Coloureds and the Men of Stone- race and identity in the new SA
Nowhere is the failure of government to deliver a better life for all and to fulfil the dream of non racialism more starkly revealed than in the current resurgence of the debate around "Coloured" people, thanks to Mr Jimmy Manyi, government spokesperson. This fact is an obscenity that should haunt anyone with any appreciation of South Africa's past. It is something we as South Africans should be thoroughly ashamed of. That we are generally not speaks volumes about how little we have leaned in our new found freedom, and how narrow and mean spirited that vision has become since Madiba's retirement from the presidency.
Ethnicity is a complex topic to define, unlike racism. There is only one race, the human race, as we should all know by now. Science, DNA sampling and paleontology have all proved this beyond reasonable doubt.
But there are many ethnic identities, and what they all have in common is two things. First, they are largely situational. They take place in a context. So at times we might feel proudly South African, or proudly Hindu, or proudly Xhosa, or proudly African, as we compare ourselves to others. There are also those that proudly define themselves as Coloured. But second, ethnic identities will only turn nasty when they occur in societies in which there is fierce competition for scarce resources – where the economy is not growing fast enough is the usual context. Then people collect around identities that enable them as a group to achieve what they cannot as separate individuals. Rising ethnicities are a sure sign of failure on the part of the state, whether economic or social. Ask the former Yugoslavians.
If that is not warning enough, then there's our own history. The history of "Coloured" South Africans is such as to tear your heart out. This is not to disparage the sufferings of any other ethnic "group". But in South Africa the obscenity that was apartheid sliced and diced South Africans in general and Coloureds in the Western Cape in particular in brutal fashion.
The Mixed Marriages Act tore families in two in ways that defy every religion in the world. The Group Areas Act ripped the heart out of entire long established communities and threw them onto the sands of the Cape Flats rent , breaking all the ties of mutual caring and affection that sustained the young, the old and the vulnerable, and the unemployed. Often they were replaced by the gang culture that terrorise people to this day, but at least provided the protection that long established communities build over centuries. District 6 is the best known and most visible of these former communities destroyed by apartheid, but it is only one of them.
And so under apartheid "white" and "African" men applied to be reregistered as "Coloureds" so they could continue to love their women and children at home and in peace. Or families took the decision on which members were light skinned enough to "pass for white", and, having made that decision, severed all ties or recognition of each other to save each other. There must be a special place in Hell for the architects of this evil and the human anguish it caused.
And the rest of us, what is it that we learned through the painful years of struggle? What is that that boys on the border, or throwing stones in the townships died for? So that we could see this bile re -emerge from the "official" government spokesman? So we should be told that once again there are "surplus" people of one or another ethnicity that must be moved around like cattle to serve some or other race obsessed ideology? That we must compound one evil with another?
And so now we have the Manyi incident, as if nothing has been learned at all.
Yet Manyi is telling the truth. For until recently, until early this year, there were provisions in the Equity legislation that Cabinet had oversight of and thus knew about that clearly state that in the pursuit of "demographic" representivity ( a truly Hitlerian concept if there ever was one) regional demographics should not interfere with national demographics. In other words, that the representation of "Africans" (whoever those are) should not be crowded out by the preponderance of "whites"(whoever those are), Indians (where were they born? In India?) or "Coloureds".
And why not? Because Mr Manyi is just the tip of an iceberg. On the slopes of Devils Peak, overlooking the very Cape Flats where all those "Coloureds" are, and just around the corner from District 6, we have an unctuous vice chancellor who agrees with these "racial" definitions and, rubbing his hands in the manner of a Uriah Heep, adjusts the University of Cape Town's entrance criteria to reflect "ethnic" preferences. And all South Africans still are asked to tick little boxes on official forms to indicate whether we are white , Coloured, African or Indian. We are complicit.
Others tell us the whole Manyi "Coloured issue" is just "electioneering", as if otherwise it wouldn't matter. But does matter, because it goes to the very heart of the South African project. It ends with us regaining our senses and our morality, or with us descending into the Rwandan abyss.
Mr Manyi is not the clever man his supporters claim he is. His views are fundamentally those of the peasant, in which the world is fixed, and resources are limited. In this world view, your prosperity is at the expense of mine. If you have more, I have less. And so I group with others who seem like me to grab my share of this limited cake. It is as grubby, and as primitive as that. The concept of a non-racial South Africa with a growing economy and a society underpinned by respect for each other is nowhere to be found in the peasant view. It assumes failure.
The problem with this nastiness is when it comes to the application, when you deal with the flesh and blood of humanity. That doesn't happen in the solemn, disinfected halls of Parliament, or the lofty halls of academe. It comes with wrenching people physically from the communities they live in. It requires a meanness of spirit that would sacrifice individuals on the altar of some twisted ideology. It requires, as Trevor Manuel pointed out (whatever his real motivation) a profound ignorance of our past, and a determination to repeat it, until those of us who know better, like Shakespeare's Lear, would cry out "Howl, howl, howl! O, you are men of stones: Had I your tongues and eyes, I'd use them so that heaven's vault should crack".
