WHAT WOULD THE DA DO IN GAUTENG?

By Gavin Lewis, DA Spokesperson for Economic Development, Gauteng Province

A recipe for 8% pa growth for South Africa's leading provincial economy

 (Note: Provincial powers are limited in terms of the Constitution, so that some decisions, such as those on labour legislation, fall outside provincial competencies and into the national sphere of government).

Gauteng faces core structural impediments to growth.

1. Electricity shortages and costs severely hamper job intensive mining and beneficiation.

2. The absence of any linkages between wage increases and productivity makes South African labour too expensive to compete with many other developing economies.

3. Measured by international standards, entrepreneurship levels in SA are low.

4. Severe skills shortages impede higher levels of growth.

What is to be done?

1. Free entrepreneurship. The emphasis on supporting small and medium enterprises (SMEs) must be increased, and moneys from other economic development activities diverted to this cause.

In practice this means:

- Changing the Gauteng Enterprise Development (GEP) emphasis away from vague "training" towards set targets for SME support that measure not just quantity but quality, the latter being determined by sustainability. Over-dependence on state contracts for survival, while important in the start-up phase, must be only a step on the path to diversified markets, not a destination in itself. Independence, not dependence, must be the goal.

- In addition, there must be attention to new start-ups (accepting that many of them will fail) as well as to existing SMEs, and to SMEs able to make the transition from small to medium sized enterprise – because this is where the job creation potential is greatest.

- Identify more entrepreneurs. Entrepreneurs are people willing to undertake risk, not, as the current government thinks, people chosen at random off phone-in lists. Start with entrepreneurs selected from those companies unsuccessful at tendering, to train them to do better next time. Entrepreneurship modules should be offered at high school levels. Support township service providers by allowing them to share tools and equipment in a safe environment (e.g. electricians, mechanics etc.)

2. Good governance. Good governance grows the economy because it has the following attributes:

- It eliminates the corruption "taxes that add to the cost of doing business".

- Transparency in tendering procedures free of insider trading allows SMMEs to compete on an equal footing.

- Provincial administration staffs are measured by efficiencies, which means better, faster, cleaner licensing, zoning and other key inputs investors look for.

- It creates a climate conducive to economic growth and supportive of, not hostile to, the private sector.

- Involve the private sector more. Outsource GEDA (Gauteng Economic Development Agency) and export readiness training to the private sector entirely, to those who understand the sectors they operate in through personal experience. Involve the banks in the Tender Boards, to find new ways of financing emerging entrepreneurs.

3. Reduce crime. It hits SMMEs hardest. This means a properly trained, professional Metro police, amongst other things. Introduce lifestyle audits for high level officials.

4. Provide affordable infrastructure. The provincial government must lead the rapid roll out of broadband in alliance with the private sector at affordable rates, preferably free. This will raise Gauteng's growth rate (judging by international norms) by 1%-2% pa.

Administered prices, especially tolls and electricity rates proposed by metros and municipalities must be cleared at Provincial level with an eye towards their impact on jobs and growth. The East Rand refineries and plastics industries are losing jobs daily because of the electricity rates, for instance. All beneficiation projects are negatively affected, since they all require heat for smelting. Allow companies to provide their own power supply wherever feasible (co-generation) – and import it from Botswana.

5. IDZs/SEZs. Scrap the ORT IDZ currently being invested in by government. It will not work unless we can match labour concessions offered by international IDZs. Nor is gold jewellery manufacture going to work. We've tried it before, at Virginia, and it failed.



Re-examine every regional airport for its potential as an EPZ ( export processing zone), where goods (e.g. textiles) can be imported duty free for value adding and export here, using favourable international trade agreements (e.g. the American Growth and Opportunity Act). Link these to Local Economic Development (LED) projects in the municipalities and to the Johannesburg fresh produce market (extending the benefits to agro processing – see below).

6. Expand Exports. Facilitate trade with sub Saharan Africa, especially neighbouring Botswana and, through it, the Walvis Bay port in Namibia – cheaper than Durban. This includes ensuring border posts operate efficiently on a 24 hour basis.

Work with the Department of Trade and Industry (DTI)'s Trade and Investment SA, and with SA embassies worldwide to eliminate unnecessary and costly junkets by provincial officials abroad.

