LETTER: President’s investment spin belies SA reality
New investment amounts to fixing what's broken, while new racial quotas make doing business more costly
Last week’s investment conference saw the president and his ministers trying to sell a country that has become increasingly unsaleable.
To their credit, there was some grudging admission of this. It would have been difficult to do otherwise given that SA was sitting at stage 6 load-shedding, the logistics infrastructure was shuddering and the state cannot credibly claim to be executing the basic functions of government such as enforcing the law. In terms of media attention, the investment conference was overshadowed by the sordid Thabo Bester affair and the failure to secure the extradition of the Guptas.
And so, despite the somewhat farcical spin the president tried to put on things in his address to the conference, the country is in dire straits. The president has declared R1.5-trillion received in pledges and commitments, although it’s doubtful that much of this represents a vote of confidence. Much of it appears to comprise what firms had planned in any event, merely to maintain their operations — and to compensate for what the state might once have provided.
Business Day columnist Peter Bruce identified a uniquely SA type of investment: “Investment to replace stuff broken by the ANC government in the past 30 years.” Investment as a proportion of GDP sits at a paltry 13%-14%; the National Development Plan envisaged 30%.
It deserves to be recorded that last week also saw the president assenting to the Employment Equity Amendment Bill. It is now law, and grants the employment & labour minister the power to set what amounts to racial quotas across 85% of the private sector workforce. It also raises the prospect of crippling fines being levied for failure to comply: as much as R2.7m or 10% of a company’s turnover (for repeat offenders), whichever of these is larger. Expect this to kill firms.
The act reintroduces racial pre-qualification requirements — employment equity certificates — for doing business with the state. Predictably, this will make doing business more costly and cumbersome, and will aggravate the failures afflicting the country. SA society and its business community must understand that this represents not a mere pathology, but an active choice.
Institute of Race Relations
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