The shame is not just on Mr Manyi and his ilk. The shame is on us all, that we tolerate this for one more wretched minute.
Dr Gavin Lewis is a DA MPL in Gauteng, and author of Between the Wire and the Wall: A History of Coloured Politics in South Africa.
(Note: This article appeared as an op ed in Business Day, 24/5/11)
Saturday, December 31, 2011
The Job Eating Developmental State Machine in SA
THE JOB EATING DEVELOPMENTAL STATE MACHINE: THE COSTS OF CENTRAL PLANNING IN SOUTH AFRICA
Joseph Stalin had a much easier job than Jacob Zuma does when it comes to central planning. Since the Plan, devised by ideologues and bureaucrats with no knowledge of business or industry, was by definition perfect, any failure of the plan could only mean deliberate sabotage by counter -revolutionaries. So the solution to the failure of the Plan was to shoot the saboteurs.
No such luck for Zuma, living as he does in a democracy with a battered but extant market based economy. Yet although the concepts that underlie central planning may have died with the collapse of the Soviet bloc, they live on, zombie like, at the southern tip of Africa.
The damage central planning causes to jobs is clear for all to see. The jury is well and truly in.
The South African economy over the last decade has underperformed the global average the developed world average, the undeveloped world average, and the Africa average. We sit with the highest recorded unemployment rate in the world.
There is a cost to central planning in South Africa, and nowhere is it more apparent than in the costs to the economy, and thus to jobs, through the chief implementation agencies of that planning, our State Owned Enterprises ( SOEs). They form the centrepiece of the "developmental state" that the Alliance ideologues fondly imagine exists so successfully in South Africa. Yet the cost of this is immense, and it is mounting. In the last four years alone to 2010, bailouts of SOEs cost the taxpayer R243 billion. Yes, billion.
Nor does it end there. Burdened by the cost of the unwanted King Shaka airport in KwaZulu Natal, the state agency the Airports Company of South Africa (ACSA), wants to recoup its losses with a 132% increase in airport taxes. Yet tourism lies at the heart of industrial policy in South Africa as a prime job creator. The SABC, playing interminable musical chairs with its incompetent leadership of deployed cadres, is an endless drain on state resources. And every household and small enterprise in South Africa strains under the costs of the annual hike in Eskom's charges of 25% plus. There is no money left for domestic savings, nor is there much room for consumption as these state monopolies leech on the SA economy.
All of this cost jobs. While South Africa was warbling on to investors about SA's "cheap" electricity, the state planners ignored the market signals of a looming crisis until the wheels literally fell off. It meant the end of another triumph of state planning, the Coega deep water harbour, which immediately lost a R2,5 billion investment by Rio Tinto Alcan - because alumnium smelters chew electricity.
Most recently, even as IPAP 2 targets "beneficiation", which basically means adding energy (heat via electricity) to heat raw ore, South Africa's only zinc smelter near Springs closed this year directly because of rapid electricity hikes. Yet the state planners continue to punt smelters as a solution to job creation in South Africa.
From 2005 to 2014, independent economist Mike Schussler reminds us, electricity prices based on already agreed upon tariffs, will have risen by 633%. What small plastics company, for instance, can factor that into its growth forecasts? Schussler estimates this alone will reduce SA GDP by 1% per year (Sunday Independent, 22/11/09).
Since 2009 power shortages have pulled the plug on an estimated R6 billion in new property and construction initiatives, says the Cement and Concrete Industry, while mining, a job mainstay in this economy, has also taken a hard knock.
In fact, it could be argued that it is this very developmental state, as conceptualised by government, which is the real and present danger to economic growth and the 5 million new jobs target.
Of course, this is not necessarily an argument in favour of a passive, minimalist state either. But if we examine where the developmental state has had successes, such as amongst some of the Far Eastern dragon economies, we quickly see that there is very little common ground between our fantasies of the developmental state and the developmental state in, for instance South Korea in the 1950s and 1960s. In an address to the Helen Suzman Foundation (Focus 2009), William Gumede provides a useful summary of the reasons for South Korea's developmental state succeeding. You don't need to be an economist to see what the problem is in South Africa.
The developmental state on South Korea had the following core characteristics;
1. A highly technocratic bureaucracy. In other words, a public service "with competent people".
2. A public service that drew on the whole country's talents, regardless of race or gender, drawing on the best skills available.
3. Clear policies with easily measurable targets towards their achievement.
4. A coalition in which business and labour are equal partners, with no political preferences given to either.
5. Decisive leadership. Without it, countries unwilling to make the hard decisions required tend to drift from policy to policy. As each policy fails, so it is replaced with a new policy, while in the real economy everything drifts.
