ANC economic policy – growth, jobs and investment in times of instability
The ANC's National General Council (NGC) meeting in October this year comes at a time of renewed global economic instability – some of the key symptoms being falling stock markets in China and elsewhere, the ongoing downturn in the European Union, low commodity prices and emerging market currency volatility.
The South African economy is also facing a number of problems, partly due to international developments, but also due to specific domestic weaknesses. Apart from inherited structural problems, such as persistent unemployment and inequality, inadequate skill levels and low household savings, the current period comes with the threat of job losses in mining, metals and other sectors, persistent power shortages, low levels of growth and investment, low levels of business confidence, severe drought conditions, reduced fiscal capacity and growing risks of stagflation.
The ANC is deeply concerned about the threats posed by the current, adverse economic environment. The timing of the NGC meeting provides an important opportunity for the ANC to review a wide range of policy interventions and, where necessary, to strengthen and realign such interventions to improve South Africa's economic performance.
The ANC's economic policy interventions are necessarily motivated by our movement's historic mission of overcoming South Africa's triple challenge of unemployment, poverty and inequality. Thus, our economic policy interventions are based on several key pillars.
First, the need to change the structure of opportunity in South Africa informs a wide range of our interventions. Broad-based black economic empowerment aims to change the racial nature of business ownership and participation. Overcoming the spatial legacy of apartheid requires land redistribution and transformative urban planning. Expanding access to basic and higher education creates opportunities for children from poor communities.
Secondly, the need for significant expansion, upgrading and maintenance of economic and social infrastructure is vital for economic growth and development, as well as to begin providing services and infrastructure to communities that previously did not have access to adequate housing, electricity and water and sanitation services.
Third, changes to South Africa's labor laws and codification of fair labor practices are necessary to improve the lives of working people in South Africa.
Fourth, in the post-apartheid sanctions era, the ANC has sought to increase integration with the global economy through promoting international trade and investment with various countries and blocs through AGOA with other countries on the African continent, the BRICS countries, the European Union, and the United States.
The National Development Plan (NDP) of the ANC-led government is a comprehensive policy to enhance the medium to long-term growth potential of South Africa. Various Phakisa initiatives in maritime economy and mining allow policy makers to work in-depth to solve specific challenges of the sector and create new dynamism. Similarly, ongoing iterations of South Africa's industrial policy plan help promote investment in key economic sectors.
A key ingredient that is missing in South Africa's economic policy making is adequate dialogue and cooperation between business, labor and government representatives. Internationally the evidence is clear that where business, labor and government are able to unite around an agenda of common interests, national development is enhanced.
The signals are mixed, but there are some signs that a new era of cooperation may be beginning in South Africa. The recent coming together of business, labor and government to strengthen and sustain South Africa's struggling steel industry is indicative of the kind of collaboration that is needed.
The ANC is very clear on what kind of economy South Africa needs. Inclusive reconstruction and development requires a vibrant mixed economy in which both the public and private sectors are strong and effective.
The role of the public sector is to drive infrastructure programs and expand access to services so as to open up new economic opportunities and change the inherited racial patterns of the economy. Such a program of public infrastructure expansion also helps to stimulate demand in the short term and has the potential to modernize the South African economy and make it more internationally competitive in the medium to long term.
The role of the private sector, both big businesses and small, is to thrive in the space created as opportunities for the economy expand, deploy new information and technologies, and operate efficiently and competitively in such a way as to benefit consumers, employees and the fiscus.
To achieve this vision, a priority is to identify and remove barriers to increased levels of investment. Among other things, the following should be high on the agenda with the aim of increasing the level of investment in South Africa:
- Is there broad consensus on the need to increase investment to the NDP's target of 30% of GDP, what is the role of the state in this and what is the role of the private sector
- How businesses can maximize localization benefits from the ongoing public infrastructure expansion in South Africa
- What opportunities exist for South African business, including black-owned businesses, to become part of global supply chains
- How government and business can work together to ensure maximum success of recently launched Special Economic Zones
- How governments and businesses can align themselves more closely in developing trade and investment relationships with other countries in Africa and beyond
- How independent power producers can be brought into base load power generation, as has been done for renewable energy
- What can be done to reverse the steep decline in mining production and mining investment?
- What can be done to assess and unlock South Africa's significant potential as an onshore and offshore gas producer, without compromising the country's environment
- How can land reform efforts be accelerated to expand production and exports of the existing commercial agricultural sector while increasing the number of successful black farmers participating effectively in the agricultural economy?
- How telecom competition should be facilitated with the aim of reducing broadband and telecom prices
- How can South Africa secure more positive economic relations from its maritime location,
- How can ongoing growth in the tourism sector be facilitated, as it is one of the key areas of South Africa's natural comparative advantage in the global economy
- What is more important is how business, government and labor can work together to develop a coherent South African message, rather than speaking at cross purposes.
If consensus and effective action can be achieved on such issues, there is no doubt that investment levels in South Africa will move towards the NDP's goal. Such an increase in investment is necessary if the country is to achieve the objective of radically reducing unemployment, poverty and inequality.
The ANC is deeply engaged in driving South Africa's economic transformation and has been doing so for the past 21 years. Given the challenging domestic and international economic conditions, meetings like the NGC give us an opportunity to review and strengthen our interventions and recalibrate our plans. Furthermore, successful economic transformation will require a common effort by all South Africans, and as a result the ANC, in the creation of the NGC, will consult with a range of social structures to undertake wide-ranging discussions on what should be done to uplift the South African economy.
Comrade Enoch Godongwana is a member of the ANC NEC and chair of the ANC's Economic Transformation Committee.
This article first appeared in ANC Today, the African National Congress's online newsletter.