On April 24, Finance Minister Tito Mboweni outlined how the R500 billion economic support package announced by President Cyril Ramaphosa would be allocated to deal with the Covid-19 coronavirus pandemic.
The package was aptly described by Ramaphosa as an extraordinary budget.
Among other issues, Mboweni declared that businesses and industries had to prioritise the employment of South Africans before they could access financial assistance.
The minister urged companies to allow more South Africans to participate in the economy than foreign nationals, citing businesses such as restaurants, spaza shops, informal trading and so on.
He wanted to see a new economy that put South Africans first.
“The new economy we are getting into after the lifting of the lockdown must answer that question.
"Any establishment wanting to reopen must have a new labour market policy which prioritises South Africans, but does not discriminate against foreign nationals,” Mboweni said.
What Mboweni said is standard practice around the world.
His observation comes at a time when it is clear that South Africans have been displaced by foreign nationals in sectors that should otherwise have been protected for the benefit of locals.
This approach was omitted or neglected within the Reconstruction and Development Programme (RDP) at the dawn of democracy in 1994.
The RDP focused on the provision of housing, water, electricity and other amenities, but put less emphasis on the need to locate local communities in township, rural and inner-city economies to create a system of economic redress.
Although social grants have played an important role in alleviating poverty, they were never meant to be a permanent intervention.
We need an adequate and sustainable instrument for poverty alleviation; that is participation in the economy on a massive scale.
This is an opportunity to rectify mistakes made 26 years ago.
- Allowing economic migrants into the country, a category not recognised by the UN and other multilateral institutions;
- Allowing jobseekers into the country instead of their applying from their countries of origin, thus coming to South Africa after the job has been awarded;
- Continuous granting of citizenship and placing new citizens ahead of indigenous people in all respects;
- Study permits that automatically metamorphose into work permits, instead of students returning to their countries upon completion;
- The non-protection of the micro economy for the benefit of locals, so that foreign nationals come in at a higher investment level that would create jobs for locals; and
- The absence of processing and refugee centres along the borders that has resulted in undocumented immigrants and economic migrants occupying South Africa’s inner cities to live and conduct business.
Failure to address all these issues contributed to rising levels of unemployment, pushing jobless figures to more than 10 million.
This lack of protection of specified levels of the economy, coupled with the lack of enforcement of a rare skills policy, have resulted in local businesses in townships, rural areas and inner cities being dominated by foreign nationals.
This contrasts sharply to other countries, including in Africa, where there are laws that specifically protect the local economy.
Key examples include the Nigerian Enterprise Promotion Decree of 1971, which creates opportunities for Nigerian businesspeople and promotes local retention of profits.
The Ghana National Investment Promotion Centre Act insists on a foreign national investing a minimum of $1 million (R19 million) as a precondition for participating in the Ghanaian economy.
It also says a foreign businessperson must partner with a local national to be given a licence to participate in the economy.
Ethiopia’s Economy Law of 1974 protects small and medium-sized enterprises from being exploited by foreign nationals.
The Pakistan Ordinance 2002 stipulates that only Pakistani citizens may own local newspapers. Sectors such as agriculture, health and power generation are subject to a minimum investment of $300 000.
While these countries protect some sectors and have stringent entry requirements into their economies, their nationals have a free ride in South Africa.
It is time that the provisions of the Immigration Act be adhered to, as they stipulate that a foreign-owned business must be established in the national interest of South Africa, and that a minimum of R5 million must be invested into the book value of the business.
The Labour Relations Act, as amended, also requires that there must be a preponderance of South Africans in every workplace.
The 60:40 ratio of the South African workforce versus the foreign workforce does not help in reducing unemployment.
Foreign nationals should only be considered when there are no more South Africans who can be absorbed.
The Southern African Development Community region should be prioritised in this case.
Figures from Stats SA show that the township economy is dominated by foreign nationals to varying degrees.
In 2018, the ownership of the economy by foreign nationals in various urban and rural areas ranged from 60% to 100%.
In other countries, there is a realisation that no one sector can employ all citizens.
Jobs come from the public sector, private sector, artisanal economy and the merchant economy.
Matriculants and graduates who cannot be immediately employed in the public sector and big business should participate in the local economy to eke out a living.
Sitting at home and waiting to be employed one day results in young people getting involved in crime and other social vices.
The problem of more than 10 million unemployed South Africans can be solved through a massive programme of economic participation that goes with laws that protect the economy.
Putting South Africans as anchors of the local economy would broaden the tax base; contribute significantly to GDP; remove young people from the social grant system and redirect those funds to programmes of national development; reduce levels of poverty and crime in many communities; create prosperity in local communities; enable citizens to have cash and food every day; enable them to build their own homes and afford other basic necessities of life; and restore their confidence and dignity as owners of the country.
A prosperous, stable country in the hands of its people would be to the benefit of all.
Kwinana is a Centurion-based town planner and property developer.
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