Tito Mboweni’s tips for economic growth in SA – is it more talk and task teams?

PUBLISHED: Wed, 28 Aug 2019 16:13:32 GMT

By Chris Bishop, Head of Programming, CNBC Africa

As the business minds ready for the World Economic Forum Africa in Cape Town next week the finance minister of the continent’s most advanced economy revealed Treasury’s plan how to revive growth and create a million jobs. Economists say the plan is nothing new and cast doubt on what good it will do. It is likely to generate talk – the fear must be that it is all it may do.

The forthright South African Finance Minister Tito Mboweni published the plan this week, on the Treasury website, giving the public until mid- September to comment, just ahead of the mini-budget in October. Many are seeing this as an unspoken challenge to the slow moving cabinet following President Cyril Ramaphosa’s promise in the state of the nation address, in February, of better economic times.  

Analyst Peter Attard Montalto, the head of capital markets research at Intellidex in London, says the timing of the growth plan is significant ahead of the mini-budget in October.

“Treasury is not really reinventing the wheel with this,” says Attard Montalto.

“I think the purpose of this is to deliver a giant kick up the backside to cabinet.”

Treasury and Mboweni claim the plan will create growth of 2.3% as well a million new jobs. It plans to boost agriculture with better marketing of exports, telecom reform promising more broadband, more development finance, a 25% decrease in red tape over five years to make business cheaper and easier. How the latter will be calculated boggles the mind. 

“Ï think there is nothing new here. It is very clear that the Ramaphosa administration is weakening and I think his ministers are getting scared,” says economist Lumkile Mondi, Senior Lecturer at the School of Economic & Business Sciences, Wits University.   

“What they need to do is implement and take the political flak. Trevor (Manuel) took the flak for his economic reforms many years ago – why can’t they?”

At least one of the proposals for growth put forward by Mboweni is a no-brainer. He calls for the changing of the visa regime to boost tourism. The former Tourism Minister Derek Hanekom told me last year that it would be done at the stroke of a pen and would give the industry a fillip. Why the government is still debating it a year later is beyond most people in the industry.

There is another proposal in the plan that may also raise eyebrows. Mboweni proposes that the government could auction off South Africa’s ageing coal-fired power stations.

“Private business could make money out of this with the contracts that are attached to these power stations, but this plan is a bit pie-in-the-sky. Politically, it is not on the table.”

Reform towards growth, creating a million jobs, would be as welcome as a glass of water in the desert for the dry South African economy right now.

Yet, talk can be as abundant as jobs are scarce when it comes to growth plans. Earlier, I checked my notebook from a hot sweaty December afternoon, in Pretoria, back in 2009.

I was at the Union Buildings with the then President Jacob Zuma as he gave us a report back on his pledge to create jobs, in response to the global economic crisis, back in 2008. In that year, President Zuma set up a task team to work out how to create millions of jobs.

The report back didn’t go well. It turned out that the government had lost 959,000 jobs in that first year of job creation. True, Zuma assured us, 4,482 had been saved through arbitration, 7,000 more through training instead of retrenchment…The Industrial Development Corporation claimed to have saved an estimated 7,700 jobs by lending to distressed companies.

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