by LUKE ZUNGA
JOHANNESBURG, (CAJ News) – CITIZENS have consistently argued that the technocrats, not the politicians, cause economic stagnation because of the separation of powers doctrine.
Countries have changed the Presidents and Ministers, but the economic front has not improved, such as in South Africa, Zimbabwe, Angola, Zambia, Mozambique, Kenya, Tanzania, Malawi, Zambia, Lesotho, Nigeria, Democratic Republic of Congo (DRC), Ghana, Senegal, Ivory Coast, Algeria, Madagascar, Ethiopia, etc.
The problem is not at the top but is not affected by the change of ruling party, Presidents or Ministers.
In South Africa, the Houdini facing the African National Congress (ANC) is unemployment and low growth.
What breeds crime gangs, poverty, corruption, early pregnancies, budget cuts etc are failures to meet employment and growth targets in the National Development Plan (NDP), read with the UN Millennium Development Goals (MDGs) and Sustainable Development Goals (SDGs) as well as lack of opportunities generally.
It has become clear in the Madlanga Commission of Inquiry that the Minister of Police would be overstepping, if he gets involved in the “how part” of the operations of the Police Ministry.
Only the Commissioner of Police can execute the operations. These sentiments were also gleaned from the Zondo Commission of Inquiry into State Capture where ministers were sanctioned for getting embroiled in operational matters.
This is separation of powers, which is widely observed. In the Department of Trade, Industry and Competition (DTIC) Director Generals (DGs) are solely responsible for operational matters.
Government policy is very clear and the authority to operationalize sits with the Director Generals, not the Ministers, not the President. The Minister and the President cannot interfere.
The world average GDP growth rates were 3.34% in 1994, 4.47% in 2004, 2.87% in 2013 and 2.83% in 2023. Please note that world growth rates are watered-down figures as they include under-performing countries as well https://www.worldometers.info/gdp/
South Africa Annual Growth rates from 1994 to 2015: https://www.worldometers.info/gdp/south-africa-gdp/.
In 1994 South Africa’s growth was at 3.2%, well within the world average rate of 3.34%, bearing in mind that South Africa was coming out of conflict.
In 2003 South Africa’s GDP averaged 2.92% far below the world average of 4.47%. This increased the need for solutions.
The President passed the Broad-Based Black Economic Empowerment (BBBEE) Act in January 2004.
In 2013 South Africa’s growth rose to 3.35 above the world average of 2.87%, largely due to mining contributions. But in 2023, GDP plummeted to 0.77% well below the world average of 2.83