ASGISA Anniversary: DA launches ‘5 Proposals to Make ASGISA Work

Release, immediate: Monday 5 February, 2007

The Democratic Alliance believes that there is great value in harnessing initiatives to accelerate the economic growth of our country, and to make sure that more South Africans stand a chance to benefit from this growth, through a single economic plan.

Government’s response in this regard, the Accelerated and Shared Growth Initiative-South Africa (ASGISA), is one year old tomorrow. Accordingly, the DA is today launching an initiative to evaluate how appropriate ASGISA is as a policy response to the growth and employment needs of our country.

The Democratic Alliance has identified three major deficiencies in ASGISA:

• Crime: The high incidence of crime and particularly violent crime is a “binding constraint” on the improved economic growth of our country and is completely ignored by ASGISA. In a recent survey by Grant Thorton, 84% of all small businesses in South Africa indicated that crime was an obstacle to their growth and 88% indicated spending more on security-related items in 2006 than ever before. Many skilled people who have immigrated also do so because of the high incidence of crime and violent crime in South Africa
• Priority Sectors: In putting together the ASGISA-plan, government assumed for itself the competency to choose “winning” sectors from the private sector and to back them through specific interventions and capital allocations. As a result, the DA believes that the ability of the private sector to invest what capital it has available in new job-creating or growth-promoting concerns has not been improved by the expected margin.
• Export-orientated Manufacturing Focus: Export-orientated manufacturing concerns will absorb precisely the kind of labour that South Africa has a surplus of. Despite this fact the promotion of this sector does not bear any focus at all.

As a result of our research, we have come up with five proposals which government should adhere to if it would like to realise the accelerated and shared economic growth of our country:

1. Make crime ASGISA’s seventh “binding constraint”. Giving it the necessary prominence in the ASGISA-plan will signal that government is committing itself to deal with the issue as a matter of urgency.
2. Allow a greater role for the private sector in choosing priority investment areas.
3. Prioritise sectors that will create jobs: Government should prioritise the expansion of sectors that will create jobs rather than the expansion of sectors that are labour-intensive. Job-creating sectors may not necessarily be high economic growth sectors, but may also be contributors to an enabling environment such as social and community services etc.
4. Invest in priority projects, not in priority sectors: The DA believes that public funds are best invested in projects to make industries work rather than in specific industries. Examples are investment in projects to improve labour productivity, turning South Africa’s industrial development zones into export processing zones and establishing a fully-fledged one-stop shop service for small business development.
5. Prioritise manufacturing and export promotion: The building of a manufacturing and export-friendly economy should lie at the heart of ASGISA. Examples of specific initiatives may include driving down the cost of labour through the introduction of wage subsidies and gradually reducing corporate taxation rates.

It is our hope, that our initiative to get ASGISA working will be met by the ANC government and our colleagues in Parliament in the same constructive manner with which it was intended.

Download supporting documents (ASGISA Review.doc)