Cofesa has the way forward all mapped out

SA is rated 117th out of 165 countries for oversized government; we need to downsize urgently and reduce tax. And with 200,000 millionaires in government service – the country needs to trim down salaries, fringe benefits and opulent lifestyles – not only of the 200,000 officials with salaries of more than R1m annually. There are glaring inconsistencies between good governance, service delivery and salaries. Dr Lawrence McCrystal and Adv Hein van der Walt of Cofesa have some ideas in the article below on how to achieve the reforms the country so badly needs. – Sandra Laurence

‘Let everyone generate power and sell to the grid. It will create millions of micro enterprises and spread wealth’

In their submission to Finance Minister Godongwana, Cofesa challenges him to activate Vulindlela strategies and incentivise households, factories, farmers, schools – everyone – to generate electricity and sell it to the grid. This will create millions of micro enterprises in green energy, a resilient ‘internet’-like power supply that changes our economic scenario and saves government spending R55bn on job creation with a first-year failure rate of 75%; and save on the maintenance and repair of Koeberg and other polluting coal power stations. Cofesa also calls to –

Accelerate the transfer of title deed to more than 800,000 tenants to create a ‘Marshall Plan’ effect and boost the economy
Downsize government and reduce tax – our oversized rating is 117^th out of 165 countries and 99^th out of 165 for overregulation. Cut down our bloated government staff complement with 200,000 millionaires and trim, fringe benefits and opulent lifestyles.
Deregulate like India and over a relatively short time, create between 22m and 30m job opportunities in SA, and 50m on the continent. ‘Pick the low hanging fruit of deregulation’

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

‘Activate Vulindlela’s ‘Make way’ strategies with instant deregulation to beat poverty’ – Cofesa

Cofesa calls on Finance Minister Enoch Godongwana to activate Vulindlela’s strategies with instant deregulation measures

With 45% of our population suffering from hunger which may flare up into uncontainable uprisings and lootings like in KZN-Gauteng in 2021, Cofesa calls on Finance Minister Enoch Godongwana to activate Vulindlela’s strategies with instant deregulation in his medium-term budget statement.

In their submission Dr Lawrence McCrystal and Adv Hein van der Walt of Cofesa referred Mr Godongwana to his earlier statements-

“Government expenditure is too high for the amount of revenue that the economy can generate.”
Government “can’t tax our way out of this [economic crisis] because taxes have increased substantially for the past five years, and our latest increases have generated little additional revenue” ; our dilemma with the Laffer Curve phenomenon (as head of the ANC’s economic transformation committee).
“Taxes and spending are not the way out of SA’s economic crisis” he warned at a weekend lekgotla.

Priorities for the Medium-Term Budget Policy Statement

SA is rated 117^th out of 165 countries for oversized government – downsize and reduce tax

With 200, 000 millionaires in government service – trim down salaries, fringe benefits, opulent lifestyles– not only that of the 200 000 officials with salaries of more than R1 000 000 annually. There are glaring inconsistencies between good governance, service delivery and salaries ranging from R1 137 933 per annum for junior parliamentarians to R2 825 470 for senior officials.
Before Covid-19 the real monthly wage of an average public sector employee was R4,000 more than for an average private sector worker. In the private sector salary cuts due to Covid-19, in the order of 35%, were reported.
“The real take-home pay for May 2021 was R12,650, which was slightly lower than April’s figure but 0.1% higher than May 2020,” said Shergeran Naidoo, BankservAfrica’s head of stakeholder Engagements; 13% of R1 137 933.
Cut down on fringe benefits such as international travel, expense accounts, housing, blue light brigades, and spending such as for parties, funerals, workshops, etc
Instead lift 16m people out of unemployment and 50m out of poverty, free from hunger, many of whom live in shacks, with no clean water or electricity, while sewage runs through their stands
Cut 88 travel concessions per annum for members of parliament and their dependents, by rail, road or air and daily to parliament and to airports; free tablets, laptops, furniture, stationery and insurance cover for accidents, free government accommodation in the Cape during sessions of parliament.
Meanwhile, according to Amnesty International, more than 5,000 schools are without water and sanitation. These luxuries for officials are unaffordable and must be abolished

Eskom’s 66% bloated staff complement must be downsized. Our financially stressed population and the hungry should not carry the costs of their excessive salaries.

