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How to turn SA into South Korea in 16 easy steps: Cofesa
Economist and entrepreneur Dr Lawrence McCrystal and legal expert Advocate Hein van der Walt of the Confederation of Employers of South Africa (Cofesa) have been busy. Since April, the two have submitted numerous proposals to members of the South African government detailing steps to overhaul the economy. A recurring point made by McCrystal and van der Walt has been that South Korea, which had a lower per capita GDP than SA in 1960, today has a per capita GDP which is 32 times higher than ours. Cofesa challenges government to take 16 easy steps to modernise the economy and catch up with comparable economies like South Korea. – Nadya Swart
Smarten up the economy in 16 easy steps, catch up with South Korea and beat poverty – Cofesa
Dear Dr David Masondo and Dr Boitumelo Moloi
Cofesa challenges government to regain our lost position and generate, over time, between 22m and 30m jobs in SA plus more than 50m jobs on the African continent.
‘Based on a report of the World Economic Freedom Index of 2019, compiled by more than 60 world renown economists, some of whom are Nobel Prize laureates, Cofesa challenges government to take 16 easy steps to modernise the economy and catch up with comparable economies like South Korea. In 1960 South Korea had a lower per capita GDP than SA. Today their per capita GDP is 32 times higher than ours’ Cofesa’s chairman Dr Lawrence McCrystal and Adv Hein van der Walt challenges.
Read Also: Dear President Ramaphosa: Here’s a radical plan to whip SA economy into shape. MUST READ!
Dr David Masondo, Deputy Minister of Finance was tasked to lead a unit ‘to coordinate structural reform’ and Dr Boitumelo Moloi, Deputy Minister of Employment and Labour to address ‘business turnaround solutions’ in a follow up of the discussion document for ‘Reconstruction, Growth And Transformation: Building A New, Inclusive Economy’ of Mr Enoch Godongwana, ANC chairperson of the National Executive Committee Sub-Committee of Economic Transformation to ‘highlight the economic interventions necessary for job creation, growth and investment in the South African economy amid the coronavirus (Covid-19) pandemic’.
In a challenging open letter to the two task teams, Cofesa ‘highlights’ 16 easy interventions to modernise, democratise and deregulate our economy, to pick the ‘low hanging fruit’ of deregulation, privatisation, commercialisation at zero cost to Government:
They challenged government to place an immediate moratorium on legislation that foils economic growth using the ‘Temporary’ Removal of Restrictions on Economic Activities – Act 1987. This Act “empowers the President to suspend temporarily laws or conditions, limitations or obligations hereunder or to grand temporary exemption from the provisions thereof, if in his opinion circumstances exists under which the application of or compliance with those laws, conditions, limitations or obligations unduly impedes economic development or competition in the economic field, or the creation of job opportunities: and to provide for incidental matters”.
‘We can repeat a growth rate of 6% as was previously achieved when Mr Mboweni was Governor of the Reserve Bank with Mr Trevor Manuel as Minister of Finance’.
‘Our modernised economy must align with international norms of non-racialism with a productive and friendly labour force.’
1. Modern incentive models for industry
We need to replicate the highly successful incentive model of the automotive industry that broke several export records in 2019, costing the state far less than state-driven infrastructure investments and generate more employment per rand. Automotive exports increased to R201.7-billion, equating to 15.5% of South Africa’s total exports in 2019 with 80 000 jobs component manufacturing and 300 000 in toto.
The export value of vehicles and automotive components comprised a record R201.7-billion, equating to 15.5% of South Africa’s total exports in 2019.
The broader automotive industry’s contribution to gross domestic product last year reached 6.4% (4% manufacturing and 2.4% retail).
Automotive industries congratulated with an increase in exports to R201.7-billion
Dr Lawrence McCrystal was chairman of the Board of Trade and Industry (currently International Trade and Administration Commission) when the incentives for the automotive industry and other industries were formulated in the 1990’s and implemented when Mr Tito Mboweni was Minister of Labour. He congratulates the National Association of Automobile Manufacturers of South Africa and Automotive Industry Export Council with an increase in exports to R201.7-billion and calls on government to extend the incentives to other industries as well, to kick-start the economy.