7. Job Zones. In depressed areas (e.g. former homeland decentralisation hubs) allow the creation of "job zones" where lower wages can be negotiated with unions to attract decentralised investments and improve geographic spread.

8. Innovation. Pay attention to innovation, in alliances with provincial tertiary institutions and expanded Innovation Hubs.

9. Promote tourism that draws on Gauteng's strengths. This means focussing on African, Indian and Chinese middle classes by facilitating the kinds of products these categories, which have much in common, desire. This requires different tourist offerings than we currently focus on. These attractions are characterised by the following:



- Family based

- Secure and comfortable

- Safe and predictable

- Group oriented

- Theme parks for families- e.g. Cradle of Mankind.

- Fashion and shopping, especially for brand conscious African markets.

Entrench the West Rand and use our 2010 stadiums to cement SA's position as an international high altitude sports training facility.

10. Arts & Culture. Provide more support for the Gauteng music and fashion industry. Devolve film support to Metro level for venues, permissions, etc.

Support international art forms where Gauteng has shown excellence, and which can be exported or attract tourists here – opera, ballet, orchestras. Build the Gauteng world city brand.

11. Address skills shortages. Return skills training to the private sector, so that people are trained for existing jobs rather than what training "suppliers"(i.e. SETAs) think would qualify them. Transfer un- or underutilised state training facilities to the private sector. Introduce the youth wage subsidy proposals. Encourage companies to hire youth on a trial basis, in return for incentives. Ensure that charity make-work activities, such as the Expanded Public Works Programme (EPWP), are focussed on infrastructure that is productive and that participants get proper certified training on the job.

12. Work with, rather than harassing, informal traders and survivalist enterprises. Get the Metro police off their backs. For very small companies, outsource to NPOs for support on Grameen Bank lines, and support them.

13. Eliminate unnecessary regulations that make it difficult to do business in Gauteng (on the lines of the Western Cape "From Red Tape to Red Carpet" model).

14. Grow your own timber. Metros to use underutilised SOC training facilities to train their own technical staff and provide jobs on completion, on the Cape Town model.

15. Provide business with a welcoming, predictable business environment that is a safe and enjoyable place for their employees and their families to live and work in.

16. Eliminate corruption through swift and public prosecution of offenders. No more "golden parachutes" for offenders.

17. Pay SMEs that win tenders and government contracts within 30 days of receipt, or you will destroy their cash flow.

18. Take care of existing investors. Identify major investors in Gauteng and appoint identifiable, knowledgeable, accountable Department of Economic Development (DED) executives available 24/7 to keep them happy and, if possible, to assist them to grow and export as well.

19. Develop small scale agro processing and link it to markets (e.g. via the Johannesburg Fresh Produce Market) through efficient inland ports.

20. Utilise SPVs with banks and private sector, especially for emerging contractors, to overcome finance bottlenecks.

21. Benchmark major infrastructure investments against international costings to avoid over engineered solutions. Focus on affordability as a key criterion.

22. When in doubt, get out of the way should be the motto of provincial government. Government should not be diverting scarce public resources where the private sector is willing and able to invest.

Letters; Exploiting Youth Unemployment

I note in Business Day 10 August 2011 several references from various commentators to the “ticking time bomb” that is the unemployed youth In South Africa. That there is reason for grave concern about this is beyond doubt. But when it comes to using this” time bomb “ as a threat for the adoption of economic policies, nationalisation included, a very large dose of scepticism is necessary. First, the time bomb, should it explode, will take all of us down with it, not just the capitalists; second, there is no revolution in history that has ever been successfully led by the unemployed poor – it always come from the middle class, the Malemas of this world. Third, no current political party encapsulates the needs of the unemployed youth, as the increasing number of apathetic voters shows, and fourth, such sufferings are experienced in other African countries with much bigger “time bombs than ours, endured in Southern Africa with stoic resignation and a well armed military and police force. Zimbabwe is a case in point. The “lumpen proletariat”, should it ever unite and rise up, will be shot. Instead, the threat of the time bomb is incessantly used to bully business to endorse suicidal policy options and radical transfers of assets to the new elite, who are neither unemployed or poor. So we have a real problem, but it is trivialised in the way commentators use it. We should not allow people to hide their agendas behind the real sufferings of the truly poor.




