EFF’s economic programme suicidal!

2014-05-02 08:56

After reading the EFF’s manifesto, it’s clear that their economic programme will lead to untold misery, famine and the collapse of our manufacturing, mining and agricultural sector. Their obsession with centralisation of economic control will also lead to even greater corruption, cronyism and looting of state resources. In my opinion they have no clue of sound and pragmatic economics.

According to its manifesto it claims to be a Marxist-Lennist Fanonian organisation which actively pursues a socialist transformation programme to improve the lives of South Africans. Such a programme will establish 'a state housing-construction company, a state roads-construction company, a state cement company, a state pharmaceutical company, a state-owned mining company, a state food-stocking company (to regulate prices of basic foodstuffs and guarantee food security for all) and a state owned Bank'.

It also states that it will be illegal for anyone especially business to 'use land as surety for bank loans'. This in effect means dissolving private ownership which is of critical importance for investment and business development. In the same vein it seeks to increase taxes from private corporations and companies as well as increasing customs and excise duties and levies by 50% in order to fund a R2 trillion budget projected for 2017.

Haven’t the EFF learned anything from countries such as China that pursued this path of economic suicide for decades?

Prior to the introduction of economic reforms and trade liberalization in the early eighties its economy was stagnant and relatively isolated from the global economy. Since opening up to foreign trade and investment and implementing free market reforms, China has been transformed into one of the world’s fastest-growing economies.

Today China is the world’s second-largest economy, largest trading economy, second largest destination of foreign direct investment largest manufacturer, and largest holder of foreign exchange reserves.

What we need in South Africa is an economic programme that will create an environment conducive for the empowerment of young people with business skills, small business establishment and support, investment in local industries and at least 80% state procurement from local industries. Agricultural colleges must be established to train all those who want to farm. Handing out land left right and centre and dissolving private ownership will lead to starvation and ultimately civil war. The emphasis should be on empowerment through innovative programmes implemented by dedicated and highly talented people.

South African industries must also enter the African market on a greater scale. We have particular advantages over bigger players such as China. However it will require a radical policy makeover to enhance the competitive edge of our industries and agricultural sector.

The state must also ensure that basic services are provided to all communities in and effective and efficient way. A continuous monitoring and evaluation system must be put in place to ensure that state employees do what they're supposed to do and that they walk the extra mile in delivering state services.

Business must also start to play its part. Unbridled capitalism, monopolisation, price fixing, environmental and human exploitation, blatant greed, etc cannot continue unabated. Such things undermine the free market system and fuel unworkable concepts such as nationalisation and dissolution of private land ownership as outlined in the EFF’s manifesto. The free market system creates wealth on a continuous basis as it attracts investors and entrepreneurs. Nationalisation on the other hand consumes existing wealth and drive entrepreneurs and investors away.

Business must therefore shift its focus and start to employ a stakeholder oriented approach as opposed to the traditional shareholder approach. In partnership with workers, communities and the state, so much more wealth can be created for many more people in a sustainable way. This is the way forward to overcome the seemingly insurmountable socio-economic challenges faced by society.

Closing the gap between rich and poor in South Africa requires sound economic policies, co-operation between public and private sector,  a dedicated trade and industry expansion focus and a cadre of Economic Empowerment Activist that are wealth creators in the true sense of the word. Not rhetoric and nonsensical utterances that will destroy wealth as propagated by the so-called Economic Freedom Fighters .

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