South Africa had the potential to be the engine of much-needed economic growth on the African continent but the government appeared to be in the process of abandoning growth-favouring economic policies, the Democratic Alliance’s (DA) leader, Tony Leon argued in the United States on Wednesday.
Speaking to the Council on Foreign Relations in Washington — just weeks after it was addressed by South African President Thabo Mbeki — Leon said while support for African institutions like the African Union and the New Partnership for Africa’s Development (Nepad) was important, developed world support through aid and investment ”even carried out to their fullest” would not wave the magic wand for Africa.
Noting a report by the United Nations Industrial Development Organisation this week suggesting that the only way to tackle poverty and underdevelopment on the African continent was through rapid and sustained growth particularly in the private sector, Leon said: ”Something else is needed, an engine that can drive the process of African integration and economic development forward.”
While backing Mbeki’s call for the G8 to live up to its commitments in the G8 Africa Action Plan to increase aid and investment, Leon said South Africa was that engine.
”Not only is it the largest economy in Africa by far, with a gross domestic product of $456,7-billion in 2003 but over the past decade South Africa has become the single largest source of foreign direct investment in Africa, at $1,4-billion per annum.”
Noting that the positive effects of this investment were already ”profound”, Leon — who will be attending the Democratic Convention in Boston next week — said: ”South African companies are helping to diversify African economies and reduce their dependence on primary sector industries. They are building infrastructure, transferring skills and technology, and prompting foreign governments to enforce laws and strengthen democratic institutions.”
But on a more sombre note, he argued that it now appeared that South Africa was abandoning its ”ambitious” Growth, Employment Redistribution (Gear) programme for a regime where the state drove job creation initiatives.
Instead, he suggested, South Africa should make economic growth the number one priority of economic policy. ”We must free our economy from the dead hand of state intervention and control.”
”We must embrace affirmative action policies that consider race, but never allow race to trump merit.
”We must develop empowerment policies that expand ownership and encourage entrepreneurship among ordinary people. Companies should not be forced to divest their equity. Instead, empowerment should start with the privatisation of South Africa’s public assets, whose shares should be offered to the poor at a reduced price.
”Our economy is creeping along at a snail’s pace instead of opening up full throttle. It is growing at 1,9% per year, far behind the African average of 3,6% and well below the needed levels of 6% or higher.
”As a result, South Africa’s positive impact on African economic development as a whole is therefore much smaller than it could be, and should be.”
Leon said there were two other areas of critical importance to African development in which South Africa should be leading — one was the question of Zimbabwe and the other Aids.
Zimbabwe had not only hurt the cause of human rights and democracy in Africa ”but it has also had an enormous economic cost, estimated at nearly $1-billion per year to the South African economy alone,” Leon said.
The government’s slow response to the HIV/Aids pandemic also had a cost.
”An international investment bank recently estimated that the South African economy will be 17% smaller in 2010 than it might have been without the impact of HIV/Aids”. – I-Net Bridge