- When replicated the potential growth in jobs can be as follows:
- Agriculture – With moderated incentives a projected additional 700 000 jobs can be created. Disbanding agricultural control boards in 1994 is the legacy of the then minister, credited for today’s thriving global agriculture exports.
Since 1994 the gross value of the sector has increased nine-fold to about R277 -bn in 2018. Incentives will take agriculture even further.
- Metal and allied (engineering, chemical and associated/allied industries cluster) With incentives a projected additional 300 000 jobs are within reach .
- Other industries, such as tourism, clothing, textiles, footwear, electronics, furniture etc: With ‘focused investment’ they will generate substantial numbers of jobs.
- Positive return on the government incentive- 300% plus
Based on the model applied to the automotive industry, a projected 300% or more return on the incentive is within reach.
America also had to strategise to deal with fierce foreign competition, The US has classified fifty sectors as Advanced Industries Sector’.
These sectors are the future of American prosperity, and while competition is fierce with other countries around the world also focusing on advanced manufacturing, the US is working to stay competitive due to government support rebuilding advanced sectors and STEM (science, technology, engineering, math) training for US workers.
A Brookings Institution report notes that “America’s Advanced Industries,” produce $210,000 in annual value added per worker compared to $101,000 on average for workers outside this field.
Deregulate and incentivise – Across the board Corona Cash Grants to rescue businesses –
the UIF-TERS R34bn paid out of R130bn surplus is a drop in the ocean
A study by SEDA, a subsidiary of the DTI, has reported a first year failure rate of 75% for small businesses while Mr Alec Hogg reported in 2011 the average cost of one job created by the IDC amounts to R250 000.
The high costs of and dismal failure of emergent businesses merit substantial government grants to ensure the recovery and sustainability of existing businesses.
A precedent has been set to award R35 000 each to small farmers and R200 million relief funding for tourism.
Similarly cash grants across the board should be paid directly to companies in a bid to rescue those in distress, to stimulate the economy and to avoid further job losses initially estimated at potentially 2 million.
Minimum of R500 000 grants
Instead of the DTI and IDC investing in emergent enterprises with a 75% failure rate all existing registered businesses should be awarded a basic minimum grant of R500 000 plus compensation for their loss in turnover.
Only about R34bn has been paid out so far (July 2020) by the UIF, a small proportion of the R130bn surplus held in the UIF that is meant for national disasters such as Covid-19. To make an impact, we appeal to you that a large portion of the surplus, supplemented if possible, from other Government sources, be paid out as ‘distress grants’ to make an impact.
A large number of our Member Companies are struggling to keep their operations from drowning because they have had no cash inflow while cash has been flowing out to pay salaries, rent, etc. So now they have used up their cash reserves and have minimal cash to get their operations going.
Repayable loans will not solve our economic malaise. It is time consuming and costly to administer by an already bloated government bureaucracy. Grants instead, will directly and immediately stimulate spending with a ripple effect, including to generate tax.
It is within the ambit of the UIF Board to pre-empt an estimated further 2 million job losses linked to Covid-19. (Other sources reported considerably more job losses). Employers have contributed substantially to the fund and it is morally and logically correct to use the funds to rescue businesses. While workers contributed 1% of their total earnings, excluding commission, to the UIF, employers contributed a further 1%.
UIF surpluses have also accrued due to many contributors who have emigrated and left their benefits behind, also by contributors such as senior staff and company directors who tend to abandon their benefits, as well as long deceased people. The fund also accrued an estimated R70-bn income on investments over the last 10 years.
Timely distress grants will pro-actively rescue thousands of businesses, including hairdressers and B&B’s, avoiding later reactive costly government enterprise development efforts which, in any event, have a historic failure rate of 75%.
Time for an Economic Development Board and Advisory Council
- The plan for the Automotive Industry was formulated in 1988-1991 by the then Board of Trade and Industry. It is time to appoint an Economic Development Board to formulate similar plans for the other industries plus an Independent Advisory Council to focus on a growth strategy and to replace NEDLAC with a board of leading economists, business leaders and specialist high-level government officials to advise the Presidency and the relevant ministries (Finance, Trade and Industry) on appropriate growth policies.
