finweek asked a number of experts across the economic spectrum what they would do to fix SA.
Stephen Meintjes Analyst at Momentum SP Reid and co-author of Our Land Our Rent Our Jobs
What are the top three policy issues that are depressing SA’s growth rate?
Land, tax and state intervention: we are missing a great opportunity to address the land issue once and for all via collection of land rentals and instead we are relying on a Eurocentric model of taxation and a misunderstanding of Chinese-style state intervention.
China has emerged from total communism, but allowed private enterprise to flourish [...] without, for example, imposing minimum wages. This misunderstanding is leading to a downward cycle of weakening economic growth in SA, strengthening the belief of those who favour state intervention and increased taxation, à la Thomas Piketty, author of best-selling book Capital in the Twenty-First Century.
His calculations on capital returns do not accurately reflect the extent to which the returns on capital include rent on land. His analysis is therefore flawed in as much as it does not reveal the extent to which “capital” grew faster than GDP due to uncollected rent.
Andrew Dittberner Chief investment officer at Cannon Asset Managers
What are the positives? Can we strengthen and improve on these?
One of the country’s key positives is our geographic location. SA belongs to one of the fastest-growing regions in the world, yet we appear continuously to score own goals. Removing unnecessary policies such as the recent visa restrictions, which prevent South Africa from doing business in the region, can only be beneficial.
SA is the home, or birthplace, of some of the world’s largest and most recognised businesses. SABMiller (recently the target of a takeover bid), Naspers, Anglo American and BHP Billiton, to name a few, give one insight into the intellectual capacity of the country, along with the sound corporate governance principles that we follow and the opportunities and potential that exist.
The burgeoning middle class is another positive. It is this growing middle class that is going to carry our democratic society forward. Over the past 20 years at least 3m South Africans have joined this middle class. This number continues to grow today.
Neva Makgetla Programme manager for trade and industrial policy at Tips (Trade & Industrial Policy Strategies) and former policy coordinator for Cosatu
What can we do in the short term to boost growth?
I would recommend taking a holiday regarding payments into the Unemployment Insurance Fund (UIF) and workers’ Compensation Fund. This would act as fiscal stimulus without affecting the fiscus.
Both of these funds are getting a R10bn additional surplus every year, and they have accumulated reserves of around R100bn. In effect, they are a forced savings scheme at a time when, because of the fall in commodity prices, we are risking stagflation.?I would also develop programmes urgently to improve workplace relations, which should start with a tripartite agreement on what constitutes a decent workplace (including for example improved supervision, seniority progression, career mobility and an end to discrimination in facilities in the workplace).
Another way to boost growth quickly is by making the Mining Phakisa work – the commodity bust has the potential to really damage this critical sector unless government, business and labour in the sector make the hard agreements with meaningful follow-up. Mining Phakisa is a programme modelled on Malaysia’s “Big Fast Results” initiative that aims to improve upstream linkages between mines and capital providers, enhance beneficiation of raw output and improve research and development as part of a far-reaching modernisation of SA mining.
Russel Lamberti Economist at ETM Analytics
SA has slid a further four places to 73 out of 189 countries in the World Bank’s latest Doing Business report. Do you agree that SA is slipping, and if so, how would you fix it?
Make it easier to do business. Mainly, slash the burden of company taxation by scrapping provisional tax, making VAT payments less onerous, and lowering corporate tax rates. Then, deregulate the labour market and make hiring and firing less onerous.
Herman Mashaba Chairman of the Free Market Foundation, CEO and founder of Leswikeng Minerals & Energy, and founder of cosmetics firm Black Like Me
What would your strategy be to address the need for transformation and empowerment, while ensuring an attractive business environment for investors?
When all in SA are treated equally, our economic growth should be performing at least at 5% per annum, allowing government to collect more taxes that can be invested in education. Proper investment in education should be our priority in sustainable transformation.
When our economy grows at least at 5%, we are not going to have enough white people to fill all senior positions. Sustainable transformation and empowerment will automatically happen when we focus our energies on growth of the economy.
This is an excerpt from an article that originally appeared in the 12 November 2015 of finweek. Buy and download the magazine here.