WATCH: How to get the economy going post Covid-19
CAPE TOWN – President Cyril Ramaphosa and his cabinet was congratulated for its hard work by Thys du Toit, chairperson of Rootstock Capital and co-founder of Coronation Fund Managers.
The message – released over the long weekend – also warned that the South African economy needs to be opened urgently if the country is to avoid loss of life from starvation, social unrest and crime.
“The lockdown is causing severe damage to what is left of our fragile economy,” said Du Toit. “Our survival and wellbeing depend on whether and how quickly our economy recovers.”
Du Toit’s first suggestion to get the economy going post Covid-19 is to sustainably create jobs by creating an environment where entrepreneurs can prosper as employers.
“This environment understands that taxes generated by small and medium size businesses pay the civil service salary bill,” Du Toit continued.
The business-friendly environment that Du Toit envisions is a tax friendly, secure environment with effective policing. It is also corruption free or at least subject to as little as possible corruption. According to Du Toit this environment will attract investments, generate growth and generate tax income to repay the huge debt bill that is facing South Africa.
In addition, Du Toit listed the following focus areas for consideration by President Ramaphosa and his cabinet:
- Stop funding loss-making state-owned enterprises. “Either clean them up, dispose of them, liquidate them or close them. Also fast-track ESKOM’s unbundling,” said Du Toit.
- Decrease the government wage bill. Du Toit included a note of thanks to the cabinet who already took a decrease of 30%.
- Suspend minimum wage for a period of 5 years as the minimum wage crowd job seekers out of the market and make it difficult to get labour intensive enterprises off the ground.
- For now, forget radical economic transformation. “It diverts the attention, hampers progress and enrich a small select group that has already been enriched many times,” said Du Toit.
- Remove bottlenecks on spectrum allocation and Independent Power Producer projects.
- Grant mining companies the right to produce electricity.
- Lower company tax to 20% and provide incentives to the manufacturing and finance sectors.
- Put the Expropriation without compensation narrative to bed:
- Allocate title deeds to all informal residents on government land - full ownership rights will be a massive wealth creation activity which can really stimulate demand.
- Government owns a large portion of arable land in South Africa, it may be prudent for government to partner with large successful commercial farmers to utilise the land for food production (both for consumption in SA and for export).
The message also touched on the reported billion Rand cost of the 200 Cuban doctors that were brough to South Africa. Du Toit said that South African general practitioners were struggling to pay rent and feed their families. “Why go abroad if we can start in South Africa?”
Du Toit furthermore highlighted the matter of bringing existing transgressors to book.
“It is well-known that state capture cost South Africa – already a poor country – a trillion Rand. That is twice the amount that has been allocated for Covid-19 relief in South Africa,” said Du Toit. “The Steinhoff fraud, the biggest ever in South Africa cost South Africa R300bn.”
“It boggles the mind that three/four years after we have seen the biggest frauds and corruption cases in South Africa that no-one has been brought to justice, no-one has done any jail time,” mused Du Toit.
“In my lifetime I have not seen a harder working cabinet,” said Du Toit. “It is great to see President Ramaphosa’s leadership in action. It is great to see that our country can act swiftly and with purpose. It is great to see the solidarity in our country.”
“But, Mr President, get rid of the gangsters in your cabinet. You and they know who they are. I hate to think how they are licking their lips to get their hands on the R500bn relief package.”
Du Toit strongly urged for the South African economy to be opened as soon as possible.
“We are in any case heading for an immense cost of lives. If not from Covid-19 it will be from starvation, social unrest, crime and a myriad of other chronic diseases. We need to reignite our economy because all of our lives ultimately depend on it.”