Dr Gavin Lewis
DA MPL Gauteng Legislature
Spokesman: Economic Development
Deputy Spokesman: Finance

Letter Published In Business Day ; "Insulting his Employer"

It was with astonishment that I read the vituperation heaped on Mr Leon Louw by the Department of Health’s "spokesman” Fidel Hadebe, over the formers’ criticism of the new proposed anti smoking regulations. Being a non-smoker myself, I have no irons in this fire, but Mr Hadebe would do well to remember that Mr Louw, in his capacity as a taxpayer, is his de facto employer. Mr Hadebe’s intemperate response to a someone else ‘s opinion on the matter cast further doubt on his judgement; “Selfish and dangerously igonorant” being one such phrase flung at Louw. I for one am sick to death of the arrogance shown by so-called public servants to the people they are supposed to be serving, whoever they are and whatever opinions they may hold. Mr Hadebe would do well to learn some manners, with a modicum of humility to go with it, and start behaving like a professional.





















Dr Gavin Lewis
DA MPL Gauteng Legislature
Spokesman: Economic Development

A Capitalist Future for South Africa

by Dr Gavin Lewis, DA spokesman in Economic Development, Gauteng.

For many policymakers in South Africa, especially in the trade union movement, what is happening in the world today seems like the end of capitalism. Are we in the last days?



The answer must be 'No". All the leading global economies, from Beijing to Sao Paolo, and from Washington DC to Prague, remain capitalist economies. There is much talk about China being a communist state, but this ignores the reality that it is in fact a very capitalist state indeed. The difference is that in China the capitalist is the state bureaucrat.



There is no existing viable left alternative, and even the outer fringes of social democrats are affected .



In addition, through following market principles, even amongst the crisis in financial capitalism, many developing countries continue to flourish under capitalist principals, some of them in Africa today.



In this context, it is worth reminding ourselves of how centrally planned economies did collapse in the former Soviet Union not so long ago.



Because of its sole focus on the importance of primary industrial output the Soviet bloc missed the intensive high value production that transformed, and continues to transform, western economies. Nobody who had any choice wanted to buy their obsolete products. All of this lay with the core problem of central planning, under Gosplan, the main Soviet agency for this purpose.





Fixed price systems made it impossible to work out real costs, administrators had no interest in innovation, because these might damage their chances of reaching the numerical targets set from above, besides, they we secure in their posts(after the Stalinist age of terror); they were not accountable to anyone. Numerical targets set by Gosplan made no sense because the ignored all the other factors including quality, so that in one famous case the biggest producer of tractors in the Soviet Union was making tractors that did not work.



In the end, this produced vast and entrenched networks of sustained corruption, because even though you could not own property, position gave you power that made you wealthy; it became a case of not what you owned, but who you knew. Sounds familiar ?



The fact of the matter is that it is very difficult for even a highly competent, technologically adept state to deal with the amount and range of information a modern economy throws up daily. Market replacing micromanagement of a whole economy is impossible, which produces sluggish and even falling growth rates overall.

Recently our MEC for Economic Development in Gauteng has made the announcement that no investors will be allowed into the capitalist paradise that is Gauteng without committing to sourcing 90% of their investment locally. Similar efforts apply to procurement by the State. Yet not so long ago there was a controversy over the Brazilian busses imported for our BRT system. Buy local, was the populist outcry. But the fact is we got the busses for less that they would have cost to source locally because the Brazilian taxpayer paid for the export subsidy that made them so attractively priced in the first place. The money thus saved could then be utilised in other areas of our local economy.



The age of mercantilism is over. With the current era of globalization, investment capital now flows wherever there is opportunity, regardless of nation state boundaries. In 1980 the sum of all money lent by international reforms and banks was $324 billion a year; by 1991 it was $7.5 trillion – a 2000 per cent increase in just over ten years.



In recent years the State has moved aggressively to intervene in capitalist economies to shore up demand. But that tide is turning as well, as the austerity measures of the successful German economy attest. The financial crisis is not a license for an overweening, know it all state to continue expanding its role within a mixed economy forever.



