EFF policies will kill SA economy in 3 years: Economist

Economist Dawie Roodt has weighed in on the economic policies of the Julius Malema-led Economic Freedom Fighters (EFF), saying that the party’s plans could destroy the South African economy in three years.

Both the South Africa’s largest opposition party, the Democratic Alliance (DA) and newcomers, Economic Freedom Fighters (EFF), launched their political manifestos at the weekend, with talks of job creation and uplifting workers in the country.

However, Roodt has noted that some of the loftier economic goals are simply unattainable without destroying the South African economy – while talk of job creation is just run-of-the-mill politicking.

As part of its manifesto, these are some of the things EFF leader, Julius Malema promised would become reality under an EFF government:

  • All jobs will be made permanent;
  • Mineworkers will receive a salary of R12,500 a month;
  • Farm workers will receive a salary of R5,000;
  • Manufacturing workers will receive a salary of R6,500;
  • Retail workers will receive a salary of R5,000;
  • Builders will receive a salary of R7,000;
  • Social grants will be doubled; and
  • There will be a 50% salary increase for police officers, teachers, nurses and other public servants.

Roodt was presented with the simple question: Can this be done?

“‘Can’ is a difficult word,” said Roodt. “Yes, we can – but what will the consequences be?”

“The fiscal deficit will more than double, fiscal debt will double in less than 2 years, interest will increase sharply and will ‘eat’ the budget. Eventually the fiscus will just implode – I give it max three years,” Roodt said.

According to the economist, this would be the way of things, unless a huge source of new income could be found, like higher taxes, “which will kill the economy and lead to lower future tax revenue,” he said.

“In the meantime SA will be downgraded, the rand will collapse and inflation will rise sharply leading to higher interest rates, lower growth and all sorts of other problems.

“Yes, we can, but it will kill the economy,” Roodt said.

Tim Harris
Tim Harris

DA’s 6 million “real jobs”

In an alternative to the national budget, the DA has provided steps on how it plans to increase economic growth to 8% and to help create 6 million “real jobs” in the next 10 years.

The DA’s plan includes cost-containment measures, using 10% of the country’s GDP to build and maintain infrastructure, removing exchange controls and reducing red tape, amongst others.

To boost job creation, the DA proposes stimulus packages, a fully implemented youth wage subsidy and multi-million rand investments in skills development and empowerment promotions.

According to Roodt, however, this is all fluff.

“The DA is trying to steal the middleground currently occupied by the ANC by copying the ANC’s policies – the same way the ANC copied its predecessors policies,” Roodt said.

“‘Job creation’ is just a political slogan that parties use to disguise their lack of vision on economic issues,” the economist said.

South Africa Internet Broadband ADSL
South Africa Internet Broadband ADSL

Political parties and ICT

Looking specifically at broadband and ICT, both the DA and EFF had goals in mind to bring communication to the whole population.

The EFF’s manifesto promises better broadband to all educational institutions, and tablets and laptops to all students.

  • The EFF Government will use existing capacity to provide high speed and quality broadband to all schools and all institutions of higher learning in South Africa;
  • The EFF shall investigate the introduction of the best and cost effective devices (tablets and laptops) to all learners to address textbooks shortage and access to the modern telecommunications.
  • The EFF, which is well known for its nationalisation drive, will retain total and majority control of all State Owned Enterprises, including Telkom.
  • These State owned enterprises will operate under the oversight of various government departments, and provincial governments.

The DA’s view on ICT is that it is “vital to the development and well-being of all who live, work and play in South Africa”, according to it manifesto.

  • Affordable, reliable and efficient internet must be available to all South Africans, where every person in South Africa should have access to the internet;
  • The DA will work to ensure that information and communication infrastructure, the devices that access it and the services conveyed on it are affordable, reliable, efficient and readily available.
  • The DA will support the private sector to expand access to ICT as well as use government resources to provide ICT infrastructure and services in under-serviced areas

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EFF policies will kill SA economy in 3 years: Economist