Key topics:
- Private sector drives 70% of SA’s investment but faces ANC obstacles.
- ANC’s policies deter job-creating industries, stalling economic growth.
- A free-market shift could double jobs, boost revenue, and cut poverty.
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By Dr. Marius Oosthuizen*
When the British conquered the world, they did so by ship and called themselves merchants.
Their mercantile capitalism used trade and commerce to create massive businesses, such as Anglo American, which dominated markets in South Africa. These merchants made the British very rich.
The Dutch, who arrived in the Cape before the British, were called Koopmannen (Buy-man) and were forerunners of South Africa’s rich traders. So too, the American Tycoons, the Chinese Silk Road traders called Shāngrén and Ethiopian Neggadé, were similar, selling goods and services around the world to make money.
Apartheid was a bit of an anomaly. Afrikaners created state-owned companies that skewed access to energy, finance, and social services. But instead of rectifying these legacies after 1994 by unleashing market forces to include the excluded, the ANC sees its role as a goal-keeper, maintaining the status quo and preventing the private sector from scoring, making South Africa lose the game of global business in the process.
What the ANC MPs don’t grasp is that South Africa’s economy is still dominated by merchants or koopmannen.
Private investment accounts for over 70% of total investment in South Africa. Business activities are the largest contributor to South Africa’s GDP. Personal income tax, from the 8 million individuals largely employed by the private sector, contributes 35.5% to the total tax revenue, who in turn, through corporate income tax and VAT, contribute the majority of total tax revenue.
These activities fund all government programmes, including servicing the massive sovereign debt that the ANC is amassing. Instead of the government helping these industries, it hampers them.
Simply put, if the private sector doubled, the jobs would double, and the government revenue would double. Poverty would halve. Duh!
Why are there so few jobs? The answer is, because the manufacturing industry, which could employ millions, contributes only a tiny 0.1 percentage points to GDP growth. Even though the private sector is still the golden goose financing the ANC’s socialist experiment, businesspeople are not investing in labor absorbative or job-creating enterprises in South Africa. They have no confidence in the long-term, because of ANC rule.
Why don’t we get more investment? Because the ideology of ANC policy is state interventionism, by a state that lacks the capacity to deliver. The ANC uses fancy words such as “fostering inclusive economic growth”, “reducing socio-economic inequalities” and “a developmental state”, but in reality, the ANC’s distributive policy is a project of elite capture.
To prevent the poor from rising in revolution, ANC social protection measures such as social grants are given to over 27 million, as a way of silencing the cries of the poor through a bit of “tuck shop money”.
Year after year, the ANC government’s inefficiency, corruption and ongoing political fragmentation, hamper the real driver of transformation: investment, hindering South Africa’s economic competitiveness.
Compared this to Russia’s state – which has a sophisticated space programme – the ANC has a pit latrine programme.
The ANC is so fixated on the imagined limitations of markets and investment, that its policy is anti-investment, while also demanding shares in the very businesses that do succeed. Its madness.
Can ANC voters become big businesspersons?
The wake-up call needed by the voting black majority, is that the private sector and markets (the same forces which the Afrikaners used to build wealth after 1994) are the essential drivers of economic progress. Unlocking more private sector participation in key network industries like energy, logistics, and water, and on the back of these, agro-processing and manufacturing, is the way to make South Africa richer and fairer.
Instead of regulation, South Africa needs deregulation to reduce bureaucratic hurdles and stimulate entrepreneurship, particularly in townships and rural areas. Someone called it a Capital-driven social market economy – a 100-billion dollar investment, to uplift a 100-million South Africans by 2030.
Imagine if South Africa’s black majority does business all over the world and owns assets. Instead of the government moving slowly using reforms to allow corrupt cronies to enter the markets created by industrial policy incentives, so that they can use state-led interventions to enrich themselves.
The day will come when the poor realize that the private sector, which already delivers its food through shopping centers, its energy through solar panels, its transport and the few jobs available, is the crucial engine for economic transformation. When the ANC voters realize this, a new multi-racial party of urban voters will explode onto the scene, and the ANC will be out of power.
Read also:
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*Dr. Marius Oosthuizen is a scenario planner and writes in his capacity as a citizen.