On the jobs front the outlook for countries like South Africa is less reassuring. The pendulum is swinging back as innovation and knowledge production increasingly form a larger and larger part of the leading economies = return of investment to high wage but high knowledge economies. These are epitomised by new technologies, such as software plus robots plus 3D printing systems fopr manufacturing. These are the latest disruptive technologies. Factories of the future won't have oil and grease stains . They will be run by white coated people, with few employees. Jobs will be in design, marketing, IT, engineering, logistics – all need more skills.



Low wage economies will lose their competitive advantage. Ideas – centred, not labour centred will be where the growth is. And for entrepreneurs and people with new ideas, the government simply cannot keep up.



What does this mean for us ? South Africa must move with urgency to properly educate and up skill its workforce. We cannot continue to have illiterate matrics and a 50% drop out rate at schools before kids reach matric. There simply is no going back. We must focus on stopping the new divide, between the insiders, the unionised public sector workforce plus the state bureaucrats, those mainly concerned with the distribution of wealth, not its production, against the outsiders, the private sector and the entrepreneurial, and the unemployed majority. Otherwise we will end up just like the Soviet bloc in the 1980s, and for essentially the same reasons. Either way, with us or without capitalism remains for the foreseeable future the only game in town.

 

 "Who's fooling whom ?"

Budget Speech, DED

8/6/12

Madame Speaker,

Ladies and Gentlemen,

A good Annual Report contains two main elements. First, it gives the reader a fuller sense of what the organization has been up to over the past year. Second, it gives you an insight into what can be expected in the year to come. This Annual Report of the Department of Economic Development, however, does neither. It conceals more than it reveals.

On the surface, all seems relatively well with the DED and its Agencies. But lurking under everything remains the question, what are the Department of Economic Development and the Agencies it funds really for? Why does it exist, as opposed to, say the Department of Education, or the Department of Finance. What is the DED there to do?

Well, the answer lies right up front, in the mandate that the DED has been given by this House and this Government.

In the DED's own Budget Analysis it is stated quite clearly that "emphasis is thus placed on large scale creation of decent work opportunities to be at the centre of the socio economic agenda, in an effort to conquer the triple challenge of unemployment, inequality and poverty." That is what the DED is for: Decent jobs to combat unemployment, inequality and poverty. Is it in fact doing this? I am very much afraid that the answer must be "No", and I will show you why.

What becomes increasingly clear to me as we enter the third year of economic recession is that the DED has ,since the start of this government in 2009 , failed to deliver,. What is more, it is failing to deliver when the citizens of Gauteng, with their 25% plus unemployment rate, most need it to deliver. And what is almost as bad, there does not seem any way of fixing it. We keep doing more or less the same things, making the same empty promises, year after year without doing any better.

Which is why I argue for a root and branch review, not tampering at the edges, of what the DED does. Or else we should simply take the R1 billion a year this department consumes and divide it up amongst the very poor, and save ourselves the hard work of pretending there is progress when there is none.

Let's start with the obvious – jobs. By end March 2012, the DED claimed credit for creating 266 737 jobs. Not bad, one would think until you look a bit closer. Because of those 266 000 jobs, only 9938 were permanent jobs. Fully 207 686, by far the majority, were Expanded Public Works Programme jobs. But, we are meant to be proud of this, and I quote: "This ...means that the Gauteng Provincial Government surpassed jobs target set for 2011/12 ...by 16%".

Now let's be clear about EWP jobs. Yes, EPWP jobs are necessary in times of high unemployment, such as we endure in this country. But no, they are not real jobs, or decent jobs if you prefer that term, and they are very short term. The SA Institute of Race Relations points out that the average EPWP job in South Africa lasts 46 days, and pays at an average rate of R64 per day. Would anyone in this House today regard that as a proper job, with adequate pay to feed yourself and your family? Then why do we pretend to the citizens of this Province that it is? Whom are we trying to fool?



The DED itself created 4002 permanent jobs, very broadly defined (e.g. 1713 jobs for the Gauteng Film Commission). But read the fine print. What do we mean by GFC jobs? Jobs facilitated indirectly, through getting planning permission for filming in Eloff Street? Where were these new jobs created: SABC? DSTV? SA film industry? In a recession, with ad spend severely down? Dubious claims, indeed...

