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Herman Mashaba | 16 Junie 2023

Our economy is in tatters. We have just narrowly avoided a recession, unemployment has been above 40% for three years, the rand is in the gutter and interest rates are soaring.

Any rational government would acknowledge this catastrophe and do everything possible to ignite economic growth. The ANC, however, has given up on growing the economy, instead ramping up their misguided efforts aimed at so-called redistribution.

Their obsession with quotas will have the opposite effect, leaving everyone worse off by decimating any hope of an economic recovery.

In April, President Cyril Ramaphosa signed the Employment Equity Amendment Act into law paving the way for the release of draft regulations in May to impose strict new racial quotas on employers of more than 50 people. Just days later, the department of water and sanitation published draft regulations applicable to water use licence applications, proposing similarly strict racial quotas for the extraction and storage of water.

Both proposals are contemptible and should be rejected outright.

However well-intentioned the ANC believes these measures to be, the reality is that no country can redistribute its way to prosperity. The only thing that the ANC’s race-based policies have succeeded in doing is creating a new wealthy class of politically connected black elite at the expense of the approximately 55% of our society living in poverty.

Anyone who has visited informal settlements like Diepsloot and Orange Farm in Johannesburg will know that the ANC’s redistributive policies have done nothing to transform the lives of the poorest South Africans, the vast majority of whom are black.

Despite all the ANC’s attempts at redistribution through irrational quotas and empowerment schemes, South Africa is more unequal today than it was in 1994.

Let me be clear. ActionSA supports the transformation of the country’s economy, and the need to build an inclusive economy where all South Africans can be genuine counterparts. Similarly, we are not colour blind. We recognise that inequality in South Africa still manifests largely along racial lines.

But, South Africa’s experience over the past three decades has shown us that racial quotas are a top-down attempt at addressing the symptoms of our deep-rooted inequality that do nothing to address the root causes of our economic challenges. These superficial measures are a lazy and ill-conceived attempt at transforming our economy at best, and political pandering ahead of an election — at the expense of the economy — at worst.

Instead of addressing inequality, the proposed regulations may introduce an additional bureaucratic hurdle and increase the cost of doing business, which will adversely impact job creation in South Africa, leaving the poor and unemployed in an even worse situation.

With the state of our economy, we cannot be implementing misguided anti-growth policies and regulations that will continue to harm job creation and exacerbate racial undertones.

If we really want to address inequality in South Africa we need to reduce the cost of doing business, remove the bureaucratic red-tape that constrains growth and job creation, and make South Africa a more attractive investment destination. Instead of trying to artificially redistribute an ever-shrinking economy, we need to focus on growing the economy so that more South Africans can benefit from gainful employment.

Redistributive policies aimed at reducing racial inequality should focus on achieving equality of opportunity and not equality of the outcome. This means that where there are obstacles that certain groups might experience, both due to historical events as well as current realities, the state should provide support mechanisms to ensure that individuals have the opportunity to overcome those barriers to prosperity.

Central to ensuring equality of opportunity is fixing our disastrous public education system. The latest Progress in International Reading Literacy Study (PIRLS) found that 81% of learners in grade four in South Africa are unable to read for meaning. They cannot understand basic age-appropriate text.

Unfortunately, it is black children that are the worst off — most African-language schools declined in reading performance, while English and Afrikaans schools did not. This finding means that existing patterns of poverty and inequality will be perpetuated.

Essentially, those without the means to afford better quality schooling will be condemned to a reliance on inadequate public schooling where poor learning outcomes will likely exclude them from the economy in perpetuity.

The reason why this is so important is because if it is left unaddressed, it will have a dire impact on the skills profile of our workforce. Any policy aimed at enforcing racial quotas for employers is redundant if individuals in the targeted groups do not possess the skills required for the job.

Moreover, without a skilled workforce our economy will continue to decline in global competitiveness. We will slip further and further behind relative to countries that are investing heavily in subjects like science and maths, which play a crucial role in innovation and technology. This is fundamental to economic growth and prosperity.

With the global economy entering a new era where artificial intelligence and automation will replace the need for many unskilled jobs, all the racial quotas in the world will not be able to compensate for our lack of skilled employees.

The bottom line is that the ANC’s obsession with racial quotas will not fix the underlying constraints to economic growth and job creation. If anything, they will make doing business more expensive and deter investment.

Given the choice between a country with an onerous regulatory regime like South Africa, and a country with a skilled workforce that prides itself on the ease of doing business, international companies will naturally go for the latter.

Quotas that aim to superficially address the symptoms of an ailing economy without empowering the worst-off in our society are not only ineffectual, but they are also outright destructive. The only way to truly transform our economy is to ensure that it grows.

That is why we must pursue policies that enable growth while ensuring that we empower marginalised communities with the education, skills and resources needed to overcome the legacy of the past and be active participants in an inclusive economy.

Herman Mashaba is ActionSA president.

‘Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER’.


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