Save on maintenance and repair of Koeberg and other polluting coal power stations. Instead of spending enormous amounts over years to repair Koeberg and maintenance of polluting coal fired power stations:
- Create opportunities for small scale power generators such as factories, households, solar farms and wind farms to sell green energy to the network.
  - Incentivise the public/all private energy providers to install green energy and to sell electricity to the network, as well as suspending VAT on materials and installation.
  - Abolish black economic empowerment and employment equity.
    - This will instantly stimulate the economy, save the environment and gain carbon credits.
    - Millions of micro enterprises will emerge selling green energy and instantly revolutionise our economy. When households sell electricity indirectly to large corporations, an economic gap will be bridged like never before.

Accelerate the issuing of title deeds. It will have a ‘Marshall Plan effect’ and grow the middle class

Transferring 800,000- 2,08 million new title deeds for residential property will generate VAT and create jobs. Ownership empowers and changes spending patterns. New owners will access bank loans and bonds to upgrade, repair and enlarge their houses, buy white goods and cars, and thereby stimulate the economy.
Allow and encourage additional housing structures on existing premises to optimise the use of land and existing infrastructure.

Stop wasteful spending, reduce government departments, staff complements and salaries and dismantle centralist control

Accountability for spending taxpayers’ money

Uncapped, uncontrolled, unauthorised spending
Reports of more than R140-million spending by the former Public Protector Mkhwebane, involving six law firms and several different legal representatives, (again) raises the question of accountability, management, control and authorisation of the spending of public money.

The report of the Auditor General in late August 2022 at the standing parliamentary committee that 70% of the total government spending of R1 651 billion was ‘fruitless and wasteful expenditure’ calls for urgent intervention.
Municipalities became more dysfunctional.

Taxation – Cofesa also calls for the reduction of tax rates. Our top marginal tax rate discourages the initiative and dynamism South Africa needs to build prosperity.

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%. China’s CIT rate is currently 25%.

Reduce company tax to 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.

Reduce personal tax to 11%. Personal tax needs to be reduced from 18% to 11%.

Replace NEDLAC with an Economic Development Advisory Council

Replace NEDLAC with an Economic Development Advisory Council comprised of astute business leaders, economists and high-level government officials. Their mandate will be to recommend steps also to unlock the huge resourcefulness of the private sector, grow the economy and transform South Africa into a growth country by implementing wide-ranging deregulation for businesses, commerce, trade and industry and entrust associations for commerce, trade and industry with enterprise development, interns and incubators and to advise the Presidency and the Ministers of Finance and Trade and Industry on economic policies that will stimulate job creation
NEDLAC is not inclusive of the broad population such as the unemployed. It is an exclusive forum for Cosatu, the SA Communist Party and the captains of industry at the cost of economic freedom (and growth). The SA Communist Party has 220, 000 members, Cosatu 1 million members, (3.11 million union members in total), 12 million unemployed, 27 million hungry, some 250 000 formal employing micro, small and medium enterprises in South Africa.
The rise in unemployment since 1994 is testimony to 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. With dwindling membership numbers, trade unions lost their grip on the economy but retain their prominent status at NEDLAC.

Stop extensions by the Minister of Labour of Main Agreements to non-parties.

Unions demand national agreements on the improbable argument that conditions are identical all over the country for power and for selfish economic reasons. SA Bargaining councils have only .07% legitimacy; only .07% (41 713 in 2017) of our total population of 60 m are employees and members of trade unions that are parties to Bargaining Councils. Councils enable a small collective of employers to protect and monopolise their markets at the cost of economic growth.

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%.

· Mr Trevor Manuel then Finance Minister 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 p9).

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

During the national strikes of the 1970s, 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.

Thatcher, who abolished bargaining councils in the 1980s, turned the British economy around.

The trade union leaders were barons, but 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 1950s 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’.

‘The fall in average wages predicted by our critics hasn’t materialized’

‘Only through a higher level of economic activity can we get the jobs we need in New Zealand’ he said. In months Bolger produced startling results, bringing down inflation from 15% to 1,3% and increasing the trade surplus by 500%.