These points also help explain why government's countercyclical public infrastructure investment of R785 billion continues to remain elusive (although there are some signs of life recently in the energy sector). Nor is this new. From 1995 to 2004, public sector investment in South Africa stagnated at 5% of GDP, way below the average of nasty capitalist economies. The "developmental" state lacks the capacity to implement development. It exists largely in the fantasy life of the Nzimandes and Patels of this world. Nor has it helped that the SOEs lacked for the most part the planning and execution skills, under a leadership appointed for political, not business reasons.
Nonetheless, amongst the COSATU and SACP leadership in the Alliance, the concept of the developmental state remains a central component of South Africa's march to the sunny uplands of the hoped for national democratic revolution. There is no modesty here, no sign of a fundamental rethink. So, as night follows day, the Growth and Economic Redistribution (GEAR) policy is followed by the Accelerated and Shared Growth Initiative of Economic Policy for South Africa (ASGISA), and the New Growth Path (NGP).
When expressed through the SOEs, these developmental state assumptions about redistribution and shared growth produce the kind of problems that are epitomised by Eskom. If they were not so richly rewarded it is even possible to feel some pity for the Eskom leadership of recent years, as they try and meet the contradictory demands of the developmental state proponents in South Africa. Thus Eskom's management was simultaneously supposed to run this monopoly as a profit making business venture on the one hand, and to provide "free" electricity and meet expensive social goals on the other. It was an impossible ask.
Much the same applies to Telkom, which even now holds a deathlike grip on the local loop unbundling which has seen much poorer countries such as Kenya roar past Africa's only industrialising economy in the provision of affordable broadband services. The cost in jobs forgone can be guessed at by the international experience, which shows that universal broadband access alone can add up to 1% per annum in GDP. Yet the state in this country willingly forgoes that opportunity for growth. Meanwhile rapid technological advances have allowed the cellphone industry to connect far more South Africans at an affordable rate than Telkom with all its billions in taxpayer subsidies can only dream of.
And under the SOE Transnet, the important port of Durban was this year awarded the honour of being both the most expensive and the most inefficient in the world. Yet the German economy (for instance) has recently been rescued from global recession in large part due to increased exports. And the rail bottlenecks that stop us (along with policy uncertainty) from exploiting the commodities booms, are too well known to need repeating here.
In sum, the "developmental state"as it currently exists in South Africa now has a track record of impressive failure . Ordinary South Africans in the real economy can't afford our ideologues or business as usual. It's time to learn the lessons and do things differently.
(Note: This article appeared as an op ed in Business Day, 11/11/11. It's conclusions about the developmental state were subsequently seperately endorsed in Minister Trevor Manuel's detailed National Development Plan (NDP))
Joseph Stalin had a much easier job than Jacob Zuma does when it comes to central planning. Since the Plan, devised by ideologues and bureaucrats with no knowledge of business or industry, was by definition perfect, any failure of the plan could only mean deliberate sabotage by counter -revolutionaries. So the solution to the failure of the Plan was to shoot the saboteurs.
No such luck for Zuma, living as he does in a democracy with a battered but extant market based economy. Yet although the concepts that underlie central planning may have died with the collapse of the Soviet bloc, they live on, zombie like, at the southern tip of Africa.
The damage central planning causes to jobs is clear for all to see. The jury is well and truly in.
The South African economy over the last decade has underperformed the global average the developed world average, the undeveloped world average, and the Africa average. We sit with the highest recorded unemployment rate in the world.
There is a cost to central planning in South Africa, and nowhere is it more apparent than in the costs to the economy, and thus to jobs, through the chief implementation agencies of that planning, our State Owned Enterprises ( SOEs). They form the centrepiece of the "developmental state" that the Alliance ideologues fondly imagine exists so successfully in South Africa. Yet the cost of this is immense, and it is mounting. In the last four years alone to 2010, bailouts of SOEs cost the taxpayer R243 billion. Yes, billion.
Nor does it end there. Burdened by the cost of the unwanted King Shaka airport in KwaZulu Natal, the state agency the Airports Company of South Africa (ACSA), wants to recoup its losses with a 132% increase in airport taxes. Yet tourism lies at the heart of industrial policy in South Africa as a prime job creator. The SABC, playing interminable musical chairs with its incompetent leadership of deployed cadres, is an endless drain on state resources. And every household and small enterprise in South Africa strains under the costs of the annual hike in Eskom's charges of 25% plus. There is no money left for domestic savings, nor is there much room for consumption as these state monopolies leech on the SA economy.
All of this cost jobs. While South Africa was warbling on to investors about SA's "cheap" electricity, the state planners ignored the market signals of a looming crisis until the wheels literally fell off. It meant the end of another triumph of state planning, the Coega deep water harbour, which immediately lost a R2,5 billion investment by Rio Tinto Alcan - because alumnium smelters chew electricity.
Most recently, even as IPAP 2 targets "beneficiation", which basically means adding energy (heat via electricity) to heat raw ore, South Africa's only zinc smelter near Springs closed this year directly because of rapid electricity hikes. Yet the state planners continue to punt smelters as a solution to job creation in South Africa.
