our democratically elected government gives enough consideration to the plight of poor citizens whose jobs are likely to be put at risk by the off-the-cuff regulations that government seems fond of issuing lately. I count here the sugar tax, which was sent back by Parliament for lack of consultation. I count the liquor bill, which was also found to not meet the requirement for broad and earnest consultation. I count the pending introduction of a tobacco amendment bill, which, if current trends are predictors of future behaviour, will also not take into account the interests of the industry. I say nothing of e-tolls. We all know how badly that story is failing.

Seemingly, the love-hate relationship that our government has with business has confused government’s ability to comprehend that willy-nilly regulating of important sectors of the economy to force change at short notice via unsustainable or unfeasible interventions will have very real consequences for the poor majority of South Africans who work in these important industries.

Already, the South African mining sector is fast losing its competitiveness when compared to other mining economies around the world. Can it really be in the best interests of South African workers – I dare say black workers – to introduce what we know to be value destroying regulations for these industries, knowing very well that capital will simply shift its resources elsewhere and leave only carnage for our people?

I pose this question not to protect the rights of mine owners, liquor companies or tobacco companies. Rather, I ask it because government has insisted on minimising the impact of its actions and regulations on jobs, only for those to be borne out. If in doubt, recall the visa debacle that our current Minister of Finance bequeathed the nation in 2014/15. Recall also the job destroying capitulation to US demands for South Africa to lift restrictions on imports of US chicken, only for that to lead to the decimation of an industry that provided jobs for many of the ANC’s core constituencies. One begins to wonder why government adopted the Socio-Economic Impact Assessment System if impact is never actually measured and considered appropriately.

One does not need to be a member or supporter of White Monopoly Capital to realise that Mosebenzi Zwane and his department have either wilfully ignored representations by the industry, or they are pursuing an agenda which is counter to the broad thrust of ANC resolutions. This is opportune, in a sense, as the policy conference of the party due on 30 June to 5 July 2017 is the perfect platform for the party to correct government’s devil-may-care attitude to valid concerns raised by industry and other stakeholders. Failure to remedy this malady will have dire consequences for the majority of poor black South Africans, while doing very little to achieve the societal transformation goals that we are all presumably committed to. DM

Thembinkosi Gcoyi is the Managing Director of Frontline Africa Consulting.


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