Appeasement of an elitist minority came at huge cost for the economy and worsens poverty.

Scrap draconian labour laws – it scares away investors, promotes mechanisation and cheap imports and underlies cadre deployment and patronage, fraud, service delivery failure and state capture.

4 firms, some of them listed on the JSE, were criminally prosecuted 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. We could not find similar excessive fines in BRICS countries.

Abolish exorbitant fines and imprisonment imposed by the BCEA – (Basic Conditions of Employment Act), Employment Equity Act, UIF (Unemployment Insurance Fund), COIDA (Workmen’s Compensation Fund), Skills Development Plans, abolish burdensome laws that hinders economic growth to create a business-friendly investment economy

Modernise- Scrap quotas to benefit the elite-

Race quotas for employment ‘equity’ benefit an elitist few while 19% of black African children, 18%-50% of the rest of the population suffer from hunger and unemployment rise to 40%

Indian model- Abolish Employment Equity and BBEEE–

Poverty reduction must take precedence over reducing inequality Professor Arvind Panagariya, of Indian Political Economy at Columbia University, and former vice-chairman of the Indian government think tank, NITI Aa yog with cabinet rank, spoke to CDE executive director Ann Bernstein on growth and inclusion in India.

Panagariya found that in developing countries poverty reduction must take precedence over reducing inequality. To illustrate he pointed out that few people migrate from Kerala, the richest Indian state, to extremely poor but much more equal Bihar. There is massive migration in the other direction because, rather than being concerned about inequality, poor people mostly want to improve their chances of escaping poverty. He explained that the rapid growth India experienced after reforms in the early 1990s was a central factor in halving Indian poverty between 1990 and 2015.

He also made a compelling case in favour of developing countries moving into low-skill manufacturing in today’s global marketplace. He argued that the market for these goods remains massive and is growing. In addition, the threat of automation is greatly exaggerated.

Deregulate labour laws to unleash growth- The collapse of SAA; subject for a case study

The collapse of SAA presents a classic subject for a case study illustrating how the antagonism of trade unions against outsourcing to independent contractors, temporary employment services and pieceworkers caused the failure of a previously world class air liner.

SAA – When grounded during Covid-19 SAA scored R930 for every passenger not using their services.

‘Permanent’ employment became overprotected by our labour laws. Section 200A of the LRA applies and a person is deemed to be an employee (with full benefits) until the contrary is proved, making it risky to outsource especially in the face of aggressive trade unions who collect membership fees from permanent staff and demand regular wage increases, pensions, medical cover, housing and other fringe benefits. Worldwide airlines (and businesses) employ independent contractors for ad hoc services instead of full tenure. Considering an employee’s leave, sick leave, family responsibility leave, etc he/she will work only 216 days or 60% of the year, while fully paid, with even fewer working days for women on maternity leave plus benefits.

The SAA is a typical object for a case study. When SAA had 58 airliners they employed 957 staff members per airliner instead of the international average of 140. They had enough staff to fly all of the 238 airliners of British Airways, plus another 122 airliners.Based on a reported loss of R9 billion in 2019 SAA loses R930 for every passenger it (and is subsidiary Mango) transported. (The real extent of SAA’s losses and its debts isn’t clear. The airline hasn’t been reporting its results since 2017. And still the losses continue).

Promote outsourcing to independent contractors, pieceworkers, labour brokers, temporary employment services, bring down costs and increase productivity

Scrap section 200A of the LRA that deems a person to be an employee (with full benefits) until the contrary is proved. This presumption should be reversed. It discourages outsourcing and further job creation. Independent contractors should be encouraged, particularly as a source of new SMME’s. Independents are well positioned to grow their own businesses and employ more people. Currently the so-called ‘protection of those already employed prevents further employment of the unemployed!’.

Our empirical study on the productivity of ‘contractors’ contrasted with ‘employees’ found that contractors are between 50% and 300% more productive than ‘employees’ and consequently increase the income of the company and for themselves. Over the world and especially in China ‘cottage industries’ create entry levels for untrained entrepreneurs to the formal industries. We need to promote similar models. Promote Temporary employment services – Constraining this industry which gives a livelihood to near 900 000 employees is a ‘job killer’. TES provides easy access (entry) to the labour market. that a person (such as an independent contractor) is presumed to be an employee until proven otherwise.

