Change the entire ball game – McCrystal and van der Walt back Hersov

Two leading economists, one a legal expert, have challenged Corporate SA to withdraw from Nedlac and all bargaining councils, thus breaking open this exclusive way of doing business and untying SA’s economic gridlock. The two heavyweights, Hein van der Walt, chairperson of Cofesa and Dr Lawrence McCrystal, have backed the hard-hitting speech of Rob Hersov at the BizNews Conference in September last year. They remind us that SA’s jobless army has grown from two million to between eight and twelve million since 1994, with 64% youth unemployment and 45% of the population going hungry – tragic testimony to Nedlac’s abject failure. Although union membership has dropped, they’ve retained their prominent status at Nedlac, which this trio sees as an unholy alliance preventing critically needed change. Either Nedlac must be reformed or an Independent Advisory Council of leading economists, business leaders and specialist high-level government officials should be urgently set up to advise the Presidency and the relevant ministries. The historic global examples they cite make their grassroots arguments persuasive. – Chris Bateman

By Cofesa

In September last year, global entrepreneur Rob Hersov rocked South Africa with a hard hitting speech at the BizNews Conference – accusing Corporate SA of being complicit in ANC criminality and incompetence. In this follow-up, Hersov says despite the flack he has taken, he stands by every word in that presentation. But he says there are some bright lights on the horizon as the country heads towards an ANC-free government in 2024.

Your exposure encourages us as well as reformers and advisors to the President. We persistently lobby the Presidency, Mr Enoch Godongwana (who shares alumni status of London University with Dr McCrystal) and a wide network of advisors (economists) to the Presidency, our trading partners, the World Bank IMF etc calling for economic reforms.

We wish to invite you to join our informal think tank and we would like to add you to our network of opinion leaders.  

To join forces to convince Corporate SA to withdraw from NEDLAC and bargaining councils to break our economic gridlock. From NEDLAC and bargaining councils Corporate SA manipulates the economy. They protect their markets from the competition of new entrants to the market causing rampant unemployment.

NEDLAC

  • The rise in unemployment since 1994 is a testimony of NEDLAC’S failure.  Since the start of NEDLAC the number of unemployed has increased from 2 m to between 8m and 12m with 64% of youth unemployment and 45% of our population going hungry, a humanitarian catastrophe. Their voices are ignored. With dwindling membership numbers, trade unions lost their grip on the economy but retain their prominent status at NEDLAC.
  • The poor majority are not represented on NEDLAC and their voices are not heard and acted upon. 
  • NEDLAC succeeded to protect organised labour and big business to the detriment of small business and the jobless- John Kane-Berman. Nedlac remained loyal to its masters, government’s triparty alliance which has an inherent loyalty to Nedlac. Nedlac tends to protect own and vested interests, compromise and satisfy trade union thinking and demands, not the needs of the majority, the unemployed and hungry , nor the grass roots aspirations of emergent entrepreneurs. 
  • NEDLAC has failed:  Since 1994 NEDLAC has failed to proactively formulate policies for economic growth and  job creation and is largely responsible for our present crisis.
  • Modernise-democratise  by replacing NEDLAC with an Economic Development Board with an Independent Advisory Council to enlist astute business leaders and economists to unlock the huge resourcefulness of the private sector, grow the economy and transform Africa into the next growth continent, implement wide ranging deregulation for businesses, commerce, trade and industry and entrust associations for commerce, trade and industry with  enterprise development, interns and incubatorsand to advise the Presidency and the Ministers of Finance and Trade and Industry on economic policies that will stimulate job creation. .
  • Reform or even better replace NEDLAC with an Independent Advisory Council 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 economic policies that stimulate job creation.
  • We need to emulate the success of the automotive industry in the late 90’s when Mr Tito Mboweni was Minister of Labour. This policy needs to be extended to other industries:

Automotive- Positive balance: R84.7bn (2017) -300 000 jobs created. This highly successful incentive scheme helped stimulate the motor manufacturing industry and stimulate our export economy. If replicated in other industrial sectors the potential growth in jobs can be as follows:Agriculture – a projected additional 700 000 jobs can be created;

Bargaining councils

Amend the Competitions Act: No 89 of 1998. Collective bargaining and council agreements should not be exempted from the Act. Extend the Competitions Act, No 89 of 1998 to also apply to, instead of excluding, collective bargaining agreements. Emulate the successful strategy of Germany. Exempting collective agreements from the Competitions Act, is unproductive protectionism.

