Howard Barrell and Barry Streek
While the government has scorned talk of an economic “big bang” and sought to dampen expectations this week, statements by President Thabo Mbeki and his Cabinet colleagues reveal that they are initiating far-reaching changes designed to propel the economy to a higher growth path.
Mbeki’s State of the Nation address to Parliament, like Cabinet ministers’ subsequent briefings for journalists and diplomats in Cape Town, was a carefully balanced text designed to signal the changes but, simultaneously, to reassure the African National Congress’s leftwing allies that the government would seek to minimise the pain for working people.
The sound of South Africa’s economic “big bang” is being muffled by reassuring and very carefully chosen words.
“Thabo’s speech is Gear Mark 3,” said a leading member of the hard-left group in the South African Communist Party, referring to the government’s market- friendly policy on growth, employment and redistribution (Gear), which is bitterly resented by many leftwingers.
ANC MPs said this week that Mbeki’s position within the ruling party is impregnable. There would be negligable sympathy within their ranks for any elements in the SACP or the Congress of South African Trade Unions who may be tempted to lead opposition to the changes on the way, they added.
The government’s appointment of an international investment council and its desire to attract foreign investment have tended to dominate the headlines on Mbeki’s address. But he and his key economic ministers are just as determined to ease the lot of small and medium-sized businesses which, they believe, are potentially best placed to create the millions of jobs needed.
ANC sources say Mbeki is particularly keen to foster the growth of black small and medium enterprises. He is said to believe that encouraging the growth of small enterprises may be a more appropriate focus for black economic empowerment than the big, financially engineered deals involving members of the black elite that have hit the headlines since 1990.
Many of the forthcoming changes to labour law are, these ANC sources say, designed at least as much to help small black businesspeople as they are to assist established concerns or remove obstacles to foreign investment.
Over the next two years, tens of thousands of jobs will go in the civil service and state-owned enterprises due for privatisation and other forms of restructuring. The state will also be selling thousands of properties for which it has no productive use.
Receipts from these sales and privatisations will realise billions of rands each year over the next decade, enabling the government to hold down its borrowing and, as a result, interest rates, creating a more favourable environment for private sector growth and job creation by businesses.
Minister of Trade and Industry Alec Erwin has hinted that the government believes tax cuts will soon be possible and that this, together with other factors, will encourage South Africans to save more. A higher domestic savings rate should help hold down interest rates and make South Africa less dependent on foreign capital to meet local investment needs.
The Egoli 2002 programme in Johannesburg is emerging as a prototype for urban renewal in South Africa, and is likely in coming years to be copied in other major cities.