Economists say Finance Minister Tito Mboweni's new growth plan could help to pull the country’s struggling economy from stagnation. File photo: IOL
Economists say Finance Minister Tito Mboweni's new growth plan could help to pull the country’s struggling economy from stagnation. File photo: IOL

Tito Mboweni’s growth plan is radical but doesn’t go far enough - Saiba

By Staff Reporter Time of article published Aug 29, 2019

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JOHANNESBURG -  The SA Institute of Business Accountants (Saiba) has applauded Finance Minister Tito Mboweni’s plan to reboot the moribund SA economy.

Saiba said in a statement, " For example, who would have thought we’d hear an ANC minister call for exempting small businesses from certain regulations, such as bargaining council agreements, which are little more than a monopoly enjoyed by big business and labour. The left-wing of the ANC will fight this tooth and nail – but Mboweni will have to face down the hardliners in his own party." 

"Common sense dictates that the automatic extension of bargaining council agreements to smaller businesses (which have to abide by agreements they are not consulted on) should never have been on the statute book, but once there it seemed it would remain there forever. 

"Mboweni clearly understands what is holding the economy in its no-growth trap. This is why he wants to make it easier to create new jobs by removing the red tape," according to Saiba.

Adding to this was Nicolaas Van Wyk, CEO of Saiba, who said, “We think its a great document that will if implemented great new jobs and economic growth. Tito seems to be one of the few ministers with a clear grasp of reality, and of South Africa’s true potential. There is no real reason why we need to suffer as we do. We have been lumbered with a broken economy that resisted all efforts to fix it because of corrupt politicians and businessman who served no-one’s interest other than their own.”

What about an economic TRC to close the book on our corrupt past?

Van Wyk says perhaps there is merit in forming an Economic Truth and Reconciliation Commission (TRC), similar to that for political crimes in the 1990s, where voluntary disclosure of economic and commercial transgressions could be aired, forgiven (with a reasonable fine), and allow the guilty who have corrupted the country to "get the hell out of Dodge".

“Our real economic foes are not internal but external. We need to shift our collective attention to positioning SA as a new Africa lion and emulate the Asian tigers of Singapore and Korea. If the President sets a new target whereby SA becomes the superpower in Africa, then all our local challenges will fade in the face of a new unifying national goal,” Van Wyk said.

The meat of Tito’s growth plan

Looking to the meat of the Mboweni plan, there are some worthy goals that everyone can get behind, such as:
  • Full or partial relaxation of regulations impacting small businesses, such as labour laws and bargaining council agreements. This is perhaps the most radical recommendation, since it is well documented that employment opportunities are most likely to come from the small business sector.
  • Relaxed visa requirements to make it easier for tourists to come to SA. Saiba has long advocated for a more coherent policy to allow tourism to kick-start the economy (which it can easily do). In fact, it could create 2 million jobs over the next decade.
  • Allowing third-party access to the country rail network, which would make better use of our transport infrastructure.
  • Kick-starting an infrastructure boom in coordination with government, the private sector and state-owned companies, so as to ease the pressure on the balance sheets of over-stretched SOEs.
  • SA’s demand for water will exceed supply at the end of the next decade. Far more investment is needed in water-resource development, bulk-water supply, and waste-water management.
  • Eskom’s financial problems (debt of R450 billion) could be solved through the sale of coal-fired power stations, and by allowing private power producers to sell back into the grid. The Integrated Resource Plan (IRP), the ruling government document on future energy supply, needs to compare least-cost options with the alternatives and be updated regularly.
  • Allocating broadband spectrum to private companies through an auction, keeping a small portion of the spectrum for a government-controlled network, and allowing competition in Telkom’s infrastructure.
  • Reducing barriers to entry in banking to allow more competition, particularly for services such as mobile money.
  • Reviewing fuel-price regulation and passing on the benefits of spot price benchmarks to consumers. Also reviewing regulation which has supported companies like Sasol.
“Tito’s plan will work but only if we stop scoring own goals, playing the blame game and looking for scapegoats. Our political forefathers established our democracy on the basis that SA will become a rainbow nation. It may have worked at the time to heal and unify, but something toxic has intervened in pursuit of the ‘Rainbow Nation’, and that has been fully on display in the hearings of the Zondo Commission. Let’s channel the thoughts and energies of the great African Kings that established vast economic empires in pre-Colonial times. Our real competitors are the US, China, and Europe.

“Minister Mboweni’s growth plan is an excellent starting point for the rebirth of the nation. We must be careful not to waste much more time debating and discussing. Now is the time for action. Our economy contracted 3,2% in the first quarter, so we are going backwards and the country is shedding jobs.

“SA can become a commercial superpower that supplies all of Africa with rail, energy and services. Why should we leave it to the Chinese to move into our zone and capture our resources and opportunities?

“Tito’s plan is good, but it does not go far enough. He is still thinking small and allowing current events to box him in. He can do more and go bigger,” concludes van Wyk.


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