Modernise The guiding principle of a new industrial relations system should be that individual employers and employees have the right to enter into private voluntary contracts without the intervention of third parties’ – John Kane-Berman, Daily Friend 20 Oct 2020.

‘Parole evidence rule’ – Contractual freedom – Follow the English law of evidence to uphold written contracts as binding between parties when they correctly reflect the agreement of the parties.

Implement ‘Pendulum Arbitration’ as an alternative practical way of resolving labour disputes. We need to ensure that legal strikes are both peaceful and of shorter duration, without causing further damage to the economy. We submit that the introduction of compulsory “Pendulum arbitration’’, an internationally recognized mechanism, would ensure this ideal.

Stop Minimum wages should be suspended and should not apply to trainees, interns or small businesses, and like in Germany, should not apply for the first six months, or perhaps one year, for unemployed persons. The unemployed are deprived of their constitutional rights.

A country that has almost 50% of its potential workforce either unemployed or described as “discouraged workers” has a serious problem. Such a situation is unnatural and does not arise in a free country. It happens by design and for a purpose.

What unemployed people need is for the artificial barriers to entry into the job market to be removed so that they can find themselves jobs. One of the most distressing aspects of the unemployment issue is that there are provisions in the Bill of Rights that were specifically included to prevent citizens from suffering the kind of harm to which the unemployed have been subjected.

If we apply the relevant sections of the Bill of Rights to the matter of mass unemployment and the rights of the unemployed, we are compelled to conclude that the unemployed are not receiving the benefits of the constitutional protections that should be available to them. The nature of the right: to be able to freely enter voluntary contracts with employers at wages and on conditions acceptable to both parties.

Competitions Act S3

(1) This Act applies to all economic activity within, or having an effect within the Republic, except

(a) collective bargaining within the meaning of section 23 of the Constitution, and the Labour Relations Act 1995 (Act No. 66 of 1995);

(b) a collective agreement as defined in section 213 of the Labour Relations Act, 1995;

Modernize by scrapping these exceptions.

Downsize government and reduce tax – Oversized rated 117^th out of 165 countries and overregulated 99^th out of 165

Economists of the World Economic Freedom Index noted that ‘downsizing government will reduce costs and enable tax reduction’. Out of every R1 tax income, 48c go to government salaries is blamed our very high, top marginal tax rate for our distress. It 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 Sub Sahara African average (33.17 percent), and the world average (28.98 percent). This puts South Africa at a considerable disadvantage compared to its competitors.

Reduce VAT to 10% or even to 5%. 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.

Our oversized government structures were now rated even worse than before at 117^th out of 165 countries by the international team indicative of our economic decline. ‘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. An oversized government interferes in economic activities and creates opportunities for corruption and bribes.

They note that ‘Consequently downsizing government will reduce costs and enable tax reduction’.

Our overall Economic Freedom ranking declined from 47^thin 2000 to 99^th out of 165 jurisdictions meaning more suffering for the poor. Living in one of the least free countries (SA) the average income of the poor is $1,736 while the poorest in free countries has an income of $14 204. Overregulation is directly linked to unemployment, hunger, unrest, violence, and looting. Economic freedom translates into more scope for individuals to trade with each other, to engage in employment on their chosen terms, and to know that the work and risks they undertake to start or grow businesses will not be consumed in the form of taxes by ever-hungry, more centralised, and top-heavy governments.

Overly stringent regulation can slow business expansion and weaken profits, which are both the means of further investment and the motivation for further investment.

Cut red tape

Prioritise Mr Sipho Nkosi’s mission to Cut red tape – to Vulindlela-Make way Beat poverty, Ukunqoba ubumpofu, Ukoyisa intlupheko, Go fenya lehuma, Klop armoede⁸Speak up for those who cannot speak for themselves, for the rights of all who are destitute.⁹Speak up and judge fairly; defend the rights of the poor and needy- Proverbs 31:8-9. Archbishop Desmond Tutu said, poverty is man-made. He could have said ‘poverty is made of regulations’.

