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Investment in infrastructure is the only way to jumpstart SA’s stagnant growth
Faced with South Africa’s weak fiscal position and downgrades by ratings agencies, in his 2020/21 budget speech Finance Minister Tito Mboweni should outline tangible structural reforms which will lead to the development of provincial economies and the resuscitation of industry in the country.
Such reforms will significantly change the fabric of the country’s economy, according to the president of the newly launched SA United Business Confederation George Sebulela.
Sebulela, a member of the Presidential Advisory Group chaired by President Cyril Ramaphosa and his deputy David Mabuza, spoke to City Press ahead of Mboweni’s budget speech this week.
The former secretary of the Black Business Council said he was always baffled by government’s continued sidelining of provincial economies, given that they have so much potential.
He said if managed properly, provinces have the potential to lead the way in growing the nation’s ailing economy.
“Provincial economic development is something that has never been on the agenda [particularly during budget speeches] and I am not sure why.
“We have to make our provinces economically efficient and develop them.
“If we look at Limpopo and Mpumalanga on the vegetation side for instance, we are supposed to have state of the art processing plants, but there is nothing.
“Everybody moves from those provinces to Gauteng and there is no way this province will survive.
“You can see by the traffic volumes that there is a problem. It cannot be correct that in a country with nine provinces we only depend on three – Gauteng, KwaZulu-Natal and the Western Cape,” Sebulela said.
“The question becomes, what are we doing to make sure that the economies of those provinces are not becoming those of the country’s on their own?”
Sebulela also criticised the budgeting process which he said was inefficient.
“I have always had a problem with the budgeting process. It is never about the plans that provincial governments present to national [government], to say this is what we are going to do, this is how we are going to create jobs and to achieve this, we need X amount [of money],” he said.
“Rather it becomes a matter of, ‘last year you gave us this much and this year we want that same amount plus 9%,’ and that’s it.
“That is the process. It needs to be reformatted because the way things are currently done is not effective and sustainable to grow the economy.”
Read: Sona down, now can Mboweni pull a rabbit out of his hat for Budget Day?
Sebulela was sympathetic to Mboweni. He said: “Being a finance minister right now is a difficult position to be in.”
But he added that given the country’s financial crossroads, tougher decisions needed to be made.
“At this point in time, there is no way, under any circumstances, that we can say the country is doing well. The recent Moody’s Investors Service growth downgrade from 1% to 0.7% is a clear indication that South Africa is facing a major crisis.”
To offset the country’s current slow economic growth Sebulela suggested that spending on infrastructure would help jump start the country’s economic growth.
“Spending on infrastructure is one way through which we can activate the economy,” he said.
“If the economy is not growing, government cannot collect taxes and is therefore unable to reinvest in the infrastructure which in turn will play a [major] role in keeping the economy active.”
Sebulela who is also the president and founder of the African Entrepreneurs Council, also reflected on President Cyril Ramaphosa’s state of the nation address.
He complimented the president on the fact that “for the first time, in a state of the nation address I could relate with the practicalities of implementation [of government programmes]”.
For Sebulela, the distribution of social grants is an issue that also needs to be addressed urgently.
“The most amount of money is spent on social grants. We need to have a serious dialogue about this issue.”
Statistics SA’s General Household Survey released early last year revealed that more than 45% of South African households depend on social grants.
According to Stats SA, more than 17 million South Africans – or one in five people – rely on social welfare grants.
However, Sebulela added he was left less than impressed on Ramaphosa’s stance on entrepreneurship. “Government is a policy driver and it must create policies that will ensure that entrepreneurs can excel,” he said.
“First, what I would have liked to hear the president say was that we should take a curriculum of entrepreneurship to the schools.
“We cannot assume that entrepreneurs are going to be successful just because they have access to capital and a market.
“It is important to understand the basic principles of entrepreneurship to go together with the capital and market.
“Second, the president intents doing all these good things. He can only make them a reality by deploying the right people. If you have deployed the wrong people, nothing is going to work.
“The very same people will continue to loot and be inefficient because the current deployment policy is based solely on comradeship rather than things such as skills, experience and qualifications.”
Having recently launched the business confederation, Sebulela explained that the SAUBC – “a non-profit and non-racial business and economic federation,” was established after the realisation that “as a country we need an organisation that will lead business”.
“Having attended business dialogues around the world, led by the president, South Africa was not well represented in various working groups and we realised that key industry players and so called leaders of the country were not there,” he said.
“At these dialogues, parties are looking to do business with each other, but if a country, like in the case of South Africa, is not well represented, how are we going to attract investment? We can only attract investment when people realise that industry leaders from the country are there and are presenting their own cases of what opportunities are available in the country.”
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