2. Modernise relations with business; Entrust business with entrepreneurs and development programs
New name, new synergy
The name of the Department of Labour has recently been changed to ‘Department of Employment and Labour’ and as an employers’ confederation Cofesa look forward to synergize for reforms and job creation, to fix an economic strategy that has failed to generate the growth necessary to create a better life for more than a minority. We are reminded that South Korea and China looked insignificant before embarking on major reforms.
In the words of President Mandela:
‘We know it well that none of us acting alone can achieve success. We must therefore act together as a united people, for national reconciliation, for nation building, for the birth of a new world’. ‘Let there be justice for all. Let there be peace for all. Let there be work, bread, water and salt for all. Let each know that for each the body, the mind and the soul have been freed to fulfil themselves’.
Involve and embrace the private sector
Like elsewhere in the world outsource and entrust empowerment programmes to chambers of commerce and industry and associations – to BUSA, SAACI, AgriSa, ROCCI, Cape Chamber of Commerce and Industry, Cofesa etc who engage volunteers from the commercial and industrial sector as mentors, coaches who are keen to replace failed and costly programmes of government directorates and agencies.
Cost of one job R250 000 – A study by SEDA, a subsidiary of the DTI, has reported a first year failure rate of 75% for small businesses while Mr Alec Hogg reported in 2011 the average cost of one job created by the IDC amounts to R250 000.
Commerce, trade and industry are able to (re)formulate workable criteria for simplified funding, incentives and grants, transfer business skills to entrepreneurs, fairly, productively and ethically.
3. Modernise the transfer title deeds and land reform with 4IR IT with a Marshall Plan upshot
Fast tracking the transfer of title deeds will generate R5bn – R10bn in VAT income and potentially create 3m jobs in services and retail. With title deeds in hand, the new owners will access bank loans and bonds to upgrade, repair and extend their houses, buy white goods, cars, etc, thereby stimulate the economy. The Free Market Foundation has, from its own experience, ample evidence to support this contention.
Issuing title deeds will have a Marshall Plan upshot – ‘THE BENEFITS WOULD BE EVEN GREATER THAN THOSE SEEN IN POST-WAR EUROPE’- Bruce Cameron, of the JSE commented.
4. Modernise youth empowerment at grass roots level
Expand rural programs.
Cofesa has pioneered a number of projects such as orientating learners at 200 rural schools to become entrepreneurs. Afterwards, one of the girls for instance assembled a team of seamstresses to make and sell their school uniforms. She also retailed items such as shoes, socks and stationery; creating a thriving micro rural enterprise with great prospects.
Some pupils started vegetable gardens, food distribution, services etc. Our chairman, Dr Lawrence McCrystal is part of the Africa Cooperative Action Trust. Over the last 40 years they have empowered thousands of rural people both in SA and elsewhere in Africa to start their own vegetable gardens and eventually to advance towards commercial farmers and entrepreneurs through their Sustainable Agriculture Entrepreneur Development Programme. He was the founder chairman of the KwaZulu Development Corporation.
5. Modernise by deregulating manufacturing. Abolishing outdated bargaining council restraints
‘Bargaining councils’ increase wage bills by between 18% and 33%. Abolishing bargaining councils will open the economy and enable the establishment of an estimated 200 000 SMME’s with 2m+ jobs.
- Dealing with the IMF report of 2005, Mr Trevor Manuel argued in favour of relaxing employment laws and warned against ‘the entrenchment of a labour aristocracy and the further marginalisation of outsiders by giving legal protection for large corporations to monopolise markets and for unions to secure protected wages and benefits for an ‘elitist’ group, imposing a major burden on the economy”. The World Bank agreed, and the available evidence bears out that this is exactly what has happened.
