EFF STATEMENT ON 2020 2ND QUARTER GDP FIGURES.

Wednesday. 09 September 2020

The EFF notes the 2020 second quarter Gross domestic product (GDP) issued by Statistics South Africa on Tuesday the 8th of September 2020. South Africa's GDP contracted (shrunk) by 51%. This is the biggest economic contraction in South Africa's history. even when the era of the nonsensical Colonialism and apartheid-era is put into perspective. The most vivid aspect of South Africa's shrinking economy is the fact that government's contribution to the GDP is shrunk due to the patently foolish and unscientific austerity measures imposed by Tito Mboweni in all budgets he presented since he was regrettably appointed as Minister of Finance.

The other vivid aspect is the shrinking of the manufacturing sector which could have been mitigated if the government had adhered to the EFF's demand for localisation of all essential economic activities including the production of PPEs and other essential healthcare essentials. Ramaphosa and his corrupt government chose to spend billions of Rands buying imports which could be reasonably substituted with locally produced goods and services.

Whilst the contraction of the economy is amongst other things due to the necessary lockdown to contain the COVID-19 pandemic, the sitting government's incompetence. lack of clear vision, corruption and capture by the minority white capitalist establishment are part of the factors why South Africa is on a downward spiral since Cyril Ramaphosa was regrettably elected as President of South Africa. The EFF expected this sort of outcome and have consistently warned that a lack of a believable and practical plan will lead to economic decline. South Africa's economy was already in a downward spiral before COVID-19 because those that are responsible for economic policy have mismanaged South Africa's economy for a long period. They have demonstrated their inability to lead a coherent economic policy that will grow the economy. create jobs and eradicate poverty.

When the first lockdown was announced, the EFF called for localisation of the majority of products that South Africa imports from the United States. United Kingdom, China and Europe. We believe this would have significantly boosted the manufacturing sector due to increased local, continental and global demand for PPEs and other consumables required in our hospitals and clinics. The stone deaf. misguided and stooges of the IMF refused to be guided by superior logic and chose an austerity approach which will continue to shrink the economy into permanent insignificance. The puppets of the white capitalist establishment misleading South Africa today chose to weaken the State's capacity to perform its own functions, therefore decimating even the State's contribution to the national income.

The South African Government's economic response to COVID-19 was full of gimmicks. There was no thought process and consideration of the situation on the ground to come up with a plan that will address South Africa's immediate economic needs. The EFF consistently warned that the announcement of the so-called biggest economic stimulus package is nothing but urban legend and was deceitful. Finance Minister Tito Mboweni unscrupulously used COVID-19 pandemic to borrow money from the IMF when South Africa didn't need dollar-dominated loans that added no value to our economy. Departments and SOEs are failing to spend existing allocation because the government cannot do anything but depends on tenders for everything.

The imaginary R500 billion Cyril Ramaphosa and Tito Mboweni claimed was injected into the economy were nothing but figments of their imaginations. Of the R200 billion allocated as loan guarantees to the private sector, only R15 billion was accessed by predominantly white corporations. The social relief temporary programmes such as the R350 social grant for unemployed South Africans was a dismal failure. Due to corruption and incapacity, the Unemployment Insurance Fund did not adequately address the demands of millions of retrenched workers.

Instead of increasing budget allocations for important departments and government expenditure items, Ramaphosa and Tito Mboweni cut budgets of almost all departments and expenditure items. This is despite the EFF's repeated warning that cutting government expenditure will shrink South Africa's economy.

Steps to arrest the downward economic spiral should necessarily involve the following:

1. Abandon the foolish and unscientific austerity budgeting, and government expenditure must be significantly increased, including the introduction of Basic Income Grant, which will entail that all unemployed South Africans must receive R1000 per month.

2. Government must partially nationalise companies in distress, particularly in the manufacturing sector.

3. Immediate creation of a state-owned bank though the already existing African Bank that the South African Reserve Bank holds shares and pay all public servants through a state-owned bank and make credit available to small and medium-size black-owned enterprises.

4. The approach to massive infrastructure development should be through Build, Operate, and Transfer models which must be underwritten by Pension Funds.

5. The government must cancel its COVID-19 loan guarantee scheme with commercial banks, and all transactions must be managed by the state bank with political supervision of beneficiaries.

6. Insource all security guards, cleaners and gardeners in all national, provincial and municipalities including state-owned entities.

7. Issue an immediate instruction and allocate sufficient resources to Denel to expand massive industrial capacity to produce health equipment, including ventilators.

8. Amend the PFMA and MFMA to compel national, provincial and state-owned entities to procure 80% of all goods from local producers and a minimum of 50% from producers of which 50% is owned and controlled by women and the youth.

9. The government must declare additional special economic zones with zero company taxes and a building allowance in exchange for each investor to create 1 000 full-time jobs. In the immediate, the government must build makeshift structures to house companies that are willing to move from overpopulated metropolitans and assist them with subsidies to open their production in other provinces.

10. All food procured for hospitals, clinics, correctional facilities, school feeding schemes, and other institutions must be locally procured from black farmers.

11. All retailers in South Africa should be mandated to put 60% of locally produced goods and products on their shelves.

These are many other interventions contained in the EFF 2019 Elections Manifesto will play an important role in salvaging the economy and preventing further decline. Cyril Ramaphosa and Tito Mboweni's misguided approach to economic growth and development of the productive forces will not assist South Africa's economy. The path they have chosen will only serve to decline South Africa's economy further, therefore, threatening the revenue base, deepening poverty and causing social instability.

We are categorically clear that the nonsensical structural reforms proposed by Tito Mboweni are not a solution to South Africa's economic crises. The nonsensical structural reforms which are meant to privatise State-owned businesses and institutions will only serve to weaken the State further and must be rejected.

The people of South Africa must begin to appreciate that Ramaphosa ANC's misguided confidence in the so-called private investors, domestic and global has not and will not bear any positive consequences. The State should play a much more significant and impactful role in the economy, and that is the only way our country will be saved from this decline.

Statement issued by the Economic Freedom Fighters, 9 September 2020