Job reservation: S3 is borrowed from English law, a legacy of our colonial past and of apartheid to protect ‘artisans’ against the untrained. S3 authorizes bargaining councils, a concept that was ‘borrowed’ from English law between 1914 and 1924 to reserve jobs (closed shop) for qualified artisans and to ‘legally’ exclude/discriminate against unqualified locals, even prosecuting them when working in those industries. It was abolished in England: 

As in England and New Zealand the key to labour-economic reform is to abolish bargaining councils –

  • Bargaining councils originated in colonial England to protect artisans against the entry of untrained workers to their trades. ‘Work reservation’ was a cornerstone of apartheid. Over time many bargaining councils in SA, like the councils in the building industry, dissolved.
  • Unions demand national agreements on the improbable argument that conditions are identical all over the country for power and for selfish economic reasons. 
  • Stop the extension by the Minister of Labour of Main Agreements to non-council parties. In SA bargaining councils inflate wage bills by between 18% and 33%. 
  • Liberating industry from this outdated system will give the economy at least a 2% boost and restore our status as an international investment destination.
  • Abolishing bargaining councils to open the economy and enable the establishment of an estimated 200 000 SMME’s with 2m+ jobs.

∙        Mr Trevor Manuel said that ‘South Africa risked the entrenchment of a labour aristocracy and the further marginalisation of outsiders. Bargaining councils entrench a labour aristocracy and marginalise outsiders by giving legal protection for large corporations to monopolise markets and for unions to secure protected wages and benefits for an elitist few employees (Sunday Times September 25 2005 BT p 9 Finance Minister Mr Trevor Manuel in 2005). 

Ms Margaret Thatcher turned the British economy around when she abolished bargaining councils in the 1980’s.

  • 1980 Mrs Margaret Thatcher blamed the ‘bargaining councils’ for obstructing economic growth and got rid of the council system. With the councils out of her way, she was able to deal directly with industry leaders and turned the economy around. Without the closed shop, workers were no longer forced to be members of the trade unions in their industries. 
  • In Britain the closed shop enforced a mass of restrictive practices. Throughout the 1950’s Lord Beaverbrook happily met even the most absurd union’s demands- calculating that such demands might break his weaker rivals.

‘Who governs the country?’ During the national strikes of the 1970’s, Edward Heath asked, ‘Who governs the country?’. The country was not quite sure. The trade unions had too much legal and political power vested in their leaders, too little in their members. A series of new laws were needed to diminish their immunities and increased their members’ rights.

Ms Margaret Thatcher who abolished bargaining councils in the 1980’s turned the British economy around.

Unions demanded national agreements on the improbable argument that conditions are identical across the country.

The trade union leaders were barons, but Mrs Thatcher did not make the mistake of giving them a Magna Carta. She simply stepped past them to the men and women they claimed to represent.

Bargaining councils enforced a mass of restrictive practices. Throughout the 1950’s Lord Beaverbrook happily met even the most absurd union demands – calculating that such demands might break his weaker rivals.

Big business paid their labour a King’s ransom to maintain their oligopoly and shut out newcomers. Most were bled white -Simon Jenkins of The Times.

Mr Jim Bolger of New Zealand, who abolished the nationwide agreements by monolithic union power blocs with ‘compulsory union membership that bred wasteful strikes and scandalous abuse’. 

‘Only through a higher level of economic activity can we get the jobs we need in New Zealand’ he said. 

In months Mr Bolger produced startling results, bringing down inflation from 15% to 1,3% and increasing the trade surplus by 500%. ‘The fall in average wages predicted by our critics hasn’t materialized’. Appeasement of a minority came at huge cost for the economy and worsening poverty.

SA bargaining councils have only .07% legitimacy. 

∙        Only .7%  of our total population of 60 m are employees and members of trade unions that are parties to Bargaining Councils. 

∙        Bargaining Councils are statutory forums for trade unions to negotiate benefits for their .07% (41 713 in 2017) members. Councils enable a small collective of employers to protect and monopolise their markets at the cost of economic growth and job creation for 44% of unemployed population.