From 2005 to 2014, independent economist Mike Schussler reminds us, electricity prices based on already agreed upon tariffs, will have risen by 633%. What small plastics company, for instance, can factor that into its growth forecasts? Schussler estimates this alone will reduce SA GDP by 1% per year (Sunday Independent, 22/11/09).
Since 2009 power shortages have pulled the plug on an estimated R6 billion in new property and construction initiatives, says the Cement and Concrete Industry, while mining, a job mainstay in this economy, has also taken a hard knock.
In fact, it could be argued that it is this very developmental state, as conceptualised by government, which is the real and present danger to economic growth and the 5 million new jobs target.
Of course, this is not necessarily an argument in favour of a passive, minimalist state either. But if we examine where the developmental state has had successes, such as amongst some of the Far Eastern dragon economies, we quickly see that there is very little common ground between our fantasies of the developmental state and the developmental state in, for instance South Korea in the 1950s and 1960s. In an address to the Helen Suzman Foundation (Focus 2009), William Gumede provides a useful summary of the reasons for South Korea's developmental state succeeding. You don't need to be an economist to see what the problem is in South Africa.
The developmental state on South Korea had the following core characteristics;
1. A highly technocratic bureaucracy. In other words, a public service "with competent people".
2. A public service that drew on the whole country's talents, regardless of race or gender, drawing on the best skills available.
3. Clear policies with easily measurable targets towards their achievement.
4. A coalition in which business and labour are equal partners, with no political preferences given to either.
5. Decisive leadership. Without it, countries unwilling to make the hard decisions required tend to drift from policy to policy. As each policy fails, so it is replaced with a new policy, while in the real economy everything drifts.
These points also help explain why government's countercyclical public infrastructure investment of R785 billion continues to remain elusive (although there are some signs of life recently in the energy sector). Nor is this new. From 1995 to 2004, public sector investment in South Africa stagnated at 5% of GDP, way below the average of nasty capitalist economies. The "developmental" state lacks the capacity to implement development. It exists largely in the fantasy life of the Nzimandes and Patels of this world. Nor has it helped that the SOEs lacked for the most part the planning and execution skills, under a leadership appointed for political, not business reasons.
Nonetheless, amongst the COSATU and SACP leadership in the Alliance, the concept of the developmental state remains a central component of South Africa's march to the sunny uplands of the hoped for national democratic revolution. There is no modesty here, no sign of a fundamental rethink. So, as night follows day, the Growth and Economic Redistribution (GEAR) policy is followed by the Accelerated and Shared Growth Initiative of Economic Policy for South Africa (ASGISA), and the New Growth Path (NGP).
When expressed through the SOEs, these developmental state assumptions about redistribution and shared growth produce the kind of problems that are epitomised by Eskom. If they were not so richly rewarded it is even possible to feel some pity for the Eskom leadership of recent years, as they try and meet the contradictory demands of the developmental state proponents in South Africa. Thus Eskom's management was simultaneously supposed to run this monopoly as a profit making business venture on the one hand, and to provide "free" electricity and meet expensive social goals on the other. It was an impossible ask.
Much the same applies to Telkom, which even now holds a deathlike grip on the local loop unbundling which has seen much poorer countries such as Kenya roar past Africa's only industrialising economy in the provision of affordable broadband services. The cost in jobs forgone can be guessed at by the international experience, which shows that universal broadband access alone can add up to 1% per annum in GDP. Yet the state in this country willingly forgoes that opportunity for growth. Meanwhile rapid technological advances have allowed the cellphone industry to connect far more South Africans at an affordable rate than Telkom with all its billions in taxpayer subsidies can only dream of.
And under the SOE Transnet, the important port of Durban was this year awarded the honour of being both the most expensive and the most inefficient in the world. Yet the German economy (for instance) has recently been rescued from global recession in large part due to increased exports. And the rail bottlenecks that stop us (along with policy uncertainty) from exploiting the commodities booms, are too well known to need repeating here.
In sum, the "developmental state"as it currently exists in South Africa now has a track record of impressive failure . Ordinary South Africans in the real economy can't afford our ideologues or business as usual. It's time to learn the lessons and do things differently.
(Note: This article appeared as an op ed in Business Day, 11/11/11. It's conclusions about the developmental state were subsequently seperately endorsed in Minister Trevor Manuel's detailed National Development Plan (NDP))
Friday, December 30, 2011
Why isn't Gauteng creating jobs?
Budget Speech, Gauteng Legislature: Econ Dev: 10 July 2011
Madam Speaker, Honourable Premier, Members, visitors and guests.
The national priority today is jobs.
Since the Department of Economic Development is the Department in the Gauteng Provincial Government most directly responsible for jobs, a measurement of the DED’s performance should provide a clear indicator of how well we are doing in facilitating the creation of jobs in this province.
So how well is the DED doing?
