Opinionista Makashule Gana 6 November 2019

ANC’s empty promises doom SA to the economic doldrums

Since the ‘New Dawn’ there have been high hopes for the ANC leadership moving from mere words to the actual implementation of plans to arrest the backward economic slide in which the party placed the country. Alas, this seems not to have been the case.

The recently released unemployment statistics emphasise South Africa’s losing battle against poverty and inequality as a result of an economy in the doldrums. The ANC-led government shows no sign of stemming the tide of surging joblessness as the country reached the highest unemployment rate in 11 years, at 29.1%.

Since the ascendency of President Cyril Ramaphosa, there has been a tremendous amount of talk through several summits about improving the economy, but there has been very little in terms of walking these discussions into concrete action. In Gauteng, Premier David Makhura has failed to leverage the position of being the economic engine of the country, as the province saw a consecutive quarterly decline in employment with an above national average unemployment rate of 31%.

Unemployment is not an inexplicable phenomenon with causes that can’t be identified. Instead, it is mainly a consequence of bad governance, rigid ideology and political expediency in the place of clear, stable policy vision and implementation. We have leadership that has created an environment toxic to business and investment growth through not only hostile rhetoric, but red tape in service of political patronage, which increases the cost of doing business. Faced with such inhospitable conditions, foreign and local businesses are disincentivised, resulting in less investment in starting new businesses or expanding old ones. A lack of expansion in existing industries and no emergence of new businesses means there are no jobs being created.

One can see how governance is a crucial factor in the unemployment figures without even comparing South Africa to its international peers, but by looking locally at the distinction between the ANC-run provinces and the Democratic Alliance-run province of the Western Cape.

The Western Cape, which is not immune from global economic pressures, sits at an official unemployment rate of 21.5% – far below the national average. When the expanded unemployment rate is considered, there is a 10% difference between the unemployment rates of the Western Cape and Gauteng, which are at 24.5% and 35.1% respectively. There are clear differences in how the governments of the nine provinces conduct themselves when it comes to creating an environment conducive to job creation.

One area we can look at is the relationship between government and business, particularly the payment of invoices for services rendered. In 2019, it was reported that there was over R7-billion in unpaid invoices by government, many of these owed to small business. The small business sector is often cited as crucial to job creation, but in reality, many departments led by the ANC have shown a disregard for the economic importance of SMMEs to employment growth. Late payments are “assassins” of small businesses, and in an economy like South Africa which is highly concentrated, this exacerbates economic inequality by keeping out newcomers to the economy. While the leaders in the ANC speak loudly about the economic transformation that will get more black people into the economy, by their actions as government they are actively killing the prospects of black entrepreneurs.

Gauteng is the biggest culprit among ANC governments in the scandal of invoices unpaid within the 30-day period. In the 2018-19 financial year, the Gauteng government owed businesses R2.6-billion in unpaid invoices. By contrast, the Western Cape government paid 99.4% of its invoices for suppliers within 30 days and owed only R240,497 in the 2018/2019 financial year.

Since the “New Dawn” there have been high hopes for the ANC leadership moving from mere words to the actual implementation of plans to arrest the backward economic slide in which the party placed the country. Alas, this seems to have not been the case as shown by the failures in Gauteng by Premier Makhura in meeting his 100-day goals.

The latest statistics show that those without a matric certificate comprise 56.1% of the total unemployed in South Africa. The premier of Gauteng promised in his State of the Province Address (SOPA) that there would be interventions to reduce the number of learners who get lost in the system between grades R and 12. South Africa has a dismal retention rate of school learners, which is completely overlooked each year when it comes to matric results.

While Gauteng achieved top honours as the province with the highest matric pass rate in 2018, the province achieved a retention rate of only 49.67% as compared to the Western Cape’s 62.9%. Without a clear strategy to keep learners in school and improve the quality of education, it can be assured that most of the youth in Gauteng will continue to add to the masses of unemployed every year.

The present state of major unemployment is a result of past policy failures by the government. No lessons seem to have been learned as the leadership of the ANC appears blind to the tidal wave that is the Fourth Industrial Revolution (4IR). Countries can either be crushed by this wave or ride it to reach greater heights in economic and social well-being for their people. In his SOPA, Makhura also said he would “appoint an advisory that will advise the provincial government on the Fourth Industrial Revolution in the first 100 days”. All the premier has delivered is another unmet promise, as there is no budget nor plan for this advisory panel.

While Makhura dithers, Gauteng is on the back foot at a time when global economies are experiencing major upheavals as a result of technological revolutions. Gauteng’s position as an economic hub in Africa will be lost with the emergence of other hubs in, for example, Kigali, Rwanda, that have taken a more serious approach in keeping up and staying ahead of technological advancements.

South Africa has missed the boat in terms of the economic boom seen in many emerging nations across the globe in the past decade. It would seem that the next decade will also pass us by as long as we have leadership more concerned with form (hosting summits) than substance (implementing policy). DM

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