Clem Sunter

New deal or no deal

2011-06-29 12:00

Clem Sunter

People who have read my last article on redirecting Julius Malema will realise we are at a second tipping point around economic freedom, in contrast to the first one around political freedom in the early 1990s. Moreover, just as the first tipping point required Codesa I and II to negotiate a new political democracy for the country, we need Codesa III to negotiate a new economic democracy.

It is now a case of a new deal to launch South Africa onto the growth path of becoming a winning nation; or no deal plunging the nation into penury or, worse still, civil war. Codesa III will require different players at the table including business, agricultural bodies and trade unions alongside the major political actors. Other community-based organisations, NGOs, business schools and various academic experts will be required for aspects of the debate. Following in the footsteps of the previous Codesas, an open debate must lead to decisions and actions ushering in a new economic order. We have done it before, we can do it again.

The agenda will be different. Here is the one I propose; but obviously Ebrahim Patel and members of the National Planning Commission must be involved in formulating it:

1. Nationalisation
It is hoped that, by mutual consent, the policy of nationalisation of entire industries is abandoned as a desirable option; but the role of state owned enterprises is clarified. The possibility of employee share ownership schemes is examined to give workers a stake in the mineral wealth and means of production of the country.

2. Land ownership
The issue of vacant farm land is discussed as is the current failure of the willing buyer-willing seller scheme. Alternatives to improve the prospects of emerging black farmers are identified as well as a ladder to climb from small-scale farming to large-scale agri-businesses going downstream in the food chain. Ways that the big food retail chains can encourage farming enterprises to be established and grow their profitability by becoming part of the supply chain are investigated. Realistic targets on transfer of land from white to black farmers are set. Employee share ownership schemes are examined for the same reason as in mining.

3. Beneficiation and general rules of investment
Ways of adding value to both mineral and agricultural products before they are exported are debated as are the rules generally for investing in industry in the country. The objective is to remove policy uncertainty which is having an adverse impact on foreign direct investment and local investment.

4. Capital ownership
The strengths and weaknesses of the current BEE programmes are evaluated in terms of changing the ownership of existing capital. The role of banks, the JSE, possible local stock exchanges, venture capital companies, stokvels and government guaranteed loan schemes is debated as a means of providing new capital for enterprise development.

5. Public private partnerships
This area has unbelievable potential in improving service delivery in areas like infrastructure including independent power sources, and the running of railways and ports. Equally in health, housing and education there have to be many possibilities that can be captured in discussion.

6. Economic freedom
This is a critical item on the agenda and covers a whole range of issues comprising technical and entrepreneurial training; tax incentives to get companies to hire young people and train them; tax holidays and simplified labour legislation for small business; changes in company scorecards to promote stronger relationships between big and small business; the extension of the cellphone to become an electronic wallet and portable IT system for small business; and the possibility of introducing basic income grants and local energy transfer systems (bartering of services and goods) in rural communities. Worker co-operatives as a way of empowering labour forces should also be covered – John Lewis as a successful retailer in the UK being a remarkable example.

7. Environmental sustainability
No agenda is complete without discussing the impact of business on the environment, carbon taxes, green industries, water shortages and desertification. A balance between economic development and environmental sustainability is central to any long-term economic plan.

This agenda is just a straw dog to motivate people to add their own issues. However, the idea of a big-bang event like Codesa III should not be lost. It is infinitely preferable to a series of smaller meetings behind closed doors which will probably lead nowhere. We have to make the whole process transparent with extensive media coverage. We have to achieve a set of measurable outcomes to which the players attending the meeting commit themselves. Finally, we have to have a system that monitors progress so that strategies and tactics can be adapted in light of successes and failures down the line.

Send your comments to Clem

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