FIN24 / 28 APRIL 2019 - 09:27/ FERIAL HAFFAJEE
The economy is centre-stage in the manifestos of all political parties in the run-up to the May election.
If the economy is at the top of your mind too, here’s a quick guide through a few key areas to help you make your cross.
The Huffington Post South Africa editor-at-large Ferial Haffajee.
This is an the election being fought on jobs – and with an expanded unemployment rate of almost 40%, that's no surprise. We assess the three leading political party manifestos on their ideas for getting South Africans working, on creating an environment for investment and on their plans for getting South African out of the low growth slump.
The three parties are the governing African National Congress (ANC), the official opposition Democratic Alliance (DA) and the Economic Freedom Fighters (EFF). The EFF is now South Africa’s third biggest party. On the national ballot, the other 45 parties contesting will share about 10 to 12 percentage points of the vote, which mean that they are unlikely to be able to exercise their manifesto ideas in government.
The ANC has the most considered ideas on jobs. The party has imported the Jobs Summit resolutions into its manifesto and those ideas are geared at employment in high-growth areas of the economy like tourism and agriculture. It focuses on youth employment. With three million young people out of work (and often never in work), the party has showcased the private sector led Youth Employment Service, a mass-based youth internship programme for which companies can get black empowerment points.
The ANC promises 275 000 jobs a year to be funded by securing R1.2trn in investment. About a quarter of this investment is promised, but not yet in the bag.
The DA has said it will pass a Jobs Act if its becomes government to pledge one job in every household. This is a pragmatic idea but another piece of legislation goes against the party’s promise of cutting red tape.
The DA says "Ten million South Africans are jobless. There are too many families in our country who do not have a single breadwinner." These jobs are primarily to be in the private sector, with a smaller cohort coming from training programmes in the public sector.
The EFF is likely to become a kingmaker party, and EFF President Julius Malema has said that jobs will be its primary focus. The EFF’s problem is that its employment ideas are at odds with its ideology.
An EFF government will nationalise everything, so it’s not clear where new jobs will come from, as it is unlikely there will be additional funding available to pay for more than the already existing 1.3m state employees.
The party does not set any targets for employment generation, but it does say that companies will be made to target youth for employment for just over one in three posts.
The DA is the only one of the three leading parties which overtly sees the role of the state to create a business-friendly environment.
"It is the role of the state to provide an enabling environment for the private sector to be the engine of economic growth and development," says the party’s manifesto.
"The current government has not only flip-flopped on important policy issues but has taken a hostile stance toward the private sector for years and the result has been a business environment wracked by uncertainty and heightened risk," says the DA.
The party promises a repeal of legislation on new competition policy (it has not been signed into law yet) and the Protection of Investment Act, which the party says endangers investments. The party guarantees property rights and it rejects land expropriation without compensation.
The DA manifesto features a host of other pro-business measures like cutting red tape (in the Western Cape, it says it has taken R100m of costs out in unnecessary red tape) and a new visa regime to allow foreign investors to bring in skilled workers more easily.
The ANC’s investment promise is linked to its existing Investment Summit last year, which attracted investment promises of over R250bn over the medium term.
Some of the investments are coming through, notably in the automotive industry and in mining, but critics say many of these were already in the pipeline. President Cyril Ramaphosa has upped the promise to R1.2trn over four years.
As a government, the ANC has got a head start, as it is also working closely with a number of business sectors with growth potential to unblock hurdles in the way of further growth.
The EFF is not really interested in creating a conducive environment for existing business or for new foreign direct investment. Instead, the EFF promises "massive and protected sustainable industrial development and diversification to create millions of decent jobs between 2019 and 2024". Its ideas are not teased out, but it seems to support a highly protected and black-owned/state-owned domestic economy to attempt to re-industrialise South Africa.
SA Reserve Bank independence
The Democratic Alliance is the only party which unequivocally expresses its support for an independent central bank.
The ANC is so split into factions that it is not clear what the party’s position is. Its manifesto says, "The ANC believes that the SARB must pursue a flexible monetary policy regime, aligned with the objectives of the second phase of transition.
"Without sacrificing price stability, monetary policy must take into account other objectives, such as employment creation and economic growth."
Analysts have read this as holding the potential to interfere with the central bank’s independence. The party’s resolution from its 2017 national conference supports nationalisation of the SARB.
The EFF says it will nationalise the SARB and all banks.
The DA is the only party that puts economic growth at the centre of employment, investment and empowerment. Its support is for private sector-led growth, with the state playing an enabling role. The party notes that SA can learn from Kenya, Rwanda, Ivory Coast, Botswana and Ethiopia where growth rates have been between 5% to 8% per annum.
The ANC still favours a state-led growth model – it calls this the capable state model to support employment and a more robust economy.
This is fine in principle, but not in practice: the ANC has punted this model since 2007, but it has not worked as both employment and growth have gone into long-term decline. It’s fair to note, though, that all reliable predictions do suggest green shoots and a slow uptick in economic growth.
The EFF does not believe in an economic growth model. Instead, its model is expressed by this slogan from its manifesto: "We demand the economy NOW!" It is a model of nihilism where the party wants to smash down the system and rebuild it.
The party favours centralised state planning and ownership as its model – a socialist model with some private ownership but only by black Africans. But with this model, you have to giggle at the party’s assertion that: "Under the EFF government, the economy will grow at 6% in the first two years and 10% in the remaining three years."
BEE – black economic empowerment
If your key consideration as you make your cross is black economic empowerment, then the EFF is your party. The entire manifesto is geared toward BEE in various forms, using a mix of socialist and patronage policies.
The ANC has the best record of black empowerment: its policies have seen a black middle class of significant size grow over the past 25 years. But ownership is still elusive. The party’s manifesto spends a lot of time explaining and proposing a new model of worker ownership or what is called stakeholder capitalism.
The DA’s manifesto section on BEE is a hot mess. The party almost split as it created its manifesto,
Bloomberg reported this week. One of the key fissures is on BEE, and that is clear in the manifesto, which expresses support for black empowerment because of South Africa’s history, but then only offers a mish-mash of measures that don’t hang together coherently. These include better skills training as well as employee share ownership.
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LINK : https://www.fin24.com/Economy/sunday-read-elections-and-the-economy-2019-whats-your-partys-promise-20190428
Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER