Ramaphosa’s economic recovery plan yet another scam to embarrass the ANC
By Hadebe Hadebe
Only a day after President Cyril Ramaphosa revealed the economic recovery plan, the Mail & Guardian (16/10/2020) beamed a headline that read “Too broke for a budget”. This story insinuates that “the dire state of South Africa’s finances forced [finance minister] Tito Mboweni to postpone his budget speech.” ...
Nongayidli inhlaba uzoyidla-ke manje: Tito Mboweni and his dish of bitter aloe awaiting South Africans, especially the poor Black people
At this time of the year, the finance minister presents the medium-term budget policy speech (MTBPS) to parliament to mark the half year for the government’s financial year which begins on 1 April each year. This important milestone in public finances commences with a summary of the medium-term economic outlook, and goes on to outline fiscal policy proposals, which are followed by allocations for different departments, as well as the provincial and local governments.
In the main, the MTBPS deals with budget adjustments to accommodate new spending and this is where additional resources are allocated to struggling SOEs such as SAA, Denel and Eskom. The Mail & Guardian claims that the immediate need for R10 billion by the ailing national carrier threatens to mess up the budget. As a result, Mboweni had to can his appearance before parliament.
In his previous budget speeches, Mboweni carried an aloe plant to symbolise a crisis in national finances. It appears that this time around the MTBPS was not worth even a wilted plant. Has the bitter aloe completely run out water? If yes, what is the real picture? Thus, this article seeks to explore the current state of affairs in light of the promises made in the economic recovery plan.
The economic recovery plan in brief; it's a jobs galore of whishful thinking
South Africa is now used to promises for jobs. In 2019, a whopping 412,000 jobs were promised to be created. This figure was 275,000 jobs a year. But this year’s figure raises eyebrows at 800,000 jobs. This means that a total of 1,487,000 jobs were “wishfully created” and or are said to be “created” in a country with at least 10 million people that are reportedly unemployed when using the traditional figures of unemployment rate in South Africa. This figure rises to 12 million if you include 2 million jobs lost due to Covid-19 hoax.
Nevertheless, the economic recovery plan promises to create hundreds of thousands of jobs, growing the economy by 3%, spending R1 trillion on infrastructure and hiring thousands of assistant teachers. What is interesting is that approximately R13.8 billion will be injected in efforts to create 800,000 jobs and economic opportunities by the end of March next year. An additional R86.2 billion will be spent on employment creation over the next two years.
[Side Note: But the question is where is all these resources for job creation going to come from? How are these jobs going to be created? By whom because the Western economy has never created jobs in Africa except for a handful of exploitative factories here and there. The Western economy would never create jobs for African people, even if by a miracle it became able to do so because property rights and comfort for a Western white racist bourgeoisie is guaranteed by high unemployment rate and landlessness of the Black majority.
There is a widespread narrative that plenty of jobs existed during the apartheid government but this is false and misleading. There were no jobs during apartheid. The illusion of job availability was created by police brutality whose mission was to kick the majority of Black people out of the cities from which they were not born under the dreaded Influx Control Act. Those who were born outside the cities were forced out of the industrial areas into the rural areas for exploitation by nearby barbaric and illiterate school-drop-outs of racist white farm managers.
Due to the fear of ‘pass and permit’ racist laws prevalent in the cities many Black people decided to stay put in the rural areas as oqhwayilahle, until someone they knew from a city wrote them a letter to come up to the city because a company boss wanted a slave. Industrialists preferred amagoduka; workers from the rural areas because they were too desperate than township dwellers they always blamed for regularly going on wage strike via Trade Unions.]
If indeed Mboweni’s aloe has given up, then where exactly will this money come from? The talk of big money during hard lockdown resulted in the announcement of R500 billion stimulus package (Mboweni said it was R800 billion) which turned out to be a paltry 10% cash resources, and the rest was guarantees and monetary policy interventions.
The trillion rand in question will apparently come from the Infrastructure Fund, which is an entity of the department of Public Works and infrastructure; the National Treasury; and the Development Bank of Southern Africa (DBSA). Founded in mid-August 2020, the Fund was going to be allocated an amount of R100 billion over a period of 10 years. An initial R10 billion injection was supposed to be announced during the current MTBPS.
Interestingly, the economic recovery plan frighteningly presents a shorter timeframe of three years instead of the original ten years. It is unclear where this humongous figure of R100 billion will come from in such a short space of time, especially in the present economic conditions. The planned mass employment programmes will not only fall short of causing a dent on the 30% plus unemployment rate, but it is below the 2.2 million jobs that were lost as a result of COVID-19 lockdown measures.
Furthermore, there are also suggestions to ramp up or broaden social protection coverage and creating 60 000 jobs for labour intensive maintenance and construction of municipal infrastructure and rural roads. What remains a mystery though is where and how will this happen?
[Side Note: It won’t happen. This is how Ramaphosa is trying to trick the pending National General Council of the ANC not to fire or expel him from the party.]
