The Institute for Race Relations (IRR) has published its response to finance minister Tito Mboweni’s proposed economic policy document.
The policy document, which covers 77 pages, includes politically controversial recommendations like selling off Eskom assets and reforming many government departments.
Some of the biggest proposed changes include:
- The state relinquishing its near-monopoly of electricity, port and rail services;
- Relaxing rules to make it easier to do business;
- Privatising government assets to stabilise its finances;
- Maintaining a flexible exchange rate;
- Inflation targeting;
- A sustainable fiscal policy.
Arguably – unlike some other government policies – the document also places emphasis on evidence-based recommendations grounded in research. For these reasons, the new policy should not be allowed to fail, says the IRR’s John Kane-Berman.
“There is, of course, a risk that the Treasury’s proposed strategy will fall by the wayside, as eventually happened to Growth, Employment, and Redistribution plan, which was published in 1996,” he said.
“This must not be allowed to happen. Captains of industry, organised business, public servants, politicians, journalists, economists, and those few non-governmental organisations committed to faster growth need to speak up in favour of the Treasury document, loudly and clearly. And the Treasury must do some serious marketing.”
Kane-Berman added that the policy stands out as it does not blame the country’s low growth on racial inequality and the persistence of colonialism and apartheid.
Instead, the report identifies some of the issues facing the country as;
- Lack in economies of scale;
- Regulations and policies that support incumbents or are ineffective in assisting rivals and new firms;
- Competition legislation that favours large firms and incumbents;
- Challenges in access to finance.
“Even though it suggests a (limited) social compact, the Treasury document is a welcome contrast,” said Kane-Berman.
“It has taken the lead in putting forward important microeconomic proposals. Few of these are new, most of them having been urged down the years by various organisations favouring economic liberalisation, the IRR among them.
“But their importance is that they are all now strung together in a document emanating from the Treasury.”