Thomas Johnson, Belthorn
While I agree South Africa needs urgent structural economic reforms, the letter “SA in urgent need of economic reform to fight poverty”, (Athlone News, October 4) does not say what these ought to be.
It’s true other countries, some with far worse than conditions than SA was presented with, have all but eliminated poverty in a generation or less. But with SA, and certain other African countries, people are poor because the leaders, in the policies they’ve adopted, want the people to be poor (Dr Greg Mills, Why Africa is Poor).
Aside from its Soviet-era ideology and internal issues, the ANC government’s policies are anti-development and growth despite claiming otherwise especially around elections. Other problems as Moolman indicates are the failure of state enterprises like Eskom, Post Office etc, functioning world class entities in 1994, through negligence, incompetence and corruption. And the costs and risks of BEE, cadre deployment, bureaucratic obstacles and so on.
I disagree with Moolman, though, that government agencies are euphemistically “underperforming“. Most are dysfunctional, collapsing and collapsed. The country is literally at a fiscal, economic and social tipping point but among business there’s still the tendency not to offend the ANC. The time for excuses are long over.
What Moolman does not say, though, is big business have benefited from economic policies and regulations that allowed them to receive profits up to 50% more than similar abroad. Among other effects these policies raised barriers to entry for newcomers and protected the market share of the few large existing players, banks and cellular particularly but in all sectors.
The restrictive labour regime, for example hiring and firing, collective bargaining and employment equity, and black economic empowerment requirements add further costs and red tape for employers, SMMEs especially. These prevent sustainable job creation.
There is this tendency in SA to regulate everything, not out of equality or justice or progress, but for political or ideological agendas. In essence these regulations create the continuation of the economic status quo since apartheid: monopolies, oligarchies and cartels. Few oligarchs in a country of the poor.
The above are not the only indicators of South Africa’s economic failure; its GDP should be twice what it is. In the public and private sector there’s an absence of innovation and can-do attitude. Job seekers are not recognised for their skills but employers’ subjective criteria (with about 10% graduates across all ages unemployed, there is no skills shortage).
All this resulted in the lack of true competition and high prices for consumers that stifled prosperity and growth.
What innovation might exist is strangled at birth by pigeon-holing, tick-box exercises, outdated ideas and petty bureaucracy for its own sake. Tangentially, the City of Cape Town’s insistence on certain types of solar inverters owners may use, and levying monthly taxes for the privilege of owners using initiative in a time of an energy crisis when every kilowatt is desperately needed, is the negative, anti-progressive thinking I’m talking about.
For 20 years and more people like Mills and the IMF’s David Lipton have been saying what’s wrong with SA’s political economy and market and calling for reforms. But except for the past year, few, including in the private sector — many ANC government praise singers — have listened.
Now here we are. The money has ran out and still government is spending like there’s no tomorrow, more concerned with clinging to power and excusing state capture than SA’s citizens. Even conservative analysts are warning about the rand falling dramatically and social unrest. It’s futile claiming ignorance anymore.
Unfortunately, even if the ANC had the desire to implement structural reform (before an election, impossible; other times unlikely), I think it’s already too late to prevent a slide to a Zimbabwe-like failed state within 10 years.