Mail & Guardian Reporter
The Centre for Development and Enterprise (CDE) has released a publication focusing on South Africa’s inability to stimulate economic growth and job creation.
The publication is an edited summary of a round-table discussion of private sector economists, business leaders, government officials and the president’s economic adviser, Wiseman Nkuhlu.
CDE executive director Ann Bernstein says: “We have neither the skills nor the capital to achieve all our economic and developmental goals if we attempt to reach them all simultaneously. The government’s transformation agenda is too big.”
The report argues that South Africa has not created an environment that encourages maximum possible investment, entrepreneurship and job creation.
The CDE round table indicates three broad areas in which the country is failing to get it right: business confidence is low; the government has too many priorities; and the country faces a growing shortage of skills.
Bernstein says South African business leaders are not sure if the country is the best place in which to commit their capital and themselves over the long term. The reasons cited by the local business community include the inflexible labour market, which increases costs and hassle; employment equity regulations that cost too much, with small business particularly affected; deteriorating essential infrastructure and institutional efficiency elements seen as crucial ingredients for business success.
The report points to rapid changes in the business regulatory environment there have been more than 500 changes in the past six years.
Perceptions about laxity in combating crime and an inefficient and declining justice system all paint a negative picture of the country. The government’s intense focus on race leads to unease concerning minority inclusion in the new South Africa. Race is too often seen as more important than competence to deliver.
Bernstein says the government has too many priorities and tries to fix everything that is wrong with South Africa, the continent and North/South relations simultaneously. But, she emphasises, our capacity as a country is limited. “The government’s reach exceeds its grasp. In trying to do too many things at once, the government often fails to achieve.”
The report also criticises President Thabo Mbeki, claiming he spends too much time and effort on foreign affairs as opposed to domestic matters to promote his philosophy of disciplined work and persuading the country to make the hard choices necessary for growth.
Bernstein says the government does not speak with one voice on growth and jobs as the benchmark for all government actions on a national, provincial and local level. This results in market-friendly messages frequently being cancelled out by anti-market approaches and sentiments.
According to Bernstein, the government is now suffering from a growing credibility gap with respect to delivery. Unfulfilled promises have led to public scepticism about ministers and their department’s capacity to deliver.
The country faces a deep and growing skills crisis that has an enormous effect on confidence and the capacity to create jobs and wealth.
“Almost every one of the obstacles identified by business to greater confidence and thus a higher growth rate are in the government’s power to change,” says Bernstein.
The report has identified four areas of economic action required if the country is to move on to a higher growth path: a new paradigm is essential; the country needs an inclusive, new vision; the government must get rid of the obstacles to growth and job creation; and has to combat poverty directly.
Governance through transformation idealism is not working. Tough choices must be made. A smaller government agenda is essential. The government must recognise limits and choose a few initiatives that can be done well.
As for business-government relationship, this must be deepened. Mechanisms must be explored to bring in private sector capacity, with accountability and transparency to help achieve results.
The report is critical of affirmative action and holds that efficient and speedy delivery should supercede considerations of the incumbent’s colour. The government must professionalise its communications and stop underselling its achievements.
In its report the CDE calls for the development and marketing of a common vision for all South Africans. An inspiring, inclusive vision of where we are going and what kind of society we are trying to create will provide a benchmark against which all decisions can then be tested and priorities chosen. Areas have been identified for this purpose:
l The most important contribution South Africa can make to an “African renaissance” is to be a glowing economic and political success. The only way to do that is to implement the president’s goal of making South Africa the “world’s most promising emerging market” and use this as the benchmark for all government decisions.
l South Africa with its history of division and discrimination needs common goals that all can subscribe to and work towards. The government must ensure that all South Africans black and white feel they have an important role to play in making the country an African success. Inclusive gestures and actions by the president and other members of Cabinet are urgently and consistently required.
l The government must seize the high ground and convince citizens and investors that it is really committed to market-led development and has fully accepted all its implications.
The realities of long-term unemployment need to be addressed directly. It will take years of above-average growth rates to provide the jobs, resources and opportunities that millions of people require.
Bernstein argues: “In the meantime, the government has to ensure that poorer South Africans have a means of sustaining themselves. The country should aim to offer every South African who is willing to work an opportunity to participate in infrastructure projects in our cities, towns and rural areas at a modest wage. This will involve scaling up on present efforts and require experienced management skills from the private sector.”