Some progress has indeed been made:
1. Much of the corruption and tenderpreneurship in the DED and the Agencies its funds has been cleaned out. An obvious example is the cancellation of the motorsports deals. That saved the taxpayers of this province R800 million rand – almost as much as the entire budget for the whole of the DED and its Agencies this year. It cost us over R100 million to get out of the contracts, but it was worth it. It's still too soon for a clean bill of health, but it is much better than when we started in 2009.
2. The reorganisation of the DED and its Agencies, a long overdue task, has begun, even though the transformation process has taken far too long, which has severely impacted on the department's ability to deliver the services required of it – just when it was needed most, in the worst economic recession since 1994.
3. The linkages between the motor industry and its downstream suppliers in this province is looking healthy, and forms the mainstay of this province’s manufacturing base.
4. The Gauteng Gambling industry remains well regulated and orderly.
5. There are encouraging green shoots of innovation around Sports Tourism, biogas, Township Enterprise Hubs, the proposed Maize Triangle scheme, and inner city revival, as well as the promising sounding if yet to be launched Youth Employment Programme.
On the other hand, there remain areas of serious concern around this department which have not yet been resolved.
1. The first is bureaucrats second-guessing the market: For instance the mooted Asambe steel mill on the East Rand, which, if approved, will be competing head on with existing, very competitive steel plants already in existence. Also, the Foundries initiative: in the East Rand Foundries are struggling to cope with the steep increases in electricity prices, and are laying off staff. Where is the demand for new foundries and more training? What is the business case for these ventures?
2. Second is the lack of coordinated, joined-up government. This impacts negatively on the DED's central mission of facilitating business-led economic growth and job creation . The toll roads fiasco is but the latest of many examples.
3. A third concern is that of labour inflexibility. Without labour flexibility, the IDZ will not work. For IDZs to succeed that must work on the lines of, for instance, Dubai. If you can't or won't match the incentives Dubai offers, the IDZ at ORT will not succeed. It a waste of money and it will end in tears. Go large or go home, as the saying goes.
4. Next is the failure to walk away from failing projects. I would suggest that we abandon provincial projects that are dead in the water, such as the stalled Dinokeng project. Rather use that money better elsewhere, for instance in training tourist police, or guides, or developing a world class Sports Centre on the West Rand.
5. A fifth concern is that there is not enough focus on SMMEs. These are where the jobs are. Plus, it costs far less to create jobs through SMMEs than through multimillion experiments in gigantic new projects. But in Gauteng, the DED and its Agencies are failing to advance the SMME sector. This is perhaps the biggest and most urgent problem facing this province.
Take the key SMME and Cooperatives support agency, the Gauteng Enterprise Propeller. The fact is that GEP is not working properly, even by its own modest standards. It is not just the official GEP reports that show this. A recent FIS by the Portfolio Committee found the following: · Many SMMEs that GEP claims to have supported don’t exist.
· Several SMMEs started on the basis of government procurement, and given GEP loans on the basis of those contracts, have been left high, dry and deeply in debt as the recession forced government cutbacks.
· GEP officials do not adequately understand the industry sectors that the SMMEs they support have to work in.
· As an organisation GEP is slow, inflexible and reactive. By the time help comes, it's often too late. The element of sustainability in small business start ups is severely neglected.
6. A further concern is that we are not encouraging exports. The Agency primarily tasked with this, the Gauteng Economic Development Agency, is all over the place and is not doing its job properly. Yet South Africa is a leading global trading economy.
7. Then there is the strange neglect of Local Economic Development ( LED). Successful LED lies at the heart of restoring the viability of the crisis-ridden Local Government sphere in Gauteng. Yet LED seems in this province to remain the poor cousin, even though it falls under the ailing GEDA within the DED’s ambit. LED must be revitalised and energised.
8. Finally, there is no sign of a conducive environment for business being created in Gauteng. Red tape continues to impede economic growth in this province, combined with a sluggish DED. Regulation of harmful practices is one thing; stifling growth with pointless rules and costly compliance procedures in the face of an unsympathetic bureaucracy is entirely another. Yet where rules are needed, they are either not enforced properly, or are riven with corruption. The shambles that is liquor regulation is one example – it's still a mess, halfway through this government's term of office. When will it be fixed? Other impediments range from slow or questionable EIAs, to unaccountable, lazy officials. Nor is the DED itself exempt from these failings. Let me quote from the findings of the multiparty Portfolio Committee on the Fourth quarterly Report of the DED, 2011:
· The DED "gailed to implement performance policies and M&E frameworks";
· The DED showed "non-adherence to prescribed supply chain management policies";
· The DED failed to meet its targets on Youth Employment, on SMMEs, and on Co-Ops,
· Dinokeng and the Cradle of Mankind failed to reach 45% ( almost half) of their targets,
· Consumer Protection failed to reach 50% of its target, and
· The Liquor Board failed to achieve an IT system to reduce the huge backlog in license applications and reapplications, a failure that, as in the case of drivers' licensing in Gauteng, inevitably breeds corruption and costs jobs.