∙        Bargaining Council levies and regulations increase our wage bills by 18%-33%, thereby opening our markets to cheap imported goods. In five years the imports of footwear have increased by 500%, causing local factories and other businesses to close resulting in a huge loss of jobs.  

∙        The Minister of Labour extends Main Agreements of Bargaining Councils to non-parties, some effective until 2022.  We call for the abolition of this practice, an undemocratic concept, avoided by international investors.  

∙        Prominent union leaders have already declared their commitment to fundamental economic reform. The World Bank, and other researchers, have identified the bargaining council system in South Africa as a major constraint for economic growth.  

     Pittance after 20 years- A contributor who was forced to contribute, received a lump sum of R128.60 after 20 years contribution to the council’s provident fund.

  • For years the MEIBC, our foremost bargaining council is under judicial administration.

Brutality of the bargaining councils, the unforeseen consequences  

(See attached photo – ‘Bargaining Council sent out police : When the media reported that Annie Cawood won the ‘Enterprise of the year award’, the Clothing Bargaining Council prosecuted her firm (and lost the case) victimised the Cawood’s and caused the factory to close.  65 employees lost their jobs and the Cawoods immigrated to New Zealand). 

We have witnessed factories and skilled workers moving to Lesotho and China where SA companies established factories, from where they export to SA retailers and sell to their local retailers.  We have record of thousands of similar instances which disincentivise SMME’s to enter the ‘demarcated’ markets.

Levies of bargaining councils-

Council levies and regulations are seen as a major restraint for SMME’s and are feared by new manufacturers and investors who are looking for tax break, subsidies and trainable people, not regulations and levies! 

  • Besides the 18% added to costs of employment by Bargaining Council Agreements, hidden employment costs add another 33% to the actual wage bill.
  • Hidden employment costs, such as public holidays, sick leave, family responsibility leave, other non productive time, and a 13th cheque, add another 33% to the actual wage bill.
  • The following breakdown illustrates the additional costs of a factory operating in the metal industry: 
  • At an average salary of R5000 per month an additional R902,28 (i.e an additional 18% on actual wage) is enforced on the employer.
  • 1 Council admin fee R7,02 per month per employee
  • 2 Technological fund R1,29 per month per employee
  • 3 Dispute resolution levy R 2,47 per month per employee
  • 4 Sick Fund contribution (0.9%) R 45
  • 5 Provident Fund contribution (6,6%) R330
  • Sub-total R385,78
  • 6 UIF contribution (1%) R50
  • 7 Skills Development levy (1%) R50
  • Sub-total R485,78 (i.e. additional 9,72% on actual wage)
  • Plus holiday leave bonus (8,33%) R416,50
  • Subtotal R902,28 (i.e an additional 18% on actual wage)
  • Plus R185 collective bargaining levy for total labour force.

Council levies and regulations are seen as a major restraint for SMME’s and are feared by new manufacturers and investors who are looking for tax breaks, subsidies and trainable people, not regulations and levies! We plea for the dissolution of the bargaining council system and a new dispensation of incentive programs to grow the economy and create much needed jobs.

A  MEIBC survey found that: 

91% of the participants (in the metal industries) would like to withdraw and would not invest in the Metal Engineering Industry under the current MEIBC dispensation. 

94% felt that there would be no future for manufacturing in South Africa with the next 5 years , should the current MEIBC dispensation continue. 

89% would not employ more people with the next 12 months.

In the clothing industry with a total of 1 239 manufacturers, some 1 129 compliance orders were issued. Writs of execution were issued and machines sold in execution. It was also followed up with fines and alternatively jail sentences of 30 days. Factories of Chinese and Indian (and other) investors were driven from New Castle to Lesotho.