President Nelson Mandela said – ‘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’.

Mr Barack Obama said at Georgetown University in 2015: “The free market is the greatest producer of wealth in history – it has lifted billions of people out of poverty.’

Countries with less human capital and natural resources have overtaken us

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.

Indonesia and Vietnam demonstrate the importance of political choices. Economic take-off would have been impossible in either country without a government commitment to reverse course on previous policy stances. For Vietnam, this was particularly profound: it required the ruling Communist Party effectively to repudiate its ideological orientation, and to cooperate with erstwhile enemies. Similar shifts have occurred in China and South Korea. In a way, future development depended on overcoming history.

The remarkable economic reforms in India under the leadership of Mr Montek Singh Ahluwalia and the analysis of more than 60 of the world’s foremost economists, some of them Nobel Prize laureates who compiled the World Economic Freedom Index (Index) – correlate with our empirical studies- we can in a relatively short time create between 22 m and 30 m job opportunities in SA and 50 m on the continent by modernizing our economy, by ‘picking the low hanging fruit of deregulation’

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

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, failing at a rate of 75%, the highest failure rate in the world.
Start-ups declined from 250 000 (2001) to 58 000 (2011) and have been declining ever since.

Plea- Prioritise Mr Sipho Nkosi’s mission to Cut red tape

Stop wasteful spending on government job creation efforts-

In 2011 the average cost of one job created by the IDC amounts to R250 000. (2022- R750 00) with a first year failure rate of 75% for small businesses. President Ramaphosa said in July 2022 that R55bn were pumped into programmes to support black enterprises. The Youth Employment Services (YES) was supposed to create one million jobs annually. In the past three years (up to 2022), it only delivered 82 207 work opportunities instead.

Instead, cut taxes – Work smarter not harder- Stop fruitless spending. Deregulate and release our resilient, dynamic economic forces to create millions of jobs like in Singapore, Botswana and India.

Mr Lee Iacoca rescued Ford

Our situation is a reminder of the financial dilemma the Ford Motor Company faced in the early 1960s. 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 $267bn in 2020. SA has all the resources to go for a ‘Mustang economy’, a vibrant, energetic economy with millions of jobs. We need a quantum leap towards a modern inclusive economy for a modern generation – a Mustang, not a bloated Edsel.

Taxpayers immigrate and shrink our tax base – up to 1,8 million citizens have left the country since 1990

Brain drain – Our ‘Elon Musks’ are leaving the country in droves Following Mr Mr Musk 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. With 4thIR digital migration more people will work from their home offices from outside SA. 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 Wentzel.

Emigration of millionaires 2015 – 50 823 dollar millionaires (In 2020 – 44 605)

In 2015 910 supper rich South Africans with assets exceeding $30m (In 2020 -603 and in 2021 – 561) while numbers have increased globally with 9%.

In June 2018 189 230 born South African were living in Australia, 46.9% more than in June 2008. (Knight Frank Wealth report June 2021).

Our shrinking tax base is dwindling towards four million individual contributors (including 1,4 m government and SOE employees). It is unthinkable that half our population should live below the upper-bound food poverty line, or that almost half of those who want to work cannot find jobs and that over 27 million people receive some form of social grant every month. Retain the intellectual capital of resilient South Africans

22 Feb 2021- South-African-high-earners-exodus-may-limit-room-for-tax-hike

(30%) ….fewer than 14 m of the 39 m working age population are registered taxpayers and those earning more than R1 m, pay 40.2% of all personal income levies. Fin24 22 Feb 2021.

1^st March 2021- 5.8% of the population is paying about 92% of all personal tax. They are also paying about 85% of all Vat.

Only 5.8% of South Africa’s population is paying about 92% of all personal tax in the country, according to Econometrix chief economist and director Azar Jammine.

Jammine said South Africa has almost seven million taxpayers out of a population (substantially less in 2021) of 60 million, and the government is heavily reliant on upper-income taxpayers to fund its expenditure programmes.

This portion of the population is also probably paying about 85% of all value-added tax (Vat) paid in the country, Jammine said. His comments were made during a webinar hosted by cement producer AfriSam, on the outlook for South Africa’s economy in the context of the 2021 budget. Moneyweb INSIDER GOLD Feb 2021.

