Johannesburg - Legislators have pushed through laws in Parliament before next month’s elections that business organisations say threaten to stifle investment, economic growth and job creation.
With opinion polls indicating the ruling ANC, which holds almost two-thirds of the seats in the National Assembly, will see its support drop in the May 7 election, the party is seeking to expand the state’s role in the economy and spread more wealth to black citizens.
Among the laws awaiting President Jacob Zuma’s signature is one that gives the state the right to a free stake in all new energy ventures and one that forces private security companies to be at least 51 percent owned by South Africans.
“We believe they are too heavy-handed with this legislation and are risking encroaching on our right to business,” Neren Rau, the chief executive of the SA Chamber of Commerce and Industry (Sacci), which has more than 20 000 members, said last week. The government was “making the business environment and the regulatory environment more complex and more difficult to understand and operate in.”
Other recently adopted or proposed legislative changes include: extending the deadline to 2018 from 1998 for claims to be lodged on land seized under apartheid rule; requiring company boards to comprise at least 50 percent women; tripling the fines for companies failing to meet racial employment targets; and tightening the criteria needed to secure contracts with the state.
Last week the Rural Development and Land Reform Ministry proposed giving the state the right to force some farmers to sell it half their land, which would be distributed to farmworkers. Farmers’ organisations said the measure would flout property rights and compromise food security.
“These radical measures are coming at an unprecedented pace,” Anthea Jeffery, the head of policy research at the SA Institute of Race Relations, said. “In combination, they seem calculated to choke off investment, reduce economic growth and worsen unemployment.”
Moloto Mothapo, a spokesman for the ANC in Parliament, referred calls for comment to Enoch Godongwana, the head of the party’s economics committee, whose cellphone did not connect or revert to voicemail.
A survey of 9 019 people conducted by Indian polling company C-Voter showed the ANC might win 62 percent of the vote, The New Age newspaper reported on Friday.
The Economic Freedom Fighters, which was formed last year by former ANC Youth League president Julius Malema and seeks to nationalise mines and expropriate land to give to the poor, may win 6 percent, according to the survey.
Five years ago, the ruling party won 65.9 percent, compared with 16.7 percent for its nearest rival, the DA.
“The set of reform bills should be interpreted in the context of the upcoming general election,” said Robert Besseling, an Africa analyst at IHS Country Risk. “The ANC is likely to face greater pressure from its left wing and an emerging radical left opposition to accelerate the redistribution of wealth.”
While the economy is rebounding from strikes in mining and manufacturing last year, growth is still not fast enough to cut unemployment. The central bank is forecasting gross domestic product expansion of 2.6 percent this year, which is less than half the annual pace of 5.4 percent the government says is needed to cut the jobless rate to 6 percent by 2030 from 24 percent now.
There were “serious incongruities” between the new laws and the National Development Plan (NDP), the government’s economic blueprint that seeks to make it easier and cheaper to do business, said Raymond Parsons, a policy adviser to Business Unity South Africa, a lobby group whose members include the Chamber of Mines, which represents companies including Anglo American Platinum.
“Once the election is over, there must be a sense of urgency, no complacency and a consistent message about the realisation of the NDP’s goals to strengthen business confidence,” he said on Friday.
Zuma has denied there were inconsistencies in policy, saying the government was improving the business environment by revamping the transport and education systems. “The state has taken bold steps to diversify the economy and build our industrial base with a greater emphasis on labour-absorbing employment,” he said in a March 19 speech. “Our country promotes innovation and success.”
Tim Harris, a DA MP and finance spokesman, said there had been a definite shift in the government’s attitude toward business as the ANC sought to curry favour with its trade union allies ahead of elections.
“We need a bold response to jobs and growth; we are going in the other direction. We have seen interventionist and ill-conceived legislation, none of which will have a positive effect on jobs or growth.” – Bloomberg