  • ‘Open the South African economy’ -the consensus of leaders in government, industry and institutions- 
  • There is general consensus amongst the World Bank, IMF, economists, Neasa, the Free Market Foundation and Cofesa that the bargaining council system should be abolished. The union Solidarity successfully managed to place our leading bargaining council, the MEIBC, under judicial management. 
  • In 2016 the IMF warned that current bargaining practices hampers economic growth
  • Cofesa called on government to heed to the warning by International Monetary Fund Deputy MD, David Lipton that “certain policies, such as those governing wage-bargaining practices, are hampering  South Africa’s economic growth, as they often exclude smaller businesses and keep the ‘economic pie’ from growing”.   The government is not listening!
  • 2017 May Mr Jeff Radebe of the Presidency-  Revive South Africa‘s flagging economy and the manufacturing sector!    
  • Mr Radebe : ”There is an “urgent” need for government, labour and industry to revive South Africa‘s flagging economy and the manufacturing sector can play a key role in achieving that goal” (May 2017), but will not heed the call to abolish the bargaining council system.
  • 2017 December Minister Ebrahim Patel at Nasrec stressed  the need to address  ‘economic inclusion’, addressing the problem of over- concentration of production in a few hands. Mr Patel also referred to the  German model of collaboration with all parties (and Japanese model). (See later on in this document our reference to the German model and to the American model).
  • Council regulations make it too costly to compete. 
  • Lost legitimacy 
  • Of 1 239 local clothing factories, some 1 129  were issued with compliance orders were issued to force them to comply. Writs of execution were issued  and machines sold in execution. It was also followed up with fines and alternatively jail sentences of 30 days.  Factories of Chinese and Indian (and other) investors are allowed to continue operating with impunity.
  • The councils routinely defend their system by stating that exemptions are granted. In fact, the exemption process is a protracted procedure and is not transparent, – It is perceived to be manipulated by the industry. Those aggrieved by their decisions, can apply for arbitration which is handled by a panel of arbitrators selected and paid by the council. Non members regard the exemption process as a scam as the vast majority of applications for exemption fail. 
  • COFESA supports government’s commitment to promote emergent enterprises and job creation but inspectors impose draconian fines.

Relief from bargaining councils will be at no cost to Government and will create and estimated 2m plus jobs. Pick the low hanging fruit of deregulation.

RSA- THE HONG KONG OF AFRICA

We look forward for South Africa to become to the continent what Hong Kong is to China and welcome National Treasury’s gateway into Africa strategy, which represents a determined effort to attract foreign companies to adopt SA as their African base.

Bargaining councils levies and regulations inflate wage bills with between 18% and 33% opening our market to cheap imported goods causing local factories to close.  Mr Trevor Manuel, the IMF, The World Bank and empirical studies of Britain and New Zealand identified the bargaining council system as restraining economic growth. (Attachment)For inclusivity-. Abolish the outdated bargaining councils- Stop extensions by the Minister of Labour of Bargaining Council Main Agreements to non-parties. This will be a major step in deregulating and modernising manufacturing

Emulate reform successes Mr Derek Hanekom- We applaud his vision and decisive role in disbanding the outdated agricultures control boards in 1994. – Landbouweekblad’s 100 1919-2019 ‘n Eeu op die platteland’ commemorates his monumental accomplishment.(Page 9). Agriculture – Transformation is part of the legacy of the ANC – Disbanding agricultural control boards; a legacy of the ANC. He is credited for today’s thriving global agriculture exports.

Since 1994 the total agricultural output — field crops, livestock and horticulture — has nearly doubled over the p ast 25 years. The gross value of the sector has increased nine-fold since 1994 and was about R277bn in 2018, according to data from the department of agriculture, land reform and rural development, despite only 4% government support (including support for land reform) compared with 20% plus support in Europa and America and dealing with increased costs of  fertilizer (+40%), fuel (+20%), electricity (+11%), minimum wages (+16.1%), while poor infrastructure and roads thwart the transport of produce- Sake Beeld Oct 2021. Exports R81.3bn,  7% of GDP, 8% of total exports, employing 700 000 workers.  Positive trade balance R81.3bn  A global demand for food creates lucrative trade opportunities and government incentives will have a major impact.

Celebrate entrepreneurs, employers, investors and the super-rich to unleash the unlimited intellectual human capital of resilient South Africans and end poverty

Our unlimited intellectual human capital potential is evident by the success of Mr Elon Musk who left Pretoria at the age of 17 and sought the greater economic opportunities available in the United States. He is worth around $100 billion more than Amazon’s Jeff Bezos, and he is about 29 times better off than South Africa’s richest citizen, Johann Rupert. As of Tuesday 26 October 2021, Elon Musk is worth $289 billion or R14.6 trillion, to convert that into the currency of his country of birth. 

