Twenty five years of democracy is enough time to determine whether economic performance of the past quarter of a century under an ANC government has delivered a better life for all South Africans or not.
Whilst GDP growth has risen from R496 billion in 1994 to R4,7 trillion in 2017, the past 10 wasted years of the Zuma administration has bought economic stagnation and growing unemployment. The 9,2 million unemployed South Africans have paid a high price for the populism and economic failures of the Zuma years. This has resulted in a corresponding increase in service delivery protests by angry citizens who feel excluded and locked out of the economy.
The ANC’s response to the damage wrought by the “ Zuma years” has been to turn to more populist policies, such as the EFF proposed “Land Expropriation without compensation” through an amendment of Section 25 of the Constitution. This proposal not only misses the real impediments to land reform but will create uncertainty among investors whom the President is keen on attracting to our shores.
Quite how much could have been achieved in South Africa is put into perspective when once compares 25 years in West Germany between 1945 to 1970. West Germany transformed from a genocidal fascist dictatorship, bankrupted by war, to a successful liberal democracy with one of the largest economies in the world. The economy posted impressive GDP growth rates and low unemployment that were driven by market friendly free market policies, a policy approach that forms a central part of the DA’s economic policy suite. While many would question the relevance of the West German experience to the South African economy, I mention it because it had a brother state, East Germany whose economic policies most closely resembled an EFF dream and was a fraternal partner to the ANC.
The East German state followed all the policies the EFF and some in the ANC advocate for, from state banking institutions, land expropriation without compensation, infringement on property rights, as well as meddling commissars who controlled all aspects of a citizens life. At the time of German reunification in 1990, the East German state was bankrupt and it took the unified German state more than 20 years to repair the dama It is always good when proposing new economic policies that evidence based research is followed. Evidence of the East German example does not augur well for the EFF and some in the ANC.
To transform South Africa’s economy, the Department of Economic Development, must focus on economic forecasting that takes into account the knowledge driven era we live in. The South Africa of 1994, with its associated limited internet access, no cellphones and no social media is markedly different from the South Africa of 2018. We can be sure that 2044 will look even more different with the advent of the 4th Industrial Revolution which will completely transform our economy and the skills required by those who wish to work in it.
The DA fully supports an increasing focus on the Fourth Industrial Revolution and is already implementing measures which will help usher us into this new era. The creation of Innovation hubs by DA Governments as well as the Western Cape’s plan to roll out broadband internet at all schools is part of the greater plan to ensure that prepare young South Africans for jobs of the future. We therefore support the Department of Economic Development on the priority placed on the Fourth Industrial Revolution. The Industrial Development Corporation (IDC) is also considering devising a strategy to assist businesses that will be operating in this new world.
The DA’s plan to encourage the growth of 1 million new small business entrepreneurs is a realisation of the potential of these new technological advances and their ability to influence broad based job creation opportunities that will benefit the many. This is juxtaposed against the ANC’s elitist “Emerging Industrialist” program run by the IDC who only serves to benefit and enrich a fortunate few at the expense of a more broad based development strategy for the many. The DA believes that new Industrialists will grow naturally from the ranks of its proposed 1 million new entrepreneurs as an outcome of their successes in building businesses.
If our economy is to be truly successful in reducing inequality for all our citizens, then we need to provide relevant and improved education and training to our citizens. I would like to conclude by looking at another similar emerging economy that has got this right. South Korea has a similar size population to South Africa but an unemployment rate of 3, 6% compared to South Africa’s 25,4%. In 1999 South Korea was 28th Out of 137 countries in the Global Competitiveness Index while South Africa was 26. By 2018 South Korea remained at 26 and South Africa had slipped to 61. Foreign direct investment inflows into South Korea amount for US$12,1 billion in 2016 versus South Africa at US$2,25 billion.
The reason for the significant change in South Korea’s fortunes over the last 20 years is not only because of the investor friendly policies and investor certainty that the DA espouses, but one of the best educated work forces in the world. While there is no fee free higher education at South Korea’s 43 state and 180 private universities the country ranks 25/137 countries for Higher Education in the WEF Competitiveness survey versus South Africa at 85.
The DA believes that the best antidote to inequality and unemployment in South Africa is the provision to our people of an improved education relevant to the coming technological changes, and access to Higher Learning for those who qualify. This should not only provide greater access to employment but encourage entrepreneurs to come out and build job creating small businesses. South Korea has no problem in attracting new investment because it has skilled workforce attractive to investors. Lack of skills is one of South Africa’s greatest drawbacks in attracting new industries. A focus on this problem will not only attract investmentbut will reduce inequality and provide a better life for our people.