Responding to the Department of Trade and Industry’s Budget vote on Tuesday in Parliament, the Democratic Alliance warned that while the economy has grown, its overall position has slid backwards.
Speaking in the National Assembly, DA MP Enyinna Nkem-Abonta referred to a recent survey that showed South Africa has slipped on an index of economic freedom from 53rd position last year to 56th this year, of the 155 countries surveyed.
”This is bad news, for that index is a measure of a country’s ability to compete,” he said, warning that the survey also suggested that the growth spurt in the third and fourth quarters of last year may not translate into higher and sustainable growth rates.
The survey blamed this on ”over-regulation and relatively high taxation”.
”On economic growth and employment, we are outperformed by almost every country of a similar level of development, outperformed even by many poor sub-Saharan economies. So too are we on foreign direct investment, world export market share, per capita gross national product and entrepreneurship,” Nkem-Abonta said.
At the same time, the effective tax rate continues to be higher than those of many middle-level income countries, he said.
Minister of Trade and Industry Mandisi Mpahlwa in his address earlier told Parliament the economy grew by 3,7% last year and is expected to grow by 4,3% in 2005.
This, he said, is buoyed up by increased investment.
But Nkem-Abonta said unnecessary laws and regulations are suffocating thousands of small enterprises.
He accused the black economic empowerment (BEE) programme of being ill-conceived and driving away foreign investment.
”And the size of the public sector continues to grow far above optimum levels, draining resources that should have gone to strengthen innovation and capability in the private sector,” he said.
He said South Africa needs to become more competitive in the global market.
”Without increasing our competitiveness, we cannot emancipate millions of our black people from poverty — BEE and other social engineering policies notwithstanding — much less create an environment in which they can grow rich,” he said.
Without strengthening the microeconomic capability of the economy, raising the sophistication of local companies and heightening local competition, the government cannot hope to increase international competitiveness. — Sapa