The Centre for Development and Enterprise (CDE) has slammed the government for making poor policy decisions and failing to implement effective governance, which has led to sluggish South African economic growth over the past 15 years.
In a report released yesterday, in CDE’s Growth Agenda series, the public policy research and advocacy thinktank argued that slow economic growth was overwhelmingly the result of bad policy choices and a catastrophic decline in governance, coupled with a devastating lack of leadership.
CDE executive director Ann Bernstein said South Africa’s political leadership had been disappointing when it came to making policy decisions that could encourage investment and boost growth.
Bernstein said one of the most important examples of where poor policy choices and bad governance had become a drag on growth was fiscal policy.
She said bad policy choices such as unaffordable wage agreements with public servants, and bad governance, especially the failure of the Cabinet and the president to respect budget constraints, had catastrophic effects on sovereign debt levels, debt service costs and interest rates.
“Despite rhetoric to the contrary, the South African government does not have a growth strategy. If anything, it has an anti-growth strategy,” Bernstein said.
“South Africa has leaders who say they want growth, and there are a lot of government policy documents that describe how important growth is.
“However, at no stage has the country’s political leadership made a decisive choice to prioritise growth or put in place the components of sound policy and good governance essential to an effective growth strategy. Both poor policy and bad governance derive from the choices and conduct of political leaders.”
Bernstein said bad governance and poor policies had shredded confidence in the future and left South Africa with inadequate energy supply, which is the most critical constraint on growth.
For instance, she said the long-term failure to create a market for generating electricity had meant South Africa relied almost exclusively on Eskom for its power, even as global experience made it abundantly clear that the generation of electricity was much more efficient and reliable if there were multiple providers competing with each other.
“We have a state that is increasingly a brake on growth and unable to deliver on its most basic functions, presiding over deteriorating infrastructure and rapidly rising levels of indebtedness,” she said.
“It is a state in which the corrupt thrive at the expense of good managers, and where the lives of whistle-blowers are increasingly at risk.”
Meanwhile, this comes as the government and organised business have agreed to work together urgently in partnership to remove obstacles to inclusive economic growth and job creation.
The government, led by President Cyril Ramaphosa, met with the captains of industry on Tuesday and agreed to collaborate on clearly defined initiatives with three priority focus areas – energy, transport and logistics, and crime and corruption.
“This initiative will make a real and marked difference in rebuilding our economy and setting it on a path of sustained inclusive growth,” Ramaphosa said.
“It is driven by a shared determination to overcome the severe challenges we currently face and to mobilise the country’s substantial capabilities towards the achievement of that goal.”
On energy, business will support a drive to close the current energy capacity gap and build confidence in restoring energy security to end load shedding, in collaboration with the National Energy Crisis Committee (Necom).
On transport, business will also work to stabilise and improve operational performance on key trade corridors, mobilising private sector resources and accelerating implementation of the National Rail Policy to close the capacity gap.
On crime, business will provide support, on a carefully governed arm’s-length basis, to combat crime and corruption, in particular, expert resources to further capacitate the National Prosecuting Authority and the Independent Directorate.
Business Unity SA CEO Cas Coovadia said business was ideally positioned to ensure a better future, for the benefit of all, which makes this partnership agreement with the government critically important.
“South African business leaders are committing to contributing considerable skills and resources and, as a matter of urgency, work through all relevant partnership structures to address our country’s priorities,” Coovadia said.
“Ultimately, success will lead to a significant impact on GDP growth and job creation and will re-instil confidence amongst all stakeholders.”
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