In 1994 we started our democratic era with the lofty goals of uniting our diverse people by removing racial and sexist divides and – through the Reconstruction and Development Plan (RDP) - creating a strong, dynamic and balanced economy. Between 1995 and 2004 Gross National Growth averaged 3%. The apartheid legacy of high inflation, political instability, policy uncertainty and negative investor sentiment were erased and reversed.
The Growth, Employment and Redistribution (GEAR) Plan in 1996 further allowed growth to continue through tight monetary policy and reduced government expenditure. During the Accelerated and Shared Growth Plan (ASGISA) which was implemented in 2005 growth reached levels of 5,3 in 2005 and 5,4% in 2007. Then the wheels came off, not coincidently with the inauguration of President Zuma in the same year.
The seeds of our undoing were however sown earlier in 2002 with the thinking behind first version of the Mineral, Petroleum Act and in 2003/4 and with the narrow based Black Empowerment Act and then the 2011 Broad Based Black Economic Empowerment Act (BBBEE) in 2011. The Preferential Procurement Framework Act of 2005 further tilled the ground for the corruption that followed. The intercession of these acts removed the normal incentives that drive investors to invest in the mining industry and entrepreneurs to start businesses because racial based quotas now applied.
All the lofty ideals of removing racism from our economy were dashed and once again we became a society infused and obsessed with racialism. While the economy started to slow down the urgency of climbing on to the gravy train increased -- driven by greed and the credo that the way to emancipation was through the ballot box, i.e. political power. Under the Zuma administration the abuse of political power reached a crescendo and political power continues to protect the abusers from prosecution.
Now, even the man in the street, fed a constant and mouth-watering dose of facile populist solutions, wants to climb on the bandwagon of political looting. Even the ANC in its desperation to hold on to political power, has now succumbed, presenting the offer of free land as the new panacea for poverty.
What then do we make of President Ramaphosa’s new economic plan to get the economy back on a growth path?