Ms Margaret Thatcher abolished bargaining councils in the 1980’s to turn around the British economy and
- Mr Jim Bolger of New Zealand, who abolished the nationwide agreements by monolithic union power blocks with ‘compulsory union membership that bred wasteful strikes and scandalous abuses’. In months Mr Bolger produced startling results, bringing down inflation from 15% to 1,3% and increasing the trade surplus by 500%.
6. Modernise by deregulating and abandoning excessive fines imposed on businesses
We could not find similar excessive fines in BRICS countries: 44 firms, some of them listed on the JSE, were criminally prosecuted in 2018 under the Employment Equity Act. The majority were fined R1,5m. Companies face a daunting task of reflecting the country’s demographic profile, calculated as 77% black employees by the Department of Labour: Fines from R1 500 000, with R1 800 000 for a previous contravention and R2 100 000 for further contraventions, or 10% of turnover.
7. Modernise by deregulating and embracing independent contractors, agents, actors, writers, consultants, engineers; people working on an outsourced basis, in the economy
Cancel laws that thwart employment creation; laws, inconsistent with international norms, laws that are engineered to permit unions to force independent contractors, outsourced workers and temporary employees to affiliation as members.
Scrap the presumption (Section 200A of the LRA) that a person (such as an independent contractor) is presumed to be an employee until proven otherwise.
Cofesa’s empirical study on the productivity of ‘contractors’ in contrast with ‘employees’ found that contractors are between 50% and 300% more productive than ‘employees’ and are consequently paid accordingly. The ‘cottage industries’ of China, create valuable entry levels to the formal industries. We need to promote similar models.
Modernise by deregulating – simplify and bring in flexibility and advance 4IR IT systems
A 121st ranking for business regulation disastrous for job creation –
The international panel of economists of the World Economic Freedom Index ranks South Africa 121st on business regulation and noted that few challenges are more important for South Africa than job creation and for that it needs to free its business to create employment. Overly stringent regulation can slow business expansion and weaken profits, which are both the means of further investment and the motivation for further investment. 121st ranking is a disastrous rank for South Africa and means that red tape is strangling business’s ability to create jobs and prosperity.
Decline of SMME’s and corporates
- Registered companies declined from 3,2 million to the present 2 million From 2015 the number of companies registered at SARS declined from 3,2 million to the present 2 million.
- SMEs have been under particular strain over the last 10 years
– Financial and business services sector: 83 000 fewer companies (37% decline). (From 222 532 in 2007 to 139 664 in 2016)
Start-ups declined from 250 000 (2001) to 58 000 (2011) and have been declining ever since.
When we had 5, 579,767 small businesses in 2011, they employed an estimated 12 million people countrywide (Source: JTB Consulting). This has declined substantially since then, primarily because of the Government’s laws and expected future regulations will make it even worse, which we hope will be avoided.
SMME’s are failing at a rate of 75%, the highest failure rate in the world
A study by SEDA, a subsidiary of the DTI, has reported a failure rate of 75% for SMME’s (according to Dr Rob Davies), with five out of seven new small businesses started in SA, failing within the first year. Therefore, and contrary to popular belief, SMEs in SA are not better creators of sustainable jobs than large companies, which they were SA and are in numerous other developing countries. The demise of so many smaller firms contributes not only to concentration in large corporations, but is depriving SA of potentially the fastest way to stimulate economic growth and employment. What the Employment Equity Bill with race quotas is aiming to do is diametrically the opposite of what he, as the Minister of Employment, should be doing.
Worldwide outcry against racial discrimination must also resonate in South Africa!
While protests over racial injustice continued in the US following the killing of George Floyd by a Minneapolis police officer, we are shocked by our Employment and Labour Department’s notice that race quotas will be imposed on businesses in SA in terms of the Employment Equity Act to be submitted to the National Assembly.
The notice of impending race quotas is in conflict with President Ramaphosa’s Thuma mina initiatives which calls for ‘inclusiveness’ and his vision, shared by Mr Tito Mboweni and many other ANC leaders of ‘A new economic dawn’; a restructured, deregulated, reformed, modern economy with a trimmed down government service and government spending.
Mr Nxesi’s intended racial quotas is therefore of deep concern.