Elon Musk is now so rich he can fund SA for two years – and still be far richer than any local

Elon Musk, at a 17 May 2021 visit to Brandenburg. (Photo by Christophe Gateau/picture alliance via Getty Images)

Bring back the expats to start businesses. Of 3,2 million at SARS registered companies 1.2m have deregistered since 2015.  

Our ‘Elon Musks’ and Mark Shuttleworths are leaving the country in drovesMark Shuttleworth born in Welkom on 18 September 1973 is the founder and CEO of Canonical. In 2002, Shuttleworth became the first South African to travel to space as a space tourist, and indeed the first African from an independent country to travel to space.

Brain drain – 1,8 million citizens have left the country since 1990 Following Mr Mr Musk and Shuttleworth it is estimated that up to 1,8 million citizens have left the country since 1990 to live abroad, including 500 000 experienced, skilled and qualified citizens of all colours. More than 100 000 South Africans emigrated in 2020, including 90 000 whites, causing service delivery and infrastructure failure, disinvestment, unemployment and escalating unrest. At least 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 R10 bn and R20 bn. 7 Feb 2021 “Data from various sources suggests that around 23,000 South African tax residents emigrate each year in search of greener pastures,”  says legal firm Webber Wenzel. Since 2015 the number of our dollar millionaires declined from 50 823 to 44 605 in 2020. Super rich South Africans with assets exceeding $30 m declined from 910 to 742.

Inspiration – Junk status? No, let’s turn around the economy’ Mr Brand PretoriusMr Brand Pretorius saved McCarthy Motor Holdings from bankruptcy after the group was declared technically insolvent in February 2001.Under Brand’s leadership McCarthy was successfully recapitalized, restructured and restored to financial health, saving thousands of jobs. Today the group employs 7000 people, has an annual turnover more than R20 billion and it sells approximately 75 000 new and used cars annually. 

Inspiration- the successful transformation of the SABC in the 1970’s to SABC-TV, the most modern of its time; a platform for talents and creativity, inspiring MTN, KYKNET, SENTECH, tv production houses etc.

South Korea had a lower per capita GDP than S.A’s in 1960.  Today their per capita GDP is 32 times higher than our’s. Compared to the world average, South African’s GDP per capita plummeted in 2019 and 2020, and its citizens are now in the poorest 40% of the world with our GDP per capita ranking – 107th out of 191 countries, economist Mike Schussler said in August 2021.South Africa’s per capita GDP was a third larger than Singapore’s in 1960. Singapore’s is now 7 times higher than that of South Africa. Botswana whose growth has outstripped even that of the Asian ‘tigers’.  Mr Tito Mboweni called on us ‘to attend to a number of mistakes’. We must deregulate to unleash prosperity.

Celebrate business skills for a Mustang economy, not a bloated Edsel 

Our situation is a reminder of the financial dilemma the Ford Motor Company faced in the early 1960 ‘ s. To regain market share they designed the monstrous Ford Edsel and lost a further fortune. Then Mr Lee Iacoca rescued Ford ‘with a perky, trim, exciting Ford Mustang.’  He saved time and costs by using parts of the Ford Falcon. He saved Ford.Ford’s total assets were 267 billion US dollars in 2020. SA have all the resources to go for a ‘Mustang economy’ – a vibrant, energetic economy with millions of jobs.

Unlock our unlimited intellectual human potential, create space for the resilient, the brilliant, the talented, the mavericks the innovators, the resourceful, the pioneers, the visionaries who envision and calculate even 20, 50 and 100 years ahead to create businesses, to trade, to network, to transfer business-skills, to mentor and to coach.

They create a sustainable economy and sustainable jobs. To employ a person changes his/her world for generations to come.

“Nonracialism as a fundamental principle of the ANC

President Ramaphosa declared  “nonracialism as afundamental principle of the ANC at the January 8 anniversary of the ANC: “Ït lies at the heart of our objective to build a SA nation with a common patriotism and loyalty in which the cultural, linguistic and religious diversity of the people are recognised”. We expect that Mr Sipho Nkosi will now sanitise our legislation (especially labour laws) from racialism when ‘cutting red tape’ in 100 days.

BBBEE, affirmative action, race quotas and similar growth restraining laws benefit an elitist group of a maximum of between 30 000 possibly only as few as 10 000 people to the detriment of millions of under- and unemployed people. It distorts the economy. Professor William Gumede of Wits University called for the abrogation of preferential procurement rules that helped pave the way for the ‘Zupta’-linked ‘state capture’, estimated to have cost between R500bn and R1.5 trillion.

