ANC’s simplistic solution to SA economic ills, justifies nuclear millstone

Those who chose the wrong path soon find excuses to justify their mistake. South Africa’s dogmatic socialists, determined to apply economic policies which failed everywhere else, have discovered a convenient scapegoat. SA’s weak economic growth, a high level ANC discussion document claims, is primarily the fault of the shortage of electricity. This simplistic approach will scare anyone with even a little appreciation of how a modern economy works. Especially South Africa where demands of the First World bash daily against the Third World, adding layers of complexity. It’s the kind of thinking which leads to idealistic policy that delivers destructive unintended consequences. Inflexible labour legislation has killed exponentially more jobs than electricity constraints. Cadre deployment has wasted many billions more than power station cost overruns. A dumb Visa policy has chased away thousands more tourists than loadshedding. One of the obvious dangers of this new blueprint, to be presented to the ANC’s National General Council, is the way it is designed to let party loyalists draw an obvious but  very wrong conclusion – fix electricity supply and all else will fall into place. So let’s spend $100bn on a Russian-built nuclear fleet. The nation will thank us one day. Eisch. – Alec Hogg  

Electrical power pylons of high-tension electricity power lines Eskom slider
Picture taken March 8, 2015. REUTERS/Christian Hartmann

Cape Town – A key constraint preventing the ANC from achieving the industrial growth it aims for is the national electricity shortage, according to a discussion document issued by the party ahead of its National General Council (NGC) taking place in October.

The document states that, despite a number of interventions by government, growth in SA remains too low and job creation insufficient. External demand also remains low, as growth in many of South Africa’s overseas trading partners remains weak, retarding investment.

Key interventions adopted by government in an attempt to stimulate inclusive growth and investment in the domestic economy were counter-cyclical fiscal policy, public infrastructure investment, industrial and trade policy measures and the acceleration of the Broad Based Black Economic Empowerment Act to transform ownership patterns.

“While these interventions have prevented job losses, they have not shifted the economy onto a new sustained inclusive growth path,” according to the document.

The counter-cyclical fiscal policy was aimed at maintaining aggregate demand through continuing planned levels of government expenditure despite a slowdown in tax revenues.

“Rising government debt and a wide current account deficit make South Africa vulnerable to global economic shocks,” states the document.

The ANC sees infrastructure as an essential pre-requisite for increased investment and employment, but says in the document that such infrastructure comes at a cost.

In addition to putting pressure on the fiscus, the document explains that it is also putting upward pressure on the cost of living and the cost of doing business, an effect that is particularly amplified in a low-growth environment.

As for industrial and trade policy measures aimed at stimulating investment in industrial activity and promoting South African exports, the document states that in many cases, the Industrial Policy Action Plan (Ipap) has not gained traction across the relevant implementing agencies or departments.

Regarding the Broad Based Black Economic Empowerment Act, the document says a recent review will close a number of loopholes and deal with firms who engage in “fronting”.

The ANC expects this to better align its B-BBEE imperatives with the need to promote industrialisation of the SA economy.

“To facilitate a more meaningful participation of black people in the mainstream economy government is now looking at various ways of developing and sustaining black industrialists, including a targeted incentive to support black entrepreneurs entering the industrial sector,” said the document. – Fin24

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