And GEP created 1`192 permanent jobs. Where? Why can't our Focused Intervention Studies find them? Even though we went to visit the SMEs that the Gauteng Enterprise Propeller itself recommended, what we found there was dereliction and grave worries at the bad service they received from the GOPG. You only had to attend the well attended public hearings at Caesar's Palace organised by the Portfolio Committee to hear the discontent with the services emerging entrepreneurs fail to get.

A classic example of this resort to claims of easy victories" is the Y-Age project launched by DED this year, and in which the MEC is complicit.



The MEC claimed, and repeated these claims at the Workers Parliament in February this year that 100 000 new SMEs would be created, creating 1 million new jobs. How? By advertising for young entrepreneurs. Now put yourself in the shoes of your average unemployed township youth. Another set of shiny new promises, one million new jobs, 100 0000 new small businesses. It sounds too good to be true. And that is because it is too good to be true.

An entrepreneur is an owner or manager of an enterprise who makes money through risk and initiative. There is no risk in replying to a newspaper ad, especially if you have got nothing to lose. So the Department duly received over 120 000 responses by March 2012. Of these 999, I repeat, 999,have succeeded in being placed in the "first phase of entrepreneurship training "by GEP – the same GEP who our focused intervention studies shows is neglecting its own start ups, is claiming credit for non existing SMEs, and which 99% of delegates at the GPGs own Emperors Palace conference were so critical about ? This is a far cry from the MECs interview with the Star in February this year, where she claimed 40000 people will be trained this year. And it ignores the fact that in South Africa 80% of SMMES close their doors within three years of start-up. So again I ask this House, who is fooling whom, and why?



In the Sowetan on 4 April 2012, we are told of an interview with the MEC on the Y-Age project, and the overwhelming response "to the Youth and Graduate Entrepreneurship Development Schemes". Let me point out that this overwhelming response is due not to enthusiasm but to desperation. And it is a desperation that will become worse when once again these unfortunate youngsters find out that the politicians have been less than truthful to them. There is only one thing crueller than having no hope, and that is having hope dangled in front of you when the whole thing is a con job.

And what happened to the 100 000 entrepreneurs creating 10 jobs each that was promised at launch? And where do they get 10 jobs per SME from?

I million jobs? We are already half way through the year. Name me one single job created by this venture so far. And who is advising the MEC with these nonsense projections.



Of course, we can't all be entrepreneurs. What about jobs? Well let's take one of the jewels in the DEDs crown- the OR Tambo International Special Economic Zone, with a jewellery hub as its proposed centrepiece.

The ORTIDZ will end in tears, even though it is a major focus for GPG job creation on a larger scale. This is not just my say so, but the experience elsewhere in South Africa with simper ventures. At Coega, government has spent over R22 billion, but by early this year had attracted investments of only R800 million. You need real incentives to attract investors from our major markets, which, North or South, are a long way away. And as for gold jewellery, it has been tried before under the Industrial Participation Programme arms deals offsets investments administered by the DTI. It failed. Are we doomed not to learn from our own mistakes?

At least there is hope in some of the other DED activities.



What are working are Blue IQ innovation hubs, the Gauteng Tooling Initiative and automotive sector development – mostly all connected with existing private sector jobs. And herein lies the secret- work with the private sector, whatever your private reservations about the evils of capitalism. Don't try and second guess private business, because government knows nothing about business at all.

Matters are also not helped by the slipshod way the DED continues to operate, at least as far as the Portfolio committee is concerned. The DED reports are often late, always inadequate and poorly presented. On occasion, across party lines we in the Portfolio Committee have personally found through our own focussed intervention study visits, that the DED and some of its Agencies reports are less than honest.

To sum up then,

The DED is failing to meet its core purpose – to facilitate the creation of jobs in Gauteng Province, and to do so on scale in its larger projects.

SMEs are at the heart of job creation, and their neglect by the GEP does not augur well for the Province. GEP is set to support 489 new SMEs, 393 new coops and disburse 38 loans – a drop in the ocean, and again, when you read the small print, not as impressive as it sounds. How many of these will still be in existence in a years time. Well, judging by our FIS visits very few indeed.



But there is always no shortage of high level well paid officials complaining of budget constraints at the top. But doing apparently very little, apart from waiting for the interminable restrurctruing prices of the Agencies to take place. Presumably we will muddle on in this way until the 2014 elections when a new governement with new policies and new proposed restructuring will take its place and delude the people until they have had enough of it and vote the bums out.