‘The number of black dollar millionaires was overtaking white equivalents around 2015’ according to New World Wealth. 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 avoid affirmative action which made them uncompetitive internationally and to retain their highly skilled expertise. Research dispels the notion that racism is a major problem in South Africa. Data shows that only 3.3% of South Africans regard racism as one of the biggest problems facing the country and only 16% say they have experienced racism in the last five years. Head of Campaigns at the Institute of Race Relations (IRR), Gabriel Crouse, commented: Most South Africans agree that racism allegations are an excuse used by politicians to cover up their failures. 

Chief Albert Luthuli said in 1961, that racial politics cannot change economic fundamentals. This reality caused the downfall of apartheid and has now again characterised our legislation. It is time to sanitise our legislation.Operation Vulindlela’s proposals to reform must be activated, proposals that have been on the agenda for at least a decade, if not longer.  It will be adrenaline for our economy and inspire hope for the destitute and forge an ‘Africa Spring’.

We have passed the dangerous 30% unemployment level set by the ‘Arab spring’ tipping point when unrest spontaneously erupts. The poor are now the largest interest group in SA. With an ‘Africa spring’, we can avoid a possible Africa winter and further damage to our economy.

After the KwaZulu-Natal/Gauteng uprising, experts warned that we have passed the dangerous 30% unemployment level set by the ‘Arab spring’ tipping point when unrest spontaneously erupts. Outbreaks have increased from 2.26 daily to 2.5 and even to eight per day, 35% to 50% of our people go to bed hungry. R416bn is being paid out in social benefits to 18.2m beneficiaries; 46.6% of the entire population of 60,041,994, burdening a working population of only 14,995,000. In 1994, only two million people were unemployed.

Not in KwaZulu-Natal or in Egypt, hungry and violent crowds listened to rhetoric.

For investment we must offer an inclusive modern economy for a modern generation – Nova Africa

‘Toyota-sized’ investors – We need a fresh investment narrative to attract risk-averse investors with high return expectations. We must attract at least 390 new ‘Toyota-sized’ investors to recoup losses caused during the July KZN-Gauteng looting, the most expensive unrest in the world that caused R500bn in damages. Toyota, our largest investor in KwaZulu-Natal has invested R1.3bn per year.

Financial dead-end – Vast swathes of the country’s infrastructure has already been destroyed including our rail network, which, in years gone by, was the best in Africa. Eskom’s debt is now more than R400bn while state-owned enterprises’ debt has ballooned to R692bn by December 2021.

Conclusion

Cofesa, the Confederation of Employers of SA’s, regularly submits comments from the ranks of the private sector to contribute to your successful strategy.We call for a business-friendly environment that attracts entrepreneurs, like Elon Musk who left the country in 1970 and is now the richest man in the world to whom we refer later in this document, a place where people are encouraged to use their business skills and employ, mentor, coach and develop employees and build A MODERN INCLUSIVE ECONOMY FOR A MODERN GENERATION.

 Shortly

  • Since the start of Cofesa, the Confederation of Employers of SA in 1990 we promoted shopfloor bargaining against aggressive unions, Department of Labour and bargaining councils.
  • Corporate SA benefits from their seats on these councils that protects their monopoly markets against competition. Corporate SA and business associations ignore our pleas to withdraw from bargaining councils. Corporate SA manipulate the economy for their own benefit.
  • We call on Corporate SA and business associations to withdraw from NEDLAC and bargaining councils to break our economic gridlock
  • In numerous court cases Cofesa and Neasa (under the leadership of Mr Gerhard Papenfus) have opposed the extensions of bargaining council main agreements to non-parties.

22 m to 30 m jobs More than 60 of the world’s leading economists, some of the Nobel Price Laureates found that 22 m to 30 m job opportunities in SA in a few years and 50 million on the continent can be created by picking the low hanging fruit of deregulation. See World Economic Freedom Index (Pse see attachment)

Low hanging fruit refers to the World Economic Freedom Index finding that by deregulating SA economy can excel.

‘As I moved around the world and heard the opinions of leading people and economist about how to grow an economy, I was persuaded and convinced about the free market’- Nelson Mandela.

