The following speech was delivered in Parliament today by the DA’s Shadow Deputy Minister of Economic Development, Patrick Atkinson MP, during the Budget Vote on Economic Development.
Madam Speaker,
As we look back over the past year since we delivered the 2016 Economic Development Budget Speech, the view has not been a rosy one for our economy.
Unemployment remains persistently high at around 9 million, Gross Domestic Product (GDP) growth rates remain far too low to have any significant impact on unemployment and finally, our country has been downgraded to junk status by two of the three major international rating agencies. The effect of these downgrades will be negative, and in particular for those of our people without jobs, it will be felt for years to come.
Over the past year, the Economic Development Department has been one of the few examples of good governance in our Government. Budgets have been spent as planned, an unqualified audit attained, key performance indicators have been met and enough reports were written to fill a library. The Ministry is even looking at ways to mitigate our recent ratings downgrades.
So, why the disconnection between the work of the Department and the actual economic state of affairs on the ground?
Quite simply, the reasons for this lie in the actions of the President and his ANC cabinet rather than one specific Minister.
While it is very convenient to point to the challenges in the global economic environment, there are sufficient local factors which have resulted in South Africa getting a ratings downgrade from two agencies.
There are three factors amongst many, which have contributed to our present poor economic state.
These are:
1. Policy uncertainty and incoherence;
2. Poor Management at state-owned entities and Corruption; and
3. A workforce not properly equipped to deal with the coming fourth Industrial Revolution.
Policy incoherence and uncertainty
The Mining Sector has been the most high profile victim of policy uncertainty, as a once thriving sector is being slowly strangulated by the uncertainties created in proposed new legislation.
There is a limited amount of capital for investment in the world. When investors feel a lack of certainty in a specific jurisdiction, that money will be deployed elsewhere. The fact that Foreign Direct Investment into South Africa has fallen dramatically from US$8.3 billion in 2013 to US$1.7 billion in 2015 attests to this fact.
Falling investment levels such as this has a seriously negative impact on job creation.
Recent buzzwords of radical economic transformation (RET), land expropriation without compensation and white monopoly capital, which the South African Communist Party recently exposed had their genesis in the London offices of Bell Pottinger, devised on behalf of the President’s best friends, the Gupta brothers, has also had a chilling effect on local investment due to it heightening uncertainty.
RET remains an undefined concept from an ANC perspective. There is no evidence that any of its supposed underlying policies have been measured against any other successful economy. Policy ideas emanating from the ANC-proposed RET appear to owe more to economic policies attempted in Venezuela or Zimbabwe.
Such undefined comments by ANC officials and the Government will do absolutely nothing towards unlocking the R1.5 trillion cash investments by South African corporates. At least half of this cash has potential for investment in our economy.
A DA government would ensure well-defined investor-friendly legislation would be put in place in the mining industry and that the country would implement a single job-creating investment plan in many ways resembling the forgotten National Development Plan. Investment and job creation would be a top priority for a DA Government.
Mismanagement at state-owned entities
Mismanagement at state-owned entities has now entered the national lexicon. One only has to mention Molefe at Eskom, Dudu Myeni at South African Airways (SAA) or Motsoeneng at the South African Broadcasting Corporation (SABC) to realise the damage that has been done to our economic prospects through mismanagement at these entities.
The Minister often points out that Tourism will be one of the great economic saving graces through job creation in even the remotest of areas in our country.
South African Airways should form a major pillar in this strategy but its battle for survival due to gross mismanagement occupies its time. While SAA has been preoccupied by its own crises, international carriers such as those from the Gulf States have taken over much of its potential international traffic.
The actions of Brian Molefe at Eskom relating to the cancellation of the Glencore coal contract and the granting of it to a Gupta-linked company speak to actions which can have a chilling effect on investment. No investor would be prepared to allocate investments where there would be a fear of negative arbitrary actions by a government such as the case of Eskom and Glencore.
A DA Government would ensure that our state-owned entities would be run professionally by the very best people possible.
As the Gulf airlines have done, the DA would search for the best possible aviation specialists to ensure an efficient and successful SAA. We would also ensure that the state-owned entities deliver on their mandate to efficiently provide economic growth and job creation to the people of South Africa. The DA would focus on policy certainty across all departments.
South Africa has huge potential to be one of the world’s great economic success stories. Abundantly endowed with natural resources, good climate, a world class infrastructure and an energetic, creative and diverse people, it just needs to free itself of the burden of this confused and directionless ANC Government. Once we have a DA Government who will govern in the interests of all, our best days are to come.