· Nor were the sector strategies as prioritised in IPAP 2 reached, and the DED completely ignored the revised APP submitted in January this year.
And this is just a selection.
Obviously under such conditions the DA cannot support this Budget Vote.
So what then can be done to restore Gauteng's leadership role in economic growth and job creation in South Africa, as the self proclaimed "engine" of the country's economic growth?
Here are a few ideas:
1. Less is more
The DED and its Agencies have too many projects going all at once, and too few resources to sustain them. Rather reduce and prioritise projects. In addition, cluster sectors rather than pursuing them all in silos. And at home, cluster those GOG departments that impact on Economic Development, Infrastructure, Transport, Finance, Agriculture and Planning.
2. Include cost-benefit analysis in selecting priorities
For instance, South Africa is making progress in finding cost-per-job statistics – how many jobs you create for X rands. Unsurprisingly, it emerges that SMME development produces far more jobs per rand invested than megaprojects do.
3. Appoint good managers for the right reasons
The history of economic development in the GPG over the past seventeen years has shown over and over again that appointing bad managers costs jobs. Appoint good leaders able to lead and half the battle is won.
4. Make internet connectivity a provincial priority
Research shows that speedy and affordable internet access on its own creates jobs and raises economic growth. Don't continue to let countries like Kenya outpace us in this regard. And use the private sector, if necessary via PPPs.
5. Eliminate red tape
Ask businesses to fund a researcher plus a website just to look into red tape and ways of unlocking unnecessary obstacles to economic growth in the province. Consult and encourage input from business chambers in the province direct to the provincial cabinet on cutting red tape, and then cut it.
6. Benchmark
Compare the costs and time frames of infrastructure and service provision between Gauteng and the other eight provinces in South Africa, then set our benchmarks accordingly. We may be surprised at our own inefficiency, and we don't need to reinvent the wheel – we can learn from others.
7. Slash turnaround times
Include in the performance measurement for the DED and the Agencies a requirement for turnaround response times of 24 hours, and monitor this aggressively. It will change attitudes and greatly improve efficiency – and encourage investors now put off by long decision-making times.
8. Prioritise SMME development: the role of GEP
GEP needs to move closer to its customer base, including franchising its activities to municipal level. It must differentiate products, rather than apply a one-size-fits-all approach. It must pay special attention to informal sector SMEs that are on the verge of entering the formal sector, because that is where the job creation potential is. GEP must reassess the training it offers on the basis of its real value to SMMEs. GEP must focus as much on sustainability as on start ups, and be measured accordingly. It must pay more attention to assistance with diversifying markets. True empowerment liberates the individual . GEP must therefore invest more in making SMMEs competitive in their markets, public or private, not confine the markets for black-owned SMEs to the public sector only.GEP must obtain more sector-specific expertise, including using mentors from the private sector. It needs to push for school level entrepreneurship training.
9. Better finance for emerging entrepreneurs
The DED must find more creative ways of involving the banks directly in its activities where finance is an issue. For instance, bank representatives should be part and parcel of the tendering process, to find ways of releasing activation finance for successful tenderers, using the contract itself as collateral. Banks must be represented on the GEP board or its equivalent.
10. Maximise state tenders
The DED must contact unsuccessful contractors and find out what they are doing wrong. This of course requires a transparent tendering process, including information on the successful tenders. But unsuccessful tenderers can be a useful source of potential entrepreneurs, and improve competitiveness and broaden government's supplier base. Don't ignore losers – they have shown initiative by trying in the first place.
11. Link LED to SMMEs
LED should prioritise local SMMEs. This means capacitating LED officials with technical expertise, and requiring them to work more closely with their local chambers of commerce and other resources – even Rotary Clubs! It means aligning LED plans with SMME development.
12. Leverage off BBBEE
The revised broad-based black economic empowerment codes now allow for enterprise development as a key component which business can use to offset their BEE requirements. Potential millions of rands are available in this format for SMME development and economic growth. The DED and its Agencies need to understand this, and find ways of using it towards the growth agenda in Gauteng, where many big businesses have their headquarters, after all.
13. Fill the skills gap
You cannot have economic growth on the scale we need without an accompanying major effort to provide the skills industry sectors are so short of in Gauteng. The lack of suitable skills severely impedes investment and growth. The DED must make tailored skills development, in close consultation with business sectors, a provincial priority. And the government in general should promote artisan and technical training as the guaranteed route to a job, and as a worthy alternative to university-based study, which is excessively glamorised as the better choice, yet produces unemployable graduates with the wrong skills sets.
If government in Gauteng really wants to make a difference on jobs, all the opportunity in the world is already there. But it will not happen if we continue to have business as usual .
Madam Speaker, Honourable Premier, Members, visitors and guests.
The national priority today is jobs.