Government is heavily reliant on upper-income taxpayers to fund its expenditure programmes.

Mark 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.

Our unlimited 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 $100bn 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 $289bn or R14.6trn, 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.

Cross the political divisions and repudiate ideological orientation even archaic communist nations.

Both Indonesia and Vietnam demonstrate the importance of political choices. For Vietnam, this was particularly profound: it required the ruling Communist Party effectively to repudiate its ideological orientation, and to cooperate with erstwhile enemies. Economic take-off would have been impossible in either country without a government commitment to reverse course on previous policy stances. Similar shifts have occurred in China and South Korea. In a way, future development depended on overcoming history.

Mr Tito Mboweni called on us ‘to attend to a number of mistakes’. We must deregulate to unleash prosperity

Models of successful reforms

British economy- Ms Margaret Thatcher who abolished bargaining councils in the 1980’s turned the British economy around. Please see Macroeconomics Vulindlela-Make way above.
New Zealand– In months Mr Jim Bolger In months Mr Bolger produced startling results, bringing down inflation from 15% to 1,3% and increasing the trade surplus by 500%. Please see Macroeconomics Vulindlela-Make way above.
India The outcry of the poor ‘Waste no time’. India’s economic reform presents a valuable case study to help us to turn around the trend in SA where 1.3m companies have deregistered since 2015.

India’s employer regulatory ‘cholesterol’ universe was vast: 1,536 Acts that create 69,233 compliances and 6,618 filings every year.

In 1960 the Indian population suffered poverty at a record low income per person of $330.20 and is expected to rise to $2 100 by 2021 and created 200 m jobs in the formal sector.

With a population of 1 380 004 385 (60m in SA) unemployment went down to less than 6% (34.5% in SA) and in terms of the wider interpretation to 23.52% (In SA – 45.5%).

He had to deal wide ranging diversities: 6 racial groups, 22 national languages and numerous religious groups,

Hindu 74%

Islam 14%

Christian 6%

Muslim 5.84%

Sikh 2%

Buddhist 1%

Montek Singh Ahluwalia an Oxford trained economist and civil servant created blueprint for Indian economic reform leading to phenomenal growth. As Deputy Chairman of the Indian Planning Commission between 2004 to 2014 he oversaw India’s shift to a ‘high-growth economy’. He has been described as “a brilliant reformer that helped change India for the better in ways few can rival”. was responsible for producing the blueprint for the reforms launched in the early 1990s and has consistently pushed for a shift from a reliance on extensive government control over the economy, to a much more open economy with a larger role for the private sector. The President of India has awarded him the Padma Vibhushan, India’s second highest civilian honour for public service. (Source article by Manish Sabharwal).

Urgency of Labour law reform India’s labour was handicapped without private sector capital, and India’s private sector was handicapped without labour. India needed urgent reform on wages (reduce the gap between gross and take-home salary), social security — the costs and governance of Employees’ State Insurance (ESI) and Employees’ Provident Fund Organisation (EPFO) — and employment law (we should have one code instead of four, and it should be more than talk). New formal, private and productive jobs were delayed by the lack of unavoidable, inevitable and overdue economic reforms .
He has consistently pushed for a shift from a reliance on extensive government control over the economy, to a much more open economy with a larger role for the private sector. Since 1991 these reforms have radically improved the Indian economy and since 2014 reforms gained momentum leading to a job ‘explosion’ of 200 million jobs in the formal economy.
Central government: The Indian State had too many central ministries. 52 is much more than Japan’s 8, the US’ 14 and Britain’s 22. Additionally, too many big ministries in Delhi operate in state subjects.(RSA 28, was 36). India had to devolve more funds, functions and functionaries to state capitals. Our civil services need differentiated performance management, lateral entry, specialisation and top-heaviness rationalisation (there were 250 people with the rank of secretary in Delhi!). Outcome: a State that does less so it can do more around human capital, investment and productivity-led growth.
India’s employer regulatory ‘cholesterol’: India’s employer regulatory cholesterol universe is vast: 1,536 Acts that create 69,233 compliances and 6,618 filings every year. More painfully, this changed eight times a day last year. It needed rationalisation (more than half can be ended without compromising enforcement); digitisation (going paperless will reduce corruption and improve enforcement); and simplification (we need a single universal enterprise number for all laws). In India the regulatory ‘clots’ that obstruct the flow of trade, commerce and industry is called ‘cholesterol’.