‘Race quotas’ are foreign to a modern economy
The new draft bill now explicitly states that the labour minister may set numerical targets for any national economic sector after consultation.
Setting race quotas conflicts with ‘The rights of the people shall be the same, regardless of race, colour or sex’ and ‘All people shall have equal rights to trade where they choose, to manufacture and to enter all trades, crafts and professions’, rights entrenched in The Freedom Charter, the IMF policies, international norms, nor ‘inclusiveness’, nor with reform initiatives.
Plea: Call off the proposed EE Bill and urgently initiate labour reforms.
Read Also: Cofesa: ‘Please scrap EE race quotas – here’s how this will boost the economy’
We must ensure that we comply with international norms of non-racialism to unlock our unlimited human capital resources so aptly illustrated:
“ A bar of iron costs about R250
Made into horseshoes, it’s worth R4,000
Made into needles, it’s worth R50,000
Made into balance-springs for watches, it’s worth R6,000,000
Value is determined by what you are able to make out of something. Each substantial increase above is born out of 2 things: an idea + a skill.
Despite the economic ’boom’ experienced in the country between 2004 and 2006, the growth of small businesses has stagnated since 2003. Our remaining SMME’s not only need protection, but we need to see them rapidly growing in numbers.
Loss of entrepreneurs – Diaspora/brain drain More than 400 000 high income professionals plus their families have emigrated since 1994 and millions of remaining individuals are utilising the easing of foreign exchange controls to let their money emigrate. (Thank you for calling for their return). About 3 000 super-rich (those with wealth of $1million or R15million or more) “migrated” from South Africa over the past 10 years, Andrew Amoils, head of research at New World Wealth, told Fin24 in April 2019. The monthly loss in tax is estimated to be between R10bn and R20bn.
8. Modernise entry levels to accommodate interns, the unemployed, the untrained, unskilled, students, learners, persons who ‘shadow’, the disadvantaged, disabled
For inclusivity – Let the sun set on the general application of minimum wages
Minimum wages prevent new entrants to the work force and should not apply to trainees, interns or small businesses, and as in Germany, should not apply for the first six months or perhaps one year for previously unemployed persons. Since December 2018, 34 000 domestic workers have lost their employment.
9. Modernise the Competitions Act
Extend the protection for all against unfair competition
Extend the Competitions Act, No 89 of 1998 to also apply to, instead of excluding, to collective bargaining agreements.
10. Modernise empowerment
Modern effective HR practice of recruitment, selection, placement and management to take candidates to their full potential in career paths and as entrepreneurs with tailored programmes for coaching, mentoring, role models, incubators, interns, communication and networking skills have evolved, while black empowerment and land reform became counter-productive (similar to statutory discrimination under apartheid) .
Over the last 20 years we have actively reinvented EE, BEE and land reform. Statutory EE and BEE became counter-productive (similar to statutory discrimination laws under apartheid), and must be abolished to conform to constitutional and international norms.
Modern empowerment programs for employees and entrepreneurs conform with constitutional and international norms.
Modernise – Let the sun set on black empowerment.
Modernise for structural reform and business turnaround solutions, place a moratorium on all race based legislation such as on BBEE, affirmative action, race quotas and similar growth restraining notions.
Statutory protection for an elitist few
An analysis by a leading economist, Mr Mike Schussler, of 2019 stats of Statistics SA found that BBBEE and affirmative action benefitted an elitist group, a maximum of between 30 000 possibly only as few as 10 000 people to the detriment of millions of under- and unemployed people. Moreover it distorts the economy. (Beeld 18 November 2019 page 12).
It is notable that before the imposition of affirmative action and black empowerment ESKOM was internationally recognised as one of the five most efficient power producers in the world. Now many large corporations have relocated to elsewhere in the world, leaving skeleton offices behind, to get away from the burdens imposed by affirmative action which made them uncompetitive internationally and to retain their highly skilled expertise.
