The economic recovery plan that the FF Plus compiled in cooperation with the country’s leading experts does offer hope, but it is going to take hard work to bring South Africa back from the edge of ruin.
The country currently finds itself amid an unprecedented economic crisis due to the ANC government’s mismanagement and abuses. It is the longest economic recession in the country’s history and started in December 2013.
The FF Plus realises that the plans needed to get South Africa back on the right track must already be in place when the ANC is displaced as ruling party by a viable coalition, of which the FF Plus will form an integral part.
This economic recovery plan was, therefore, developed in cooperation with the political economist, Prof. Jannie Rossouw and Mr Mike Holland, an economist and director of PriceMetrics, an economic research company that specialises in competition and regulatory economics.
This plan reaffirms the FF Plus’s general economic policy and views.
The problems the ANC created with its damaging policy and unbridled corruption have resulted in retarded economic growth and reduced job opportunities. The tax base keeps shrinking while social expenditure grows accordingly.
This along with government’s exorbitant wage bill has led to enormous government debt, compounded by interest on that debt, driving the country ever closer to the fiscal edge of ruin.
The recovery plan recommends, among other things, the following steps to stimulate economic growth in the short term:
Replace the failed Black Economic Empowerment (BEE) policy with purpose-driven skills development.
Create a process to review unnecessary regulations that restrict economic activity.
Government must withdraw entirely from the South African Airways (SAA).
Facilitate the establishment of new businesses.
Create policy certainty, which increases investor confidence.
Many of the conditions for economic recovery identified by the plan are political in nature. Therefore, the economic reforms that it recommends cannot be achieved without making fundamental adjustments.
The FF Plus is convinced that a free market is the only way to fully unlock, create, promote and protect economic value.
Government’s hostile attitude towards large businesses coupled with its restricting policy direction must change in favour of true economic development.
No government can sustainably create job opportunities on its own. Unemployment can only be overcome by amending government policy to create a favourable environment for job creation and investments.
Personal and company tax must be reduced to stimulate investment in the economy and create more jobs.
The FF Plus’s economic policy framework also proposes a fiscal commission, which will function much like the South African Reserve Bank.
An upper limit for state expenditure must be formulated. When it is reached, the fiscal commission will have the power and capacity to increase VAT. And once the risk is mitigated, the tax rate must be decreased again.
The policy of Black Economic Empowerment (BEE) has resulted in the empowerment of a small, black elite where wealth is passed around rather than created.
The FF Plus is of the opinion that prosperity cannot be created through redistributing wealth.
Instead of encouraging entrepreneurship and community upliftment, BEE only resulted in assets being handed to specific black individuals.
Economic empowerment in South Africa must not focus on enriching specific individuals, but on truly empowering entire communities.
The FF Plus believes that skin colour cannot be used as a generalised indicator of being less privileged and can, therefore, also not be used as a condition for empowerment.
Instead, socio-economic circumstances – like poverty, unemployment and a lack of access to quality education – should be used as the basis for empowerment. Growth and development are the only sustainable methods of empowerment.
According to the plan, the overarching barriers hampering economic growth can be overcome by eradicating corruption and state capture; ensuring reliable electricity supply; replacing BEE with skills development; regulatory clarity and policy certainty.
It is clear from the abovementioned that the road to economic recovery will be long and hard, requiring serious adjustments.
The good news, however, is that a government that puts its country and people first will indeed be able to do it. The most important step to bring that about is to remove the ANC as ruling party next year at the polls.
Read the original article in Afrikaans on FF Plus