Infrastructure and white elephanting
Unfortunately, there are no persuasive proposals on which employment sectors will be effected, and how the issue of monopoly in various sectors will be tackled to increase competition by allowing new players to get involved in supply chains. The hype on infrastructure alone is sufficient to send shivers down anyone’s spine.
[Side Note: As we said it before; if you want to scare off the so called investors, distabilise SoEs like Eskom the same way Ramaphosa is doing and blame Black corruption for everything that goes wrong in the land. You are abusing the vote of the ANC as a head of State to campaign for the opposition parties. In this fashion you are creating a lack of confidence in the ANC in a mind of a voter to pave way for a much vaunted DA coalition government in 2024.]
South Africa invested too much money in infrastructure to prepare for the FIFA World Cup, but evidence suggests there were no economic spin-offs for the ever-after. White elephants called beautiful stadiums stand but money is gone. This experience calls for serious introspection and not a repeat.
Another point is that not only do the private retirement funds have no legal compulsion to re-invest prescribed assets (pension monies), but they would rather waste this money on non-strategic shopping malls.
In addition, the recently announced R84 billion Mooikloof project has raised more questions than providing answers. For example, it will be interesting who will be the overall beneficiary from this housing project which already attracts criticisms than building momentum for infrastructure-driven growth.
Also, the plan is silent on how macroeconomic policy in its entirety will be deployed, not just to provide funding but also to create favourable conditions for the plan to succeed. There are key lessons to be hopefully learned from India in how it takes advantage of monetary policy instruments at its disposal to fund biggest highway construction programmes at a cost of £81 billion.
The state’s Keynesian approach means it needs to have sufficient resources available through deficit spending. In the absence of huge propping from the conservative South African Reserve Bank (SARB), using limited resources from the fiscus could prove disastrous. Macroeconomic policy in totality needs to be in sync with economic growth if increased government spending is going to end the recession and create jobs.
No rural plan, no recovery
Nevertheless, the country’s huge infrastructure backlog, especially in townships and rural areas, as well as under pressure infrastructures in urban areas will not get any immediate ramp up or relief anytime soon in a country where the ‘investment strike’ is rife. In spite of the early promise made, members of corporate South Africa would rather stash trillions of cash than spending these funds to develop the country.
The state does not have a partner to help it implement its ambitious economic recovery plan
At the 2018 investment conference, President Ramaphosa buoyantly declared that: “We should treat our entrepreneurs as heroes and move away from what we have been fed, where we treated our business people like enemies, called them white monopoly capital and all that. That must end today. Let us see our business people as heroes.” The heroes continue to look away and maintain excuses for not supporting the democratic project, which they have always seen as a “political risk” since its early days.
[Side Note: With this White Monopoly Capitalists attitude, South Africa has become a tale of two cities, so to speak. Black people, although lacking resources; are trying to build a democratic country while White Monopoly Capitalists on the other hand are reversing each and every gain democracy makes so that in the end Black people, like those rebellious Israelites who perished in the desert, would say: “Take us back to Egypt. Apartheid was better. Let’s give a white racist regime a license to oppress us because the ANC democracy has failed us.”
This leaves the ANC with one option; to get rid of the Western economy in South Africa and follow the example of the economically freed Syria, whose President Bashar al Assad declared that he wants no Western markets in his country because they never come to invest but to take. Ever since Syria chased away Western markets, like Venezuela, it’s economy is growing by leaps and bounds.]
For as long as rural areas remain bucket toilets of the South African economy, there is no hope that any form of investment will ever reduce the socio-economic problems that beset the South African society. Rural areas need very targeted, sustainable greenfield and brownfield investment to foster their integration into the mainstream economy.
In conclusion, the economic recovery plan is another pit stop in a long race of economic policies: Growth, Employment and Redistribution (Gear), Accelerated and Shared Growth Initiative for South Africa (ASGISA), New Growth Path (GNP) and National Development Plan (NDP). In about two to three years the speedy F1 car will pause for yet another economic blueprint without fail, and not a single bridge or jobs would have been delivered.
All the economic plans dismally fail to match the political speak that is developmental, transformational, and ‘leftist’. Billions of rands will be pocketed by the usual suspects in large white owned companies and their fronts. The economic outcomes will remain bullishly weak, and the African majority will sink deeper into poverty and without jobs and basic services.
The reason for this is that the endemic economic problems in South Africa are systematic and historical, and no amount of economic theory will eradicate the country’s make-up of racial allocation of land, assets and resources, and the junior status of the African majority. Whites own productive assets and Africans retain an unenviable status of surplus labour that is freely exploitable to support the white owned economy.
The economic recovery plan therefore fails to impress, like other plans in the past. It does not aggressively envisage to bridge the apartheid and colonial divide which concentrated infrastructure and services in urban (white) areas and left the places where the African majority resides as sources of cheap labour and poverty manufacturing factories.
Siyayibanga le economy!
