ANC Economic Policy - Growth, jobs and investment in times of instability
The ANC's National General Council (NGC) meeting in October this year comes at a time of renewed global economic instability - plunging stock markets in China and elsewhere, ongoing ructions in the European Union, low commodity prices and emerging market currency volatility to name just some of the key symptoms.
Partly due to international developments, but also due to specific domestic weaknesses, the South African economy too is facing a number of problems. In addition to inherited structural problems, such as, persistent unemployment and inequality, inadequate skills levels and low domestic savings, the current period comes with the threat of jobs losses in mining, metals and other sectors, an ongoing shortage of electricity, low levels of growth and invest, low levels of business confidence, severe drought conditions, reduced fiscal capacity and a growing risk of stagflation.
The ANC is deeply concerned about the dangers posed by the current, unfavourable economic environment. The timing of the NGC meeting provides an important opportunity for the ANC to review a wide range of policy interventions and where necessary strengthen and recalibrate such interventions to improve South Africa's economic performance.
The ANC's economic policy interventions are necessarily informed by our movement's historic mission to overcome South Africa's triple challenge of unemployment, poverty and inequality. As such, our economic policy interventions have been built on a number of key pillars.
Firstly, the need to change the structure of opportunity in South Africa informs a wide range of our interventions. Broad-based black economic empowerment aims to transform the racialised nature of business ownership and participation. Land redistribution and transformative urban planning are required to overcome the spatial inheritance of apartheid. Widening access to basic and higher education creates opportunity for children from poor communities.
Secondly, the need to significantly expand, upgrade and maintain economic and social infrastructure is key to economic growth and development as much as it has been important to begin to provide services and infrastructure to communities that have not previously had access to adequate housing, electricity, and water and sanitation services.
Thirdly, the transformation of South Africa's labour laws and the codification of fair labour practices have been essential to improving the lives of working people in South Africa.
Fourthly, post the apartheid sanctions era, the ANC has sought increased integration with the global economy through fostering international trade and investment with a diverse range of countries and blocs, including with other countries on the African continent, the BRICS countries, the EU and via AGOA with the United States.
The ANC-led government's National Development Plan (NDP) is the overarching policy for lifting South Africa's medium to long-term growth potential. The various Phakisa initiatives into the ocean economy and into mining allow policy makers to drill down deeply in order to resolve sector specific challenges and create new dynamism. Similarly, the ongoing iterations of South Africa's industrial policy plan assist in promoting investment in key economic sectors.
A key ingredient that has been missing in South Africa's economic policy making has been sufficient dialogue and cooperation among representatives of business, labour and government. Internationally the evidence is clear, that where business, labour and government are able to unite around an agenda of common interests, national development is enhanced.
Signals are mixed, but there are some signs that a new era of cooperation may be dawning in South Africa. The recent coming together of business, labour and government to try and strengthen and sustain South Africa's ailing steel industry offers a hint of the kind of co-operation that is required.
The ANC is very clear on the kind of economy that South Africa needs. Inclusive reconstruction and development requires a vibrant mixed economy in which both the public and private sectors are strong and effective.
The public sector's role is to drive infrastructure programmes and expand access to services so as to open up new economic opportunities and change the economy's inherited racialised patterns. Such a programme of public infrastructure expansion also assists in stimulating demand in the short-run and has the potential to modernise the South African economy and make it more internationally competitive in the medium- to long-run.
The private sector's role, both big business and small, is to thrive in the space created as the economy's opportunities expand, to deploy new know-how and technologies and to operate efficiently and competitively in such a way as to benefit consumers, employees and the fiscus.
To achieve this vision, a priority is to identify and remove obstacles to increased levels of investment. Among others, the following items should be foremost on the agenda aimed at increasing investment levels in South Africa:
- is there broad consensus on the need to lift investment to the NDP's target of 30% of GDP, what is the state's role in this and what is the private sector's role
- how can business maximise localisation benefits from South Africa's ongoing public infrastructure expansion
- what potential exists for South African business, including black-owned businesses, to become part of global supply chains
- how can government and business work together to ensure the maximum success of recently launched Special Economic Zones
- how can government and business align themselves more closely in developing trade and investment ties with other countries in Africa and beyond
- how can independent power producers be brought into base load power generation, as has been done for renewable energy
- what can be done to turn around the precipitous fall in mining output and mining investment
- what can be done to assess and unlock South Africa's significant potential as an onshore and offshore gas producer, in a manner that does not compromise the country's environment
- how can land reform efforts be accelerated, in such a way as to expand the output and exports of the existing commercial farming sector as well as grow the number of successful black farmers participating effectively in the agricultural economy
- how should telecoms competition be facilitated, with the aim of reducing broadband and telecoms prices
- how can South Africa secure greater positive economic linkages from its maritime position,
- how can the ongoing growth in the tourism sector be facilitated, as this is one of South Africa's key areas of natural comparative advantage in the global economy
- more importantly,how can business, government and labour work together to develop a coherent South African message, rather than talking at cross purposes
If consensus, and effective action, can be achieved on such issues, there is no doubt that investment levels in South Africa would rise towards the NDP's target. Such an increase in investment is necessary if the country is to achieve the objective of radically reducing unemployment, poverty and inequality.
The ANC is deeply engaged in driving the economic transformation of South Africa and has been for the past 21 years. Meetings such as the NGC give us the opportunity to review and strengthen our interventions, and to recalibrate our plans, given challenging domestic and international economic conditions. Furthermore, successful economic transformation will require a common effort by all South Africans, and as a result the ANC will, in the build up to the NGC, be holding consultations with a number of social formations to solicit a wider range of views on what is to be done to uplift South Africa's economy.
Comrade Enoch Godongwana is a member of the ANC NEC and Chair of the ANC’s Economic Transformation Committee.
This article first appeared in ANC Today, the online newsletter of the African National Congress.