Meanwhile, and not reflected in the Annual Report, it many interest you to know that currently the DED is doing the splits. It is simultanoueusly underperforming and over spending. Take some egs:



-Trade and Sector Development - spent 95% of budget, attained 55 % of targets


-Business Regulation – spent 92% of budget, achieved 56% of Target

-Under the office of the HOD, only half the targets were met in the year to date.

-In Economic Planning, less than half the targets were met. In addition, there continues to be "non-adherence to prescribed supply chain management policies "in procurement.
- The LED programme is dead in the water: no money.


-Under Development Planning, only 50% of targets have been met YTD.


The Integrated Economic Development Services division, however, is the winner of the all. This DED division has achieved the remarkable combination of spending 112% of its Budget while achieving only 45% of its targets.



So what is to be done?

Sometimes when the patient is so far gone with decomposition of their limbs, amputation is better than using band aids.



Stop rearranging the deckchairs on the Titanic, and abandon ship entirely.



- Limit the DEDs role to that of facilitation. Governments do not create jobs anyway. Only the private sector does that, Help the private sector to do it. Confine the DED role regarding its Agencies to transferring funds timeously and to provide oversight on shared goals/ targets.

- Work more closely with other departments, especially to open up Public Private Partnerships in enabling infrastructure projects – especially from an economic pers9ective, broadband access.



How to catch up on economic growth in Gauteng:

- Create new wealth

- Create new wealth that spreads to all, via opportunity and access.

- Focus on entrepreneurship

- Focus on increased competition within the economy

- Find new markets for new products.



How to facilitate entrepreneurship in Gauteng;

- Identify and remove obstacles to doing business –microeconomic reforms

Cut red tape. Using SARS as your model. The DEDs Business Regulation and Governance division is still focussed exclusively on BEE and Consumer protection .There is nothing to acknowledge the seriousness of the need to cut unnecessary red tape strangling new business on Gauteng, not least the compliance costs and lengthy development approvals procedures. Sanlam e.g. – R90 million ten years ago to R400 million now. In other words, create a business friendly investor friendly environment.

Get a global view of South Africa and the world economy it is part of. Learn economic lesions from our African neighbours. Stop pretending the Berlin Wall did not fall, and understand why it did. And let us develop a more humble, but more elastic assessment of where we stand in the world today. Globalisation is real, it is here to stay, and we had best learn to deal with it rather than railing against it. We are just one market among many others, all competing for investment. If we don't step up to the plate, someone else will.



On DED Agencies

- Collapse GEP entirely. Outsource training to private sector suppliers overseen by GEDA, and linked to sustainability requirements.
- Leave financing of SMES to new SME Fund, the Small Enterprise Finance Agency, under the IDC.


- GEP to be managed by a PPP Board. Requirements for inclusion must be successful exposure to private sector business world.

- Improve access to information. Nobody's ever heard of GEP or its services, despite all the Annual Report's glowing claims about public awareness programmes.


- Stop appointing trophy leaders and deployed cadres for business development and support.


- Stop investment in intelligence work. Don't have to be a thought leader – be a jobs leader. Let Treasury do intelligence work for every GPG department

- Find a way to bring on board informal traders, and reduce crimes against SMMEs.


- Strengthen BLUE IQ R&D work to develop new products, adopt new technologies in close association with industry. Focus must include products derived from cellular phone technologies.'



- Replicate motor industry training success story with other successful industries: chemical industry?



- Link youth directly to jobs, introduce wage subsidy if necessary paid for out of revenue saved by cutting down GEP


- Build on new markets (not identify - leave that to DTI).



- Launch massive skills training initiative for existing successful key sectors. Use underutilised Metro and parastatals training venues. Grow own timber for government artisans. Link skills to actual jobs.



- Establish a Gauteng Business Lobby to lobby national government for provincial needs, and to act as a practical think tank.

That, Honourable Members, is my assessment of the DED's annual Report for the past year. You may think I am being unduly harsh. But it is very difficult to stand by and say nothing, and to see so many good DED and Agency employees working so hard only to fall victim to poor leadership and bad management.