India’s employer regulatory ‘cholesterol’: India’s employer regulatory cholesterol universe is vast: 1,536 Acts that create 69,233 compliances and 6,618 filings every year. More painfully, this changed eight times a day last year. It needed rationalisation (more than half can be ended without compromising enforcement); digitisation (going paperless will reduce corruption and improve enforcement); and simplification (we need a single universal enterprise number for all laws). In India the regulatory ‘clots’ that obstruct the flow of trade, commerce and industry is called ‘cholesterol’.

‘We must act boldly and quickly, because the economic status quo is not only immoral or wrong, but also unsustainable’.

“Nations on the rise dream big, dare greatly and see failure as a challenge to be overcome. To paraphrase economics Nobel laureate Paul Romer, the world is ‘conditionally optimistic’ about India. We have the ability to end this conditionality. We must act boldly and quickly, because the economic status quo is not only immoral or wrong, but also unsustainable” Mr Montek Singh Ahluwalia said.

‘Waste no time’ is the outcry of the poor (‘Time is of the essence’) Nine child deaths every minute, 13,000 per day

The state of maternal mortality in Sub-Saharan Africa – every year 4.4 million children—including 1.2 million newborns—and 265,000 mothers die in sub-Saharan Africa.

Sub-Saharan Africa has half of the world’s maternal, newborn, and child deaths” (Kinney, et al., 2010).

The agricultural sector could not provide employment to the large numbers of unskilled workers. It caused them to migrate to urban areas in search of jobs. Towns and cities became overcrowded, making living conditions poorer and resulting in socio-economic and environmental problems such as crime and delinquency, prostitution, pollution, transportation, violence, etc.

Poor standard of living and malnutrition – He had to deal with a great food shortages, especially that for a balanced diet, deficiency diseases and other health problems, inadequate medical facilities and housing problems, ignorance of people. The lack of financial resources caused poor housing and poor health conditions. The large proportion of young population put great pressure on the available medical, educational and other social amenities.

Homeless – 25 million people were homeless (2.6m in SA) and 171 million people had no access to safe drinking water.

Blueprint for Indian economic reform

‘Make rain, not snow’ – prime minister’s longing

‘But every doctor knows that a treatment 90% complete is incomplete. In his book, Backstage: The Story Behind India’s High Growth Years, former Planning Commission chairman Montek Singh Ahluwalia recounts a prime minister’s longing: ‘What we need is growth that falls like the rains on the mountains and flows down in streams to the valleys and plains below, not growth that is like snow, which sticks to the mountain tops.’

India’s challenges

India faced a very different world in 2020 than China did in 1978. Rich countries — with their skilled workforces, large capital pools, huge customer bases, better infrastructure, higher state capacity, world-leading universities and hi-tech companies — are actively creating a globalisation different from the one China took advantage of 30 years ago — a supercycle of global growth, policy trade openness, and a deconstruction of manufacturing supply chains that previously made low-cost labour valuable.

Higher education: India’s low gross enrolment ratio, and variable graduate quality, meant the current education system isn’t working. This needs three things: massifying higher education (India’s gross enrolment ratio needs to rise to 50%), vocationalising higher education (link apprenticeships to higher-education and enable modularity for certificates and diplomas to degrees), and allowing innovation.

Conclusion Vulindlela-Make way Beat poverty, Ukunqoba ubumpofu, Ukoyisa intlupheko, Go fenya lehuma, Klop armoede.

Cofesa’s plea arises from daily workplace interactions with thousands of present and past member companies. Operation Vulindlela’s reform initiatives, some of it have been on the agenda for at least a decade, if not longer, must be fast tracked. It will be adrenaline for our economy and inspire hope for the desperate and for an ‘Africa spring’.

Cofesa, the Confederation of Employers of SA’s, looks forward to Mr Godongwana’s policy statement for inspiration and formulating A MODERN INCLUSIVE ECONOMY FOR A MODERN GENERATION

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