South Africa will face immense challenges in 2012. Rates of unemployment in our country, which stand at around 25 percent of the economically active population, rank among the highest in the world. Lacklustre economic growth, exacerbated by the Eurozone crisis, has meant that the economy has failed to expand opportunities to the millions of South Africans who continue to live in poverty.
This need not be the case.
Other middle-income developing countries have made significant progress towards tackling poverty and unemployment, even in this challenging global economic climate. Brazil, for example, by implementing smart social policies, has managed to halve poverty in less than a decade. In China and India, the expanding opportunities that come with rapid economic growth has seen millions of people join the ranks of the middle class every year, faster than any period in history.
South Africa has a highly sophisticated private sector and some of the richest mineral deposits in the word. Why have we fallen behind? The answer lies in the arena of policy and its implementation.
Since coming to power in 1994, the ANC government has sought to implement a plethora of economic development plans and strategies representing a broad spectrum of interests and ideological preferences. The success of these initiatives has been similarly varied.
The Growth, Employment and Redistribution (GEAR) programme, for instance, which advocated open markets and tight control of inflation, made some progress, notably in the area of budgetary reform.
Building on these gains was the Accelerated and Shared Growth initiative (AsgiSA), launched by then President Mbeki in 2005, which sought to overcome ‘structural deficiencies’ in the South African economy through targeted investments and increased state intervention in the economy.
Politics intervened, however, and the implementation of AsgiSA suffered after Mbeki was removed from office by his own party.
The New Growth Path (NGP), introduced in 2010 by Economic Development Minister Ebrahim Patel, a former trade unionist, represents another stab at the persistent problem of unemployment in South Africa. Promising ‘5 million jobs in 10 years’, the NGP advocates massive increases in state spending on infrastructure as the primary driver of employment creation, though it does not specify where these additional funds should come from.
There are two key sets of problems that have underpinned the failure of these programmes to unlock South Africa’s true growth potential and create opportunities for all. The first of these is substantive, the second political.
First, with the exception of GEAR, the economic development programmes introduced by successive ANC governments have consistently squeezed out the private sector in favour of state dominance of the economy. They have paid too little attention to high input costs, low levels of competition, unnecessary red tape, state inefficiency, corruption, and high barriers to entry in the labour market.
Second, factionalism and political pay-offs to the ANC’s alliance partners have led to considerable policy inconsistency, uncertainty and paralysis. The politicisation of the public service through a process of so-called ‘cadre deployment’ means that many policy decisions go unimplemented, subject to the whims of the latest political appointee.
The Democratic Alliance believes it is time to chart a new course for South Africa’s future, one inspired by the high growth trajectories followed by successful middle-income countries such as Brazil, Turkey and Malaysia.
That is why we have embarked on a comprehensive policy review and development process that places the goal of 8% annual growth in GDP front and centre and offers a new vision of hope and prosperity to all South Africans.
Where state dominance, bureaucracy and factionalism have stymied previous reform agendas, we, the Democratic Alliance, will focus on building an economy that is internationally competitive, that builds on our strategic position on the African continent, that is sustainable, and that creates jobs and expands opportunities to all.
The success of the DA government in the Western Cape has shown what innovative policies and sound implementation can achieve. Building on this experience, the 8% Growth Project will provide clear and effective solutions to the challenges facing our country, which will be implemented where we govern, as well as constitute our promise to voters in 2014.