SA economy: no good news here

There is no common and coherent view in the government’s three major economic policies, the Centre for Development and Enterprise (CDE) said on Tuesday (5 November).

“It’s really important that we see more policy coherence,” CDE executive director Ann Bernstein said in a statement.

“The economy is in trouble and South Africa needs certainty. It’s time to make the tough choices and stick to them.”

Bernstein was referring to the National Development Plan (NDP), the economic development department’s New Growth Path (NGP), and the trade and industry department’s industrial policy action plan (IPAP).

She said a report titled “Policy Gridlock?”, released by the CDE, noted that the three documents offered contrasting accounts of the constraints South Africa faced.

IPAP and the NGP characterised the economy as being “consumption-led”, which suggested that the key problem lay with the financial sector, which was starving the productive sector of investment funds.

The NDP said nothing about this, Bernstein said.

“More important, the three documents have very different ideas about where the jobs will come from.

“IPAP and the NGP talk about jobs in the ‘productive sectors’ [including] manufacturing, infrastructure, agriculture, and so on, while the NDP expects most new jobs to be in small services firms serving the domestic market,” she said.

University of Cape Town economics Professor David Kaplan, who wrote the report, said that according to the IPAP and the NGP a weak rand would be fundamental to the success of their strategies.

However, the NDP said it would not stimulate growth and employment creation, as the economy was not geared to take advantage of a cheaper rand.

In the report Kaplan said the IPAP promised over 2.4 million jobs by 2020, the NGP promised five million, and the NDP 5.9m jobs by 2020 and a further five million by 2030.

Kaplan said the employment numbers were unsubstantiated.

“The NGP talks about substantial growth in employment in mining, manufacturing and agriculture, but all of these sectors have been shedding jobs for years.

“The NGP provides no data or calculations that would suggest why these persistent trends should suddenly be reversed.”

Bernstein said it was not clear which approach the government had chosen from the three documents.

“It’s no wonder more and more business leaders are speaking out,” she said.

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SA economy: no good news here