The ANC needs to act, not just think.

2011-02-12 13:44

South Africa was recently invited by China to join the group of fast-emerging economies, Brics, the acronym they will adopt going forward.

Brics member countries, with the exception of South Africa, each contribute more than 1% of the global gross domestic product (GDP).

Our economy has in the past struggled to reach the 6% GDP growth target despite increases in infrastructure spending and a commodities boom.

We have had a number of policies since 1994 that were targeted at stimulating accelerated growth but none have succeeded.

We now have the New Growth Path (NGP), which is being touted by the Zuma administration as a blueprint for job creation and economic growth.

But the NGP simply addresses the symptoms and not the causes of the problem of joblessness and lower growth.

The ANC appears to have adopted a “band aid” approach to economic problems. What is contained in this policy framework is a rehash of the same old policies that have failed to stimulate accelerated growth.

The NGP targets 7% GDP growth, despite the harsh reality that the global economy is still limping after the global economic crisis.

The apparent problem facing the ANC is lack of continuation of policy and its implementation.

The consequence of such is a less impressionable effect on the economy and, most importantly, no meaningful change in the lives of the poor.

Lessons can be learnt from China, which has been consistent in implementing economic reforms launched by Deng Xiaoping in 1978.

It is evident that the gift of foresight is not widely distributed among South African policymakers.

Since the ANC has been in power, there has been no long-term macroeconomic strategy that outlines what the end goal is.

One would imagine that given the economic structure inherited from the past which was intended for the economic benefit of the white minority, in 1994 the ANC would have formulated a long-term economic strategy.

But still none exists. Even the new National Planning Commission has not come up with any concrete proposals.

The economy needs to be transformed for the benefit of the majority. Poverty needs to be eradicated and unemployment addressed.

These are undoubtedly the immediate economic challenges that need to be tackled.

However, policymakers should not obsess over short-termism, which has no sustainable effect on the economy.

Government should not be fighting fires 16 years after assuming power.

The usual excuse that this is a new democracy is no longer plausible.

China was already growing at a rapid pace 15?years into its “Gaige Kaifang”, and that rapid economic growth was matched by equally impressive growth in human capital.

According to the World Economic Forum’s global competitiveness report, China’s quality of education is ranked 36th in the world, while South Africa’s is a sobering 112th.

The target of creating five?million jobs by 2020 is pie in the sky given the inefficiency of the labour market and poor quality of education.Industrialisation is one of the objectives of the NGP.

 It is a noble aim but the reality is that our high labour costs would ordinarily impact negatively on the competitiveness of manufacturers. Our economic success unquestionably depends on our ability to develop productive capacity.

But it is not evident if, as a country, we do not understand what our comparative advantage is.

Black economic empowerment has only served to recycle wealth and did not do enough to create new wealth by encouraging the emergence of new entrepreneurs and industrialists.

The goals of the NGP are unrealistic.

The ANC government should first learn to get the basics right.

It is delusional to think that the economic growth target of 7% would be achieved given rampant corruption and incompetence, poor education, an inefficient labour market, and budget constraints.

The NGP promises massive investments in infrastructure yet the Treasury’s medium-term expenditure framework foresees real yearly growth in expenditure of just over 2%.

The NGP reaffirms the ANC’s economic populism in presenting an endless list of promises that are never fulfilled.

The Jasmine Revolution in Tunisia should serve as a warning.

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