In conclusion, I would like to leave you with some thoughts about Africa and its potential, to remind us that we are becoming a country of losers on a continent of winners. Even as you can get better cheaper and easier access to broadband in Nairobi than you can in Johannesburg, or as we watch the Nigeria economy sail past ours towards being the strongest in sub Saharan Africa, and putting paid incidentally to our hopes if being the first African country to get a seat on the UN security Council, just remember that in large parts of Africa an economic spring is coming, bearing promises of a fruitful harvest to come. And ask yourselves, each and every one of you here today: do we South Africans want to be part of the African Renaissance, or do we not? The power is in our hands, after all.



(Speech by Ali Bongo Ondimba, president of Gabon, London Business School, 19 May 2012)

Africa's time has come - fastest growing middle class in the world, 5.5%average annual growth, full of natural resources, apoen to new technologies such as mobile phone money transfer. Isn't it time SA joined them? Africa has 1 billion people, 56% of them less than 30 years old.60% have access to mobile phohnes. Increasingly active and well informed via social media. By 2040 Africa will have the largest workforce in the world, as well as being a major market for consumer goods. It has 60% of the world's arable land. But African governments cannot do this on their own. Need private sector to realise dreams. To attract investors need an attractive investment offering/case for investment. Africa is a carbon sink, uniquely among the continents – the solution to global warming lies here. Oil and gas just starting to be discovered.

Prospects for growth ?

Letter in FM

Nazmeera Moola’s article, “Economic Viewpoint”( FM 21/10/11) refers. Nazmeera postulates that one of the factors that may lift the economy out of recession is a revival in consumer spending, premised on above inflation wage increases. A pinch of salt may be in order here. Worldwide the financial crisis has taught consumers a lesson about debt that they ( and the banks that are always fighting the last war) will not easily forget. In the US, the phrase commonly used to describe the impact on consumers is the “new normal”, where recovery can no longer been driven solely by consumption expenditures, as past recoveries were in the Reagan/Clinton eras. Banks are reluctant to lend, and consumers to stop paying off debt. In fact, there is no longer much of a gap between middle class incomes and expenditures, especially in South Africa. Here the law abiding middle class, black and white, is paying double for everything- double for schooling, double for security, double for monopolistic electricity tariffs, double for health care. Administered prices range from ACSA’s 160% plus tariff increases( which will devastate the budget travel "sho't left" domestic tourism campaign) to municipal rates and tariffs increases at twice the inflation rate- in addition to a stagnant property market. That is why there are no savings. There is nothing left to save. There is and no prospect of tax decreases, and the interest rate declines have probably bottomed out. That is why economic growth in 2012 will come in at 2.7% or so, as opposed to the 3,5% plus predicted by government at the beginning of the year . As for jobs under such circumstances, forget it. For that we need 6-8% growth, and this government cannot produce that.

Letter published in FM

" Learning from Greek Myths"


You say in your Editor’s Notes ( FM 28/5/12) that with the Greek crisis it’s very difficult to decipher a road ahead. But there are some known knowns, in the words of Donald Rumsfeld, and they all contain lessons pertinent to South Africa. They are as follows:
1. The European model of the welfare state is ultimately not a viable one, as the ability of the state to pay for it declines along with demographic change. Eventually the money does run out.

2. When you are the US, with strong demographic prospects and a culture of entrepreneurship, people will still lend you more money in the absence of anything else on offer on the same scale. Europe, not so much.

3. Voters and governments can be complicit in their own mutual downfalls, as people continue to believe that they can have their cake and eat it, and politicians reassure them that they can.

4. Greece within the EU always was a long shot for an economy that doesn’t produce anything. However, outside the EU, there is no future for Greece. Plan you next holiday there – it will be very cheap.

5. Business can take an awful lot of punishment before the private sector collapses. But when it does, the speed and irreversibility of the process will surprise you.

6. The EU crisis has its origins in the financial sector. There are few signs that this has been adequately addressed yet. So expect more trouble for Spain, Italy and Portugal.

7. Regional unity must always rest on naked mutual shared self interest. Otherwise it is a figment of your imagination, whether that be a pan European or a pan-African idyll. Sentiment wont butter your parsnips, not now, not ever.

8. There is no free lunch, for anybody, anywhere.