Deal decisively with unemployment and poverty

POSTED ON: January 13, 2022 IN by Admin

By Busi Mavuso

Each reform and each infrastructure project that is actually rolled out will contribute in their own ways to boosting economic growth, and that is the only way to reduce unemployment.

While the overall tone of the ANC’s statement released on its 110th anniversary last weekend has much to be positive about, I’m very concerned about its call to “build a social compact to decisively address unemployment and poverty”. I would have felt much better if it had simply stated: “Deal decisively with the policy reform and implementation issues underlying unemployment and poverty.”  

Those two issues along with inequality have formed SA’s “triple challenge” since before 1994 but particularly since the misgovernance of the Jacob Zuma presidency, and the issues have been explored in full. The best possible solutions have been proposed and, in some cases, are already in place. What needs to be done now is to implement those solutions decisively and speedily. This needs to be the year of action, not more talk.  

President Cyril Ramaphosa recognised the important reforms needed to tackle unemployment and drive economic growth and these were incorporated into the Economic Recovery and Reconstruction Plan (ERRP), which also includes a massive infrastructure programme intended to act as a catalyst for an economic recovery. Far too little is happening with the latter while with the reforms themselves, only in the energy sector have massive strides been made and even there we could be doing things a lot faster.  

Lifting the limit for private companies to generate their own electricity without a licence to 100MW was hugely positive as was Eskom’s announcement in December last year that it planned to lease 36,000 hectares of land in Mpumalanga to facilitate that. Public Enterprises Minister Pravin Gordhan’s announcement that a tariff for wheeling electricity from where it’s generated to other sites via the national grid is also a huge step forward. He also stated that, further down the line, private producers would be able to sell excess power to Eskom.  

Those measures will contribute immensely to shortening the time it will take the country to reach a stable energy supply that meets demand and ends the economically destructive bouts of load shedding, which themselves worsen the unemployment situation.   

Yet things need to be happening much faster. The announcement on tariffs for wheeling only came in December when the licence threshold was lifted in August, delaying the entire process as companies could not act without clarity on the issue. And the tariff levels still need to be announced. 

We need to get newly generated electricity onto grid as fast as we can. Bid window 6 for the renewable energy independent power producers programme should have been announced as soon as bid window 5 was completed in October last year but still we wait.  

Unfortunately other elements of the ERRP are faring far worse. The infrastructure programme appears to be at a standstill, there has been no progress in implementing an effective skills visa regime, and the long-delayed spectrum auction has again been hit by a legal challenge. 

Each reform and each infrastructure project that is actually rolled out will contribute in their own ways to boosting economic growth, and that is the only way to reduce unemployment. And the faster everything happens, the sooner the unemployment rate starts coming down.  

The policy environment for what needs to be done has already been created. BLSA is always ready to sit at a table with social partners but we believe the topic this year should be “why isn’t everything happening faster”.  

The ANC’s call for a social compact for poverty and unemployment was its first priority for the year and in it, the organisation does recognise the need to speed things up. The full statement says: “Build a social compact to decisively address unemployment and poverty. Working with all social partners, we must accelerate economic recovery and reconstruction and ensure that social services are provided to all citizens.” 

Business fully supports everything that follows the word “compact”, as it does two of the ANC’s other priorities for the year. One is to “build a capable developmental state with an effective and ethical public service that drives the implementation of South Africa’s transformative agenda”. 

While the benefits of a “developmental state” may be debatable, the intention to build an effective and efficient public service is something the country desperately needs. Efficiency in state institutions is an economic enabler, but the widespread misgovernance at all levels of government but particularly in municipalities serves to retard economic growth and thus contributes to unemployment.  

The ANC’s other priority is to “defend our democratic gains against attempts to undermine our Constitutional order and destabilise our democracy”. This is particularly important and the fact that the ANC felt the need to include it as a priority is itself disturbing. The statement says SA’s democratic gains are being “threatened by a concerted effort to destroy the institutions of our democratic state, to erode the values of our Constitution and to undo the social and economic progress made.” 

With such matters BLSA fully supports a zero tolerance approach.  

Busi Mavuso is CEO of Business Leadership SA and this column first appeared in fin24.

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