The City of Surreal Ramaphosa on the banks of the Rubicon

Johannes Wessels
@johannesEOSA1

Cyril Ramaphosa’s vision of “a first post-apartheid city with skyscrapers, schools, universities and factories” (if implemented) has all the potential of becoming a disastrous social engineering experiment wasting resources on a massive scale. Not because the idea of a new city is wrong per se, but simply because the president is ideologically wedded to state-led development, holding a very negative view of the role of the private sector.

Ramaphosa doesn’t consider the private sector as efficient or more effective than the public sector, despite the fact that State-owned enterprises are mismanaged, bankrupt and a drag on economic development with Denel and the SABC even struggling to meet salary commitments.

Peas of the same pod

The creation of such a city is, in the Ramaphosa framework, not a vision of dynamic economic growth, but an ideological blinkered perspective of how government can improve society. Ramaphosa and all the social engineers within the ANC are, in that sense, not far from the approach of Hendrik Verwoerd. The National Party was, just like the ANC, a force pursuing transformation through prescription and limitation of choices.

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SA lost 83 000 companies in the financial & business sector in 10 years

Johannes Wessels@

@johannesEOSA1

The landscape of incorporated South Africa in the financial and business services sector has changed dramatically: in 2007 a total of 222 532 companies in this sector submitted tax returns, but SARS Company Income Tax (CIT) data show by 2016 this figure had shrunk to 139 664: a 37% decline.

The CIT data base records a decline by almost 83 000 incorporated firms.  What happened?

This sector includes banks, money lenders, short term insurance firms and independent brokers, investment advisors, business consulting firms as well as real estate services. Figure 1 shows how the number of firms were relatively stable from 2007 to 2010 before a rapid decline before stabilising again from 2014 onwards.

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Pro-poor LED fails our cities, towns & the poor: Enterprises of the right kind generate city growth

Johannes Wessels
@johannesEOSA1

There is an intriguing symbiosis between cities and towns on the one hand and enterprises on the other. As the world population urbanise, so are business activities.

Physicist Geoffrey West in his “Scale:  The Universal Laws of Life, Growth and Death in Organisms, Cities and Companies” says based on city growth one can state precisely what will happen with the number of businesses in that city: a doubling of population does not require a doubling of grocery stores or filling stations, economies of scale kick in in a predictable manner. The reverse is also true.

Geoffrey West & Scale

Unfortunately, South Africa’s economic and enterprise development policies and strategies ignore these predictable realities. In addition, LED plans by municipalities in the main demonstrate a lack of understanding of what drives development.

Continue reading “Pro-poor LED fails our cities, towns & the poor: Enterprises of the right kind generate city growth”

If monopolies are the problem, start dismantling the worst: the State-owned Enterprises

Rating agenciesWith Moody’s soon to announce their assessment of SA’s credit risk, Finance Minister Malusi Gigaba made it clear that a white minority was controlling the economy through a monopoly and that was now to change.  Gigaba, speaking mostly in isiZulu, said “The economy is controlled by a minority; they are a monopoly. There are a lot of companies owned by very few people and the services and products on offer enrich these few people.” (Gigaba: It is time to put us first ).

Addressing an ANC Youth League event in Pinetown, Gigaba remarked that there was an agreement in 1993 that white people would continue to have a say in the economy.  The ANC stayed committed to this, “but now has come a time for change. It is time to put us first.Continue reading “If monopolies are the problem, start dismantling the worst: the State-owned Enterprises”