Since the Department of Economic Development is the Department in the Gauteng Provincial Government most directly responsible for jobs, a measurement of the DED’s performance should provide a clear indicator of how well we are doing in facilitating the creation of jobs in this province.
So how well is the DED doing?
Some progress has indeed been made:
1. Much of the corruption and tenderpreneurship in the DED and the Agencies its funds has been cleaned out. An obvious example is the cancellation of the motorsports deals. That saved the taxpayers of this province R800 million rand – almost as much as the entire budget for the whole of the DED and its Agencies this year. It cost us over R100 million to get out of the contracts, but it was worth it. It's still too soon for a clean bill of health, but it is much better than when we started in 2009.
2. The reorganisation of the DED and its Agencies, a long overdue task, has begun, even though the transformation process has taken far too long, which has severely impacted on the department's ability to deliver the services required of it – just when it was needed most, in the worst economic recession since 1994.
3. The linkages between the motor industry and its downstream suppliers in this province is looking healthy, and forms the mainstay of this province’s manufacturing base.
4. The Gauteng Gambling industry remains well regulated and orderly.
5. There are encouraging green shoots of innovation around Sports Tourism, biogas, Township Enterprise Hubs, the proposed Maize Triangle scheme, and inner city revival, as well as the promising sounding if yet to be launched Youth Employment Programme.
On the other hand, there remain areas of serious concern around this department which have not yet been resolved.
1. The first is bureaucrats second-guessing the market: For instance the mooted Asambe steel mill on the East Rand, which, if approved, will be competing head on with existing, very competitive steel plants already in existence. Also, the Foundries initiative: in the East Rand Foundries are struggling to cope with the steep increases in electricity prices, and are laying off staff. Where is the demand for new foundries and more training? What is the business case for these ventures?
2. Second is the lack of coordinated, joined-up government. This impacts negatively on the DED's central mission of facilitating business-led economic growth and job creation . The toll roads fiasco is but the latest of many examples.
3. A third concern is that of labour inflexibility. Without labour flexibility, the IDZ will not work. For IDZs to succeed that must work on the lines of, for instance, Dubai. If you can't or won't match the incentives Dubai offers, the IDZ at ORT will not succeed. It a waste of money and it will end in tears. Go large or go home, as the saying goes.
4. Next is the failure to walk away from failing projects. I would suggest that we abandon provincial projects that are dead in the water, such as the stalled Dinokeng project. Rather use that money better elsewhere, for instance in training tourist police, or guides, or developing a world class Sports Centre on the West Rand.
5. A fifth concern is that there is not enough focus on SMMEs. These are where the jobs are. Plus, it costs far less to create jobs through SMMEs than through multimillion experiments in gigantic new projects. But in Gauteng, the DED and its Agencies are failing to advance the SMME sector. This is perhaps the biggest and most urgent problem facing this province.
Take the key SMME and Cooperatives support agency, the Gauteng Enterprise Propeller. The fact is that GEP is not working properly, even by its own modest standards. It is not just the official GEP reports that show this. A recent FIS by the Portfolio Committee found the following: · Many SMMEs that GEP claims to have supported don’t exist.
· Several SMMEs started on the basis of government procurement, and given GEP loans on the basis of those contracts, have been left high, dry and deeply in debt as the recession forced government cutbacks.
· GEP officials do not adequately understand the industry sectors that the SMMEs they support have to work in.
· As an organisation GEP is slow, inflexible and reactive. By the time help comes, it's often too late. The element of sustainability in small business start ups is severely neglected.
6. A further concern is that we are not encouraging exports. The Agency primarily tasked with this, the Gauteng Economic Development Agency, is all over the place and is not doing its job properly. Yet South Africa is a leading global trading economy.
7. Then there is the strange neglect of Local Economic Development ( LED). Successful LED lies at the heart of restoring the viability of the crisis-ridden Local Government sphere in Gauteng. Yet LED seems in this province to remain the poor cousin, even though it falls under the ailing GEDA within the DED’s ambit. LED must be revitalised and energised.
8. Finally, there is no sign of a conducive environment for business being created in Gauteng. Red tape continues to impede economic growth in this province, combined with a sluggish DED. Regulation of harmful practices is one thing; stifling growth with pointless rules and costly compliance procedures in the face of an unsympathetic bureaucracy is entirely another. Yet where rules are needed, they are either not enforced properly, or are riven with corruption. The shambles that is liquor regulation is one example – it's still a mess, halfway through this government's term of office. When will it be fixed? Other impediments range from slow or questionable EIAs, to unaccountable, lazy officials. Nor is the DED itself exempt from these failings. Let me quote from the findings of the multiparty Portfolio Committee on the Fourth quarterly Report of the DED, 2011:
· The DED "gailed to implement performance policies and M&E frameworks";
· The DED showed "non-adherence to prescribed supply chain management policies";
· The DED failed to meet its targets on Youth Employment, on SMMEs, and on Co-Ops,
· Dinokeng and the Cradle of Mankind failed to reach 45% ( almost half) of their targets,
· Consumer Protection failed to reach 50% of its target, and
· The Liquor Board failed to achieve an IT system to reduce the huge backlog in license applications and reapplications, a failure that, as in the case of drivers' licensing in Gauteng, inevitably breeds corruption and costs jobs.