A recent review of South Africa’s performance by the National Planning Commission (NPC) asks what can be learned from 

Vietnam and Indonesia (and others)

One important realisation in drawing lessons from the experiences of Vietnam and Indonesia is that they exist in their own unique contexts; these may not be replicable.

But Botswana’s growth has outstripped even that of the Asian ‘tigers’.  

South Korea had a lower per capita GDP than S.A’s in 1960.  Today their per capita GDP is 32 times higher than our’s. Compared to the world average, South African’s GDP per capita plummeted in 2019 and 2020, and its citizens are now in the poorest 40% of the world with our GDP per capita ranking – 107th out of 191 countries, economist Mike Schussler said in August 2021.South Africa’s per capita GDP was a third larger than Singapore’s in 1960. Singapore’s is now 7 times higher than that of South Africa.What can South Africa learn from this? Political choices – repudiate communist/centralist ideological orientation

Cutting red tape brief to the business leader, Mr Sipho Nkosi  

We welcome the President’s brief to Mr Nkosi and we are in touch with Mr Nkosi. He needs all the support he can get.

Sona Feb 2022 –

There are too many regulations in this country that are unduly complicated, costly and difficult to comply with. This prevents companies from growing and creating jobs. We are therefore working to improve the business environment for companies of all sizes through a dedicated capacity in the Presidency to reduce red tape. If we are to make progress in cutting unnecessary bureaucratic delays for businesses, we need dedicated capacity with the means to make changes. 

I have therefore appointed Mr Sipho Nkosi to head up a team in my office to cut red tape across government. Mr Nkosi has extensive experience in business, including as the CEO of Exxaro Resources, and is currently the Chairperson of the Small Business Institute.

The red tape team will identify priority reforms for the year ahead, including mechanisms to ensure government departments pay suppliers within the required 30 days. The team will also work with other departments and agencies to unblock specific obstacles to investment and business growth. It will support current initiatives to simplify processes relating to property registration, cross-border trade and construction permits.

Infrastructure is central to our economic reconstruction and recovery. Through innovative funding and improved technical capabilities, we have prioritised infrastructure projects to support economic growth and better livelihoods, especially in energy, roads and water management. The Infrastructure Fund is at the centre of this effort, with a R100 billion allocation from the fiscus over 10 years.

The Infrastructure Fund is now working with state entities to prepare a pipeline of projects with an investment value of approximately R96 billion in student accommodation, social housing, telecommunications, water and sanitation and transport. Several catalytic projects to the value of R21 billion are expected to start construction this year.

Of this, R2.6 billion is contributed by government and the balance from the private sector and developmental finance institutions. Government will make an initial investment of R1.8 billion in bulk infrastructure, which will unlock seven private sector projects to the value of R133 billion. 

For millions of South Africans in rural areas, roads and bridges provide access to markets, employment opportunities and social services. Yet, many children still have to brave overflowing rivers to reach schools and motorists have to battle impassable roads to reach the next town. We are therefore upscaling the Welisizwe Rural Bridges Programme to deliver 95 bridges a year from the current 14. 

Invitation to comment on infrastructure development Act Country investment Strategy

In Cofesa’s 32 year history it is the first time that we have been invited to comment on a strategy document of such huge impact at a critical time. We foresee it will change the trajectory of our economy and the economies of our continent. The document covers matters related to issues that we have raised with the Presidency since President Ramaphosa’s Thuma mina, Thuma mna, Roma nna,  Send me, Stuur my outreach to us. We have commented extensively on the Act/Strategy.Since 1990 Cofesa has served the HR and IR needs of more than 100 000 companies countrywide, in 52 industries at the ‘coal face’, not on industry level, not on bargaining councils, not at NEDLAC but on shopfloor level: in offices, in shops, in factories, on farms and at households, person to person where we gained valuable insight into the soul of business.  Our national 24/7 hotline is also a source of data for research and empirical studies. 

‘The difficulty with change lies not so much in developing new ideas, but in escaping from the old ones’.-  John Maynard Keynes.

Sincerely

Dr Lawrence McCrystal, BSc London University, B Econ (Hons); M Econ; PhD Economics, (Honours & Masters – Cum Laude) and Adv Hein van der Walt.

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