Northern Cape

Buying local, Central planning, Developmental state, Economic freedom, ECONOMIC GROWTH/ANTI-GROWTH FACTORS, ECONOMIC POLICY AND STRATEGY, Economic Reconstruction and Recovery Plan, Export-led growth, Job creation and unemployment, Large enterprises, Market economy, Medium Term Budget Policy Statement, Northern Cape, Tourism & hospitality services

Ramaphosa’s bold plan (2): weak on detail, strong on flights of fancy

Johannes Wessels
@johannesEOSA1

Two recent key government speeches gave rise to two important questions:

Is the inability of the government to effectively implement its policies & plans (?) worse than its inability to table concrete action plans, underpinned by clear strategies, designs, milestones, budgets and target dates?
Why can even Thabo Mbeki see the president is naked whilst organised big business still praises the beauty of his imaginary clothes?

The president’s tabling of the Economic Reconstruction and Recovery Plan (ERRP) was lame and lacked detail, whilst the Minister of Finance’s Medium Term Budget Policy Statement (MTBPS) left one with a feeling there is not much grasp within the collective government on how to prevent SA from slipping rapidly, if not tumbling, down the slope.

Instead of rekindling confidence and inspiration, vague and mixed messages fuelled doubt and a disbelief that the government can prevent SA from boarding the proverbial bus to Argentina (debt default). I put the following three arguments to illustrate this assessment:

Will the government stand solidly behind Mboweni’s strategy of freezing public sector wages for three years when they cannot deal with the much easier route to stop financing the effectively bankrupt SAA? Recall also how Pravin Gordhan in 2018 (knowing well that Eskom was not only overstaffed, but the personnel besides overpaid) overruled the Eskom Board and management when they had decided on a zero salary increase as part of addressing the Eskom viability issue.
Can one rely (trust would be too much to ask) on the government’s undertaking to reign in public expenditure? This, when they had failed multiple times to table a comprehensive plan on how to deal with Eskom’s debt and the growing debt burdens of other State-owned Enterprises (SOEs).
How is the “growth through infrastructure roll-out” approach different from numerous previous attempts – since the days of Thabo Mbeki – to strengthen the country’s economic fibre by infrastructure investments announcements, with the emphasis on announcements?

Flipchart notes or a detailed plan?

The Enterprise Observatory of SA reckons four fundamental problems underpin the ERRP and the MTBPS:

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Anti-business, Black economic empowerment (BEE), Central planning, Economic freedom, ECONOMIC GROWTH/ANTI-GROWTH FACTORS, Enterprise friendly environment, Free State, Job creation and unemployment, Limpopo, Northern Cape, Public service delivery, Small towns, Small, medium and micro-sized enterprises (SMMEs), SME, Sole proprietors, Spending power (wealth/poverty), State Owned Enterprises (SOEs), Western Cape

GDP shrinkage of 12%: It’s not the virus, but the lock-down, stupid!

Johannes Wessels (@johannesEOSA1) & Mike Schüssler (@mikeschussler)

At the end of the initial 3 weeks lock-down a GDP decline of about 5% was considered as quite a catastrophic outcome. Even at that level, it was considered worth the price since delaying the spread of the Covid 19 virus would give a window of opportunity for the health sector to get beds, ventilators and care protocols in place for the spike that would inevitably come.

The minister of trade and industry (dti), Ebrahim Patel, however dismissed the negative projections of economic shrinkage as mere “thumb-sucking”.

After prolonging the hard lock-down with just a gradual easing to level 4 to end May, the growing queues of the hungry waiting for food parcels, the increase in the claims from the unemployment insurance fund and the drastic shrinking of the state’s purse, would make a 5% decline in GDP a dream outcome.

The GDP figures for Q1 2020 will only be known end June. Data from other countries indicate that those whose governments had opted for a hard lock-down are in for excessive economic damage.

Change in GDP trend is the difference between growth in 2019 and 2020 1^st quarters, implying that the Philippines that experienced a change of -6% went from 5.9% GDP growth in Q1 2019 to -0.1% in Q1 2020. This chart reveals the following:

Countries with a hard lock-down that kept only essential services and providers open, saw an average decline of 5,2% in GDP trend.

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Corruption, Eastern Cape, ECONOMIC POLICY AND STRATEGY, Enterprise friendly environment, Free State, Gauteng, KwaZulu-Natal, Limpopo, Mpumalanga, Municipal efficiency, North West, Northern Cape, Public service delivery, Western Cape

Fragmentation of South Africa: Is the ANC succeeding where the NP failed?

“Remember, South Africa as a unitary state is a recent experiment and the jury is still out to assess its success or failure…” These words by Lawrence Schlemmer, one of the foremost analytical minds in SA during the latter quarter of the 20thC are today far more relevant than when he uttered them in 1996 when we were enjoying a drink whilst waiting at the late Jan Smuts Airport on delayed flights. Having just read Jacques Pauw’s The President’s Keepers I was starkly reminded of Lawrie’s words.

Lawrie Schlemmer

South Africa is unravelling…

I had the privilege of meeting Lawrie when he was a strategy advisor to the Urban Foundation in the years 1987 onwards. His sharp intellect and wit made him an impressive debater. He was totally independent – apart from his utter dependence on nicotine.

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CITIES, TOWNS AND SETTLEMENTS, Demographic-entrepreneurial relationships, Eastern Cape, Free State, Northern Cape, Orderliness, Predictive capabilities, Western Cape

Of people and enterprises in South African towns

Orderliness in enterprise development in South African towns has been observed as statistically significant correlations between different characteristics of South African towns. One of the first correlations noted was a statistically significant positive relationship between the population of South African towns and the number of their enterprises. This was observed in the Free State, the Northern Cape, the Western Cape (see graph) and the Gouritz Cluster Biosphere Reserve. In fact, towns in the Eastern Cape Karoo exhibited such relationships over a period of a century. One can conclude the relationship is ubiquitous in South Africa. Continue reading “Of people and enterprises in South African towns” →