· Nor were the sector strategies as prioritised in IPAP 2 reached, and the DED completely ignored the revised APP submitted in January this year.
And this is just a selection.
Obviously under such conditions the DA cannot support this Budget Vote.
So what then can be done to restore Gauteng's leadership role in economic growth and job creation in South Africa, as the self proclaimed "engine" of the country's economic growth?
Here are a few ideas:
1. Less is more
The DED and its Agencies have too many projects going all at once, and too few resources to sustain them. Rather reduce and prioritise projects. In addition, cluster sectors rather than pursuing them all in silos. And at home, cluster those GOG departments that impact on Economic Development, Infrastructure, Transport, Finance, Agriculture and Planning.
2. Include cost-benefit analysis in selecting priorities
For instance, South Africa is making progress in finding cost-per-job statistics – how many jobs you create for X rands. Unsurprisingly, it emerges that SMME development produces far more jobs per rand invested than megaprojects do.
3. Appoint good managers for the right reasons
The history of economic development in the GPG over the past seventeen years has shown over and over again that appointing bad managers costs jobs. Appoint good leaders able to lead and half the battle is won.
4. Make internet connectivity a provincial priority
Research shows that speedy and affordable internet access on its own creates jobs and raises economic growth. Don't continue to let countries like Kenya outpace us in this regard. And use the private sector, if necessary via PPPs.
5. Eliminate red tape
Ask businesses to fund a researcher plus a website just to look into red tape and ways of unlocking unnecessary obstacles to economic growth in the province. Consult and encourage input from business chambers in the province direct to the provincial cabinet on cutting red tape, and then cut it.
6. Benchmark
Compare the costs and time frames of infrastructure and service provision between Gauteng and the other eight provinces in South Africa, then set our benchmarks accordingly. We may be surprised at our own inefficiency, and we don't need to reinvent the wheel – we can learn from others.
7. Slash turnaround times
Include in the performance measurement for the DED and the Agencies a requirement for turnaround response times of 24 hours, and monitor this aggressively. It will change attitudes and greatly improve efficiency – and encourage investors now put off by long decision-making times.
8. Prioritise SMME development: the role of GEP
GEP needs to move closer to its customer base, including franchising its activities to municipal level. It must differentiate products, rather than apply a one-size-fits-all approach. It must pay special attention to informal sector SMEs that are on the verge of entering the formal sector, because that is where the job creation potential is. GEP must reassess the training it offers on the basis of its real value to SMMEs. GEP must focus as much on sustainability as on start ups, and be measured accordingly. It must pay more attention to assistance with diversifying markets. True empowerment liberates the individual . GEP must therefore invest more in making SMMEs competitive in their markets, public or private, not confine the markets for black-owned SMEs to the public sector only.GEP must obtain more sector-specific expertise, including using mentors from the private sector. It needs to push for school level entrepreneurship training.
9. Better finance for emerging entrepreneurs
The DED must find more creative ways of involving the banks directly in its activities where finance is an issue. For instance, bank representatives should be part and parcel of the tendering process, to find ways of releasing activation finance for successful tenderers, using the contract itself as collateral. Banks must be represented on the GEP board or its equivalent.
10. Maximise state tenders
The DED must contact unsuccessful contractors and find out what they are doing wrong. This of course requires a transparent tendering process, including information on the successful tenders. But unsuccessful tenderers can be a useful source of potential entrepreneurs, and improve competitiveness and broaden government's supplier base. Don't ignore losers – they have shown initiative by trying in the first place.
11. Link LED to SMMEs
LED should prioritise local SMMEs. This means capacitating LED officials with technical expertise, and requiring them to work more closely with their local chambers of commerce and other resources – even Rotary Clubs! It means aligning LED plans with SMME development.
12. Leverage off BBBEE
The revised broad-based black economic empowerment codes now allow for enterprise development as a key component which business can use to offset their BEE requirements. Potential millions of rands are available in this format for SMME development and economic growth. The DED and its Agencies need to understand this, and find ways of using it towards the growth agenda in Gauteng, where many big businesses have their headquarters, after all.
13. Fill the skills gap
You cannot have economic growth on the scale we need without an accompanying major effort to provide the skills industry sectors are so short of in Gauteng. The lack of suitable skills severely impedes investment and growth. The DED must make tailored skills development, in close consultation with business sectors, a provincial priority. And the government in general should promote artisan and technical training as the guaranteed route to a job, and as a worthy alternative to university-based study, which is excessively glamorised as the better choice, yet produces unemployable graduates with the wrong skills sets.
If government in Gauteng really wants to make a difference on jobs, all the opportunity in the world is already there. But it will not happen if we continue to have business as usual .
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