The ANC's no growth plan - Politicsweb

21 January 2019 - Even good ideas, such as opening up the economy to greater participation by small, micro, and medium enterprises (SMMEs), are not only half-baked but motivated mainly by a desire to break up monopolies. Nowhere is there a hint of economic liberalisation. Instead, the state will increase both its size and its power.

John Kane-Berman 

The 2019 election manifesto of the African National Congress (ANC) is a revealing document. The main thing its 35 pages (as published last week on Politicsweb) reveal is that the party does not have a single idea that might put this country on a path towards the broad sunlit uplands of economic growth rapid enough to conquer unemployment.

Although there is no mention of "radical economic transformation", the manifesto shows that the ANC is still stuck in a mindset of fantasy, disdain for costs, and dirigiste ideology. Even good ideas, such as opening up the economy to greater participation by small, micro, and medium enterprises (SMMEs), are not only half-baked but motivated mainly by a desire to break up monopolies. Nowhere is there a hint of economic liberalisation. Instead, the state will increase both its size and its power.

Fantasy includes creating a "sovereign wealth fund", promoting "mass apprenticeship", building "at least one new city", and establishing universal "quality healthcare free at the point of use" by 2025. Promises to extend the social security system to "all" show little concern for costs, which will also be increased by stricter localisation and procurement requirements. The state mining company will be "strengthened" and public ownership will be extended in pharmaceuticals, renewable energy, and banking. Support services will be taken back into the public sector. More state entities will get banking licences.  

Legislation will be introduced to extend company ownership "to a broad base of workers"; these employees should continue to share in the profits of companies when they retire or otherwise leave. Retrenchments will be made more difficult.

The manifesto talks of "scaling up" support for SMMEs in various ways, among them protection via tariffs, broader access to finance, and "set-asides" in the award of contracts. Incubation centres will be set up, along with a "township and village economy fund". SMMEs will also supposedly benefit from empowering the competition authorities to deal with "monopolies, excessive economic concentration, and dominance by large players" that "keep them out".

The manifesto repeatedly complains of excessive concentration. It makes little reference to other factors that may be keeping small players out. In October last year Bernard Swanepoel and Chris Darroll reported on a study by the Small Business Institute and the Small Business Initiative. It showed that, on average, "a small business owner spends nine working days a month dealing with unnecessary forms and bureaucracy". In his state-of-the- nation address nearly a year ago, Cyril Ramaphosa promised to "reduce the regulatory barriers for small business". As the godfather of the national minimum wage recently introduced despite the objections of small business, President Ramaphosa tactfully did not repeat this promise when he delivered his party's 2019 manifesto.

The contrast with the National Development Plan (NDP) adopted in 2012 is striking. That document said that 90% of the 11 million jobs to be created would be in small and expanding firms. Regulatory reform would "boost mass entrepreneurship". Impact assessments would be done on new regulations. An expert panel would be appointed "to prepare a comprehensive regulatory review for small and medium-sized companies".

That was more than six years ago. Yet according to Mr Swanepoel, last year's "jobs summit" agreement referred only three times to red tape affecting business, and offered no plan to tackle it. This despite the minister of small business development's having "refreshingly" acknowledged that red tape encumbered small business. To make matters worse, in November last year, two Democratic Alliance MPs reported on proposed legislation that would create an "immense" new qualifications database which all employers would be obliged to use before hiring anyone.    

Despite what the NDP purported to promise about reform, the trend since then has been largely in the opposite direction. In fact the trend of intensifying regulation while simultaneously promising the opposite stretches back earlier. Now, despite proclaiming the need to "scale up" support for SMMEs, the ANC devotes not a single sentence in its 35-page manifesto to liberating them from regulatory bondage.

Deregulation was probably never seriously on the agenda anyway. Its absence from the manifesto – whether affecting SMMEs or anyone else – suggests that even the pretence has now been dropped.

* John Kane-Berman is a policy fellow at the IRR, a think-tank that promotes political and economic freedom. Readers are invited to take a stand with the IRR by clicking here or sending an SMS with your name to 32823. Each SMS costs R1. Ts and Cs apply.  

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