White Monopoly Capital: astute reverse double somersault or a Janus performance?

Is the presidential acknowledgement of entrepreneurs as heroes and not villains the equivalent of Pope John Paul II’s admission that the church was wrong to condemn Galileo for endorsing a helio-centric view? If so, it is one of the most astute political reverse double summersaults. As deputy-president Mr. Ramaphosa himself sung heartily the “Down with White Monopoly Capital” song in the Zuma choir.

Janus Ramaphosa

Does the comment during the dinner of the Investment Summit really signal the dawn of economic freedom or was it merely a modern manifestation of Janus? Will the future reveal a Ramaphosa butterfly that was an ugly caterpillar under Zuma or is the two-mouths-two-messages the real reality?

The first requirement to assess future options is a proper understanding of the present. Let us explore that by assessing the ANC Government’s (and Ramaphosa’s) views on SMEs:  does it indicate an embrace of private initiative or something else?

Continue reading “White Monopoly Capital: astute reverse double somersault or a Janus performance?”

SMEs not the magic “Open Sesame” that unlocks growth & jobs (1)

Within a week of his inauguration as Finance Minister, Tito Mboweni muttered the magical “Open $e$ame” words that, according to legend, will reveal the treasures of economic growth, job-creation and the eradication of inequality.

open-sesame-your-uservame-o-password-are-ectu-open-segame-26200568Addressing the Association of Black Securities and Investment Professionals, Mboweni said “to get the economy performing, government needed to create an environment which allowed small and medium enterprises to operate at an optimum level.

“We must think in particular how to support small and medium enterprises. In Germany the economy is driven by the hidden champions that are small and medium enterprises,” Mboweni said.

Continue reading “SMEs not the magic “Open Sesame” that unlocks growth & jobs (1)”

SheNenegans and zol clouds: Summits almost like old-age home talent concerts

Government has developed a fool proof strategy to divert (most) attention from its frenetic fumbling of the economy that they had successfully put on full-throttle reverse.

The Job Summit’s rehearsed pitches and agreements to create jobs (almost as if jobs can be manufactured like overalls), to minimise retrenchments and to buy local,  reminds one of the annual retirement village talent concert: nothing new, innovative or inspiring. Rather old hat. It solicited respectful applause, but thankfully Nhlanhla Nene (ably assisted by Julius Malema and by the grace of the Guptas) diverted attention from the dreary Summit.

One has to give it to the ANC:  just as the Job Summit was obscured by sheNenegans, the previous big building block – the Emergency Stimulus Package – was enveloped by a court verdict releasing thick aromatic clouds of “Personal stimulus by zol”.  That high successfully obscured the regurgitating of empty promises of yesterday’s infrastructure development plans.

Can Trevor Noah develop such a script? Continue reading “SheNenegans and zol clouds: Summits almost like old-age home talent concerts”

Stimulus package ignores the Achilles heel of high crime

SA’s 2018 Crime statistics & the economy (2)

Government’s ad hoc stimulus package aims at infrastructure investment to promote growth.  It is totally silent on high crime levels that is one of the major causes of divestment with SA deteriorating into a combination of the Wild West and a Mafia state.

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South Africa’s shocking crime statistics were paraded on social media and media talk shops as being mainly caused by poverty.  Economic growth can therefore be considered as essential to get poverty down. Then crime levels would also decline…

Looking at data, an inverse picture emerges.

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Economic freedom globally up but SA tumbles down

ECONOMIC FREEDOM in South Africa deteriorates rapidly. The country has tumbled 12 places and is now firmly embedded in the bottom half of the 162 countries and territories evaluated in the Economic Freedom of the World: 2018 Annual Report. This report by the Fraser Institute confirmed SA’s decline from position 82 to 94 due to anti-freedom policies and practices.

In 2003 SA almost made it into the most-free quartile ranking gaining position 45.  Now the country is a 3rd quartile fixture, being three consecutive years in the bottom half.

The Economic Freedom of the World Report  is the world’s premier measurement of economic freedom, evaluating and ranking countries in five areas: size of government, legal structure and security of property rights, access to sound money, freedom to trade internationally and regulation of credit, labour and business. (See full report).

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Government sabotages growth through property rights uncertainties and ignoring Moody’s warning shots

The heated debate between proponents of property protection and those in favour of  confiscation (expropriation without compensation) has been characterised by a lack of data and waged mainly on ideological and emotional arguments.  The lack of an acceptable factual basis is evident in:

  • Government, AgriSA and Afriforum operating with different figures for categorising land ownership according to race;
  • The number of farms on the list for the first round of expropriation.  (If there was such a list).
  • Uncertainty about the number of recipients of free subsidy houses (where transfer of title has not taken place) and how these properties should be counted.
  • Arguments that expropriation would kill the economy simply being countered with promises that the economy would not be harmed.

At the public consultations the facts applied were almost always derived from (and limited to) local situations and narratives with no or little attention to systemic information. EOSA therefore analysed last year’s WEF’s Global Competitiveness Index (as part of our enterprise research on relevant data and statistics) to assess whether there are some global indicators to inform the debate.  Several significant correlations are evident from the WEF data:

  • Highly competitive countries have strong protection of property rights.
  • High per capita GDP goes hand-in-hand with property rights.
  • Poor policing and high cost of crime for businesses are not characteristics of highly competitive countries.

Continue reading “Government sabotages growth through property rights uncertainties and ignoring Moody’s warning shots”