Professor William Gumede of Wits University wrote late last year: ”The purpose of Black Economic Empower (BEE), said the ANC in 1994, is to remove ‘all the obstacles to the development of black entrepreneurial capacity’ and ‘unleash the full potential of all South Africans to contribute to wealth creation’. In practice, however, BEE has had precisely the opposite effects. Close to R1 trillion has been transferred in BEE share deals’, said Professor William Gumede of Wits University late last year, but these deals have gone to ‘a handful of politically connected politicians, trade unionists, and public servants”.
The favoured few have done little to expand the economy. Instead, adds Professor Gumede, they have ‘crowded out genuine black entrepreneurs and killed the development of a mass entrepreneurial spirit in black society because all you need to secure a BEE deal…is the right political connections’. BEE preferential procurement in the public sector and state-owned enterprises (SOEs) has also been inordinately damaging. By abrogating normal procurement rules, it helped pave the way for the ‘Zupta’-linked ‘state capture’, estimated to have cost between R500bn and R1.5 trillion.
11. Modernise our tax system – Formulate a modern, new business friendly tax regime with general tax relief as a direct stimulus to the economy
Nurture businesses, including SMME’s and micro enterprises. Reduced tax will be a direct incentive for growth.
The economists of the World Economic Freedom Index found that our very high, top marginal tax rate discourages the initiative and dynamism South Africa needs to build prosperity. South Africa’s top marginal income tax rate at 41 percent is considerably higher than Botswana’s (25 percent), the subSahara African average (33.17 percent), and the world average (28.98 percent). This puts South Africa at a considerable disadvantage compared to its competitors.
Even before Covid-19, president Donald Trump and the UK reduced company tax: We must follow America’s example where President Donald Trump reduced company tax from 35% to 21% to turn his economy around, the United Kingdom from 30% to 19%, and in China’s CIT rate is currently 25%.
- Reduce VAT to 10% or even to 5%. In 2019-’20 VAT contributed R346.2 bn to the budget. By reducing VAT by 5% (R115 bn) will directly alleviate poverty and stimulate the economy.
- The most recent increase of VAT to 15% negatively impacted on the economy. No business takes home 15% on turnover without any risk. In fact without any risk, government now profits more from businesses than the businesses themselves. High levels of taxation made Government the most profitable ‘business’ at the cost of economic growth. 15% VAT deters emergent enterprises in the informal sector to advance to the formal sector and register their businesses for VAT.
From 2015 the number of companies registered at SARS declined from 3,2 million to the present 2 million. The increase in VAT directly affected consumer spending and caused the collapse of large clothing retailers.
- Reduce company tax to 17%. Similarly Mr Mboweni should reduce company tax to a suggested 17%. from an accumulated 42% (the current 28% plus 14% on dividends) and even as high as 52%, to enable entrepreneurs to build capital and pay taxes. The fact that an expected R63,3 bn less tax will be collected than budgeted for 2020, signals that the ‘tipping point’ has been reached and that higher tax rates will generate less income.
- Reduce personal tax to 11%. Personal tax needs to be reduced from 18% to 11%.
- Reduce excessive property tax. Excessive property taxes should also be substantially reduced.
- People have been taxed into poverty. Economist Mike Schussler has broken down the weighty tax burden placed on individuals in South Africa, showing that we have one of the highest tax rates in the world and hiking these will only serve to further stifle growth. (March 2020).
Broaden the tax base
A small tax base of 574 000 individuals contributes almost 20% of all tax in SA. A constant spiral of worsening fiscal statistics and higher taxes have been feeding a growing sense of despair about the country’s prospects. The Finance Minister can break that cycle which, hopefully, will boost consumer confidence.
“Overly large government for a nation at its stage of development” Reduce the size of government for substantial saving and tax reduction
In 2019, The World Economic Freedom Index, an index designed by sixty of the world’s top scholars from many disciplines, including three Nobel Laureates, were ‘deeply concerned by our “overly large government for a nation at its stage of development.”
- Reduce the size of government for substantial saving.
The international team of economists questions as to whether South Africans are getting value for their tax money. Does their money go to providing a sound, well-functioning legal system and security that promotes well-being, and delivers essential services? Or is much of it wasted or stolen? they enquired and noted its concern regarding high taxation and our oversized government. Consequently downsizing government will reduce costs and enable tax reduction.
Austerity calls for urgent action
- Trim down salaries, fringe benefits, opulent lifestyles – not only that of the 200 000 officials with salaries of more than R1 000 000 annually.
- Cut down on fringe benefits such as international travel, expense accounts, housing, blue light brigades, spending such as for catering, funerals, workshops etc.
- Move parliament to a central venue in Gauteng to save on travel, accommodation and other expenses. The Cape has become an international tourist destination. An increase of tourism incentives for the Cape should compensate for this move.
- Consequently downsizing government will reduce costs and enable tax reduction
Overly large government spending and taxation can crowd out other economic activity and limit people’s economic freedom, and their ability to power growth and job creation. Nations that have outsized governments relative to the size of their domestic economy are penalised in economic growth and job creation. South Africa’s overall rank in Size of Government is 140th and its rating is 6.04. The low rating is a cause for deep concern for a nation at its stage of development.
Measured on a GDP per capita basis, the five nations ranked just above South Africa have an average score of 7.03 in the area Size of Government. Coincidentally, this is the same score of the five nations ranked just below South Africa when measured in GDP per capita terms. However, these nations are a full point ahead of South Africa in their EFW score which shows just how large the South African government has become in relation to the size of the economy.
After improving somewhat in Size of Government after Apartheid, South Africa regressed significantly in the 2000s. Over the last decade, scores have fallen substantially, indicating government growth and weakening economic freedom in South Africa.
The Index found government interference in the economy through government enterprises and investment is far too great and weakens both economic freedom and the dynamism of the private sector.
12. Modernise strike handling (collective action) with Pendulum Arbitration
Enforce Pendulum Arbitration as an alternative practical way of managing and resolving labour disputes quickly and fairly. We need to ensure that legal strikes are both peaceful and of shorter in duration, without causing damage to the economy. Compulsory “Pendulum Arbitration’’, an internationally recognized mechanism, would ensure this ideal.
13. Modernise our continental economic development strategy
We have the resources to change the face of Africa and improve the living standards of more than 120 million hungry and poor people.
14. Modernise – Water “highway” from the Nile river to the Western Cape
The Water Commission back in 1970 concluded that SA will, in due time, need to bring water from surrounding countries to help SA. That is where the Lesotho Highlands Scheme started.
15. Modernise strategies and policies to fast track the role out of our valuable human capital
We have spare capacity in construction, engineering, manufacturing, transport, management, finance, technology, agriculture, nature conservation, tourism, training, etc and other resources that can be used for an ‘African Marshall Plan’ to change the face of the continent
Since the completion of the 2010 World Cup, the South African capital project environment has witnessed a steady decline in activity and productivity
16. Modernise by aligning to international norms and qualify for IMF loans. ‘Pick the ‘low hanging fruit’ of reform, deregulate, privatise and commercialise –
IMF loans – To qualify we need an inclusive economy aligned with international norms of inclusiveness SA would be required to implement major microeconomic reforms, especially for state-owned enterprises (SOEs) as well as product and labour markets’. and is called Building a bridge with improved conditions for private sector-led growth – The IMF’s Article IV report on SA, published in January 2020.07.22
“Fiscal measures must continue to build the bridge over the financial support for workers and SMMEs”, the Managing Director of the International Monetary Fund Kristalina Georgieva recently said, emphasising the need for debt sustainability, financial lifelines and improved conditions for private sector-led growth. Inclusiveness is also the key to qualify for much needed IMF loans.
Inclusiveness Our plea resonates with the call made in parliament recently by President Ramaphosa for real Modernise- and solutions for inclusiveness when he was asked whether it is not time to rid the country of policies such as BEE and affirmative action.
Inclusiveness resonates with the ANC’s Freedom Charter June 25 1955:
‘The rights of the people shall be the same, regardless of race, colour or sex’
‘All people shall have equal rights to trade where they choose, to manufacture and to enter all trades, crafts and professions’.
Adv Hein van der Walt and Dr Lawrence McCrystal.
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