Economics

 

South African Economy

South African Minister of Finance, Tito Mboweni recently released a Proposed Economic Strategy and called for public comment

Summary

The Minister of Finance, Mr Tito Mboweni,is calling on members of the public to make comments on a paper published today, titled:Economic transformation, inclusive growth, and competitiveness: Towards an Economic Strategy for South Africa.

The paper, prepared by the National Treasury, is an attempt to translate the broad outcomes of inclusive growth, economic transformation, and competitiveness into specific programmes and draw on a range of domestic and international literature to support these policy priorities. This paper considers the contribution of specific growth reforms that can achieve the outcomes of economic transformation, inclusive growth, and competitiveness.This paper is a detailed examination of the structural reforms that can reverse the downward trend in South Africa’s growth potential and competitiveness.

Weak growth over the last six years is a function of both cyclical and structural factors, although structural factors have dominated, including sharply declining competitiveness, which saw South Africa’s position in the Global Competitiveness rankings fall from 44th to 67 th between 2007 and 2018. A series ofcyclical once-off shocks such as political turmoil, drought and most recently load shedding by Eskom have further exacerbated the depth of the slowdown. Together, these have served to compound and prolong the effect of weaker confidence, leaving us with an economy that has almost 30% unemployment.

The paper drawson the National Development Plan to outline sixthemes and the contribution of growth reforms within each theme that prioritize economic transformation, inclusive growth, and competitiveness.

The themes include:

Modernizing network industries to promote competitiveness and inclusive growth

Lowering barriers to entry and addressing distorted patterns of ownership through increased competition and small business growth

Prioritizing labour-intensivegrowth: agriculture and services

Implementing focused and flexible industrial and trade policy to promote competitiveness and facilitate long-run growth

Promoting export competitiveness and harnessing regional growth opportunities

Quantifying the impact of proposed growth reforms

 

Our Proposals

Treasury's proposals do emphasise reform in favor of SMEs, so it is a good idea to participate in this process

Our Response (PDF) facebook

Summary

I agree with most of the proposals (unless stated to the contrary), I then extend the suggested proposals suggesting ways to put them into practice with immediate effect and to be more effective in the medium term and I show that a proposal to create one million jobs over the medium term is dynamically destined for failure and I extend the scope of the proposal to create three million jobs, act immediately, do this in the medium term and do it with a balanced budget.

What is lacking for the proposal is a vision. While well-meaning, the proposal is more a tick list of good economic governance and lacks urgency. I propose that the focus industries should be small scale agri processing, service tourism, and electricity.

I show where there are errors in the SAGE model.

Treasury's proposal lacks "Missions" to rally around– I suggest some.

Job creation proposals

These proposals DO NOT require major public expenditure. A small seed contribution and - stand back

Repeal EWC and BEE (1 Million jobs)

Sobukwe Canal (1 Million jobs)

Southern Sunset (1 Million jobs)

Electricity - microgrids (1 Million jobs)

Stepping Stone Jobs (1 Million jobs)

Slaves to America (100K jobs)