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SA government must be enabler, not just rule maker - economist

Jun 22 2018 07:28
Carin Smith

Durban – The role of the state in South Africa should be changed from just a rule maker to an actual enabler, according to economist Mike Schussler.

He was one of the guest speakers at the annual conference of the SA Property Owners' Association (Sapoa), which takes place in Durban this week.

In his view, the South African government could, for instance, see how it can "take the jobs closer to the people" instead of only focusing on bringing people closer to jobs.

"Government could lower taxes in areas where there are lots of unemployed people and look for industries that can settle there," said Schussler.

Talking about the South African economy in general, he said he expected 2019 to be yet another "transition year". In his view, the country should be harnessing "low-hanging fruit" like tourism benefits, and see to it that state-owned enterprises (SOEs) perform better.

"Private fixed investment is ultimately driven by profit. People do not put money into things if they will not get a return. Cash flow is the thing that drives business," he argued.

"On top of that, SA has the 8th highest tax burden in the world. We cannot go any higher, for instance to add on National Health Insurance. It is just not doable."

 He noted that South Africans are investing far more overseas than people from overseas are investing in South Africa.

"If they cannot make profits here, you cannot expect them to invest here," Schussler summed it up.

Another challenge, he said, is that for the past six years, the economy has not grown as fast as the population has.

Dawie Roodt, chief economist at Efficient Group, added during a panel discussion that there are 10 million South Africans who need jobs.

South Africa, therefore, needs to aim for at least 5% economic growth per year.

"We need policy clarity. Government debt levels are also totally unsustainable and SOEs are total disasters, financially speaking. We need to bring government debt levels down," said Roodt.

"Secondly, even if we fix the financial situation, there is a skills problem at local authorities."

Roodt said it was important to understand that there was no guarantee of getting the South African economy to grow.

"Politicians should look at what South Africa's comparative advantage is - for instance our institutions, our protection of property rights, our independent courts, the previous Public Protector. If we fix where those have been undermined, including at Eskom, it would help to grow the South African economy," he said.

  • Fin24 is a guest of SAPOA at its conference.
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sapoa  |  dawie roodt  |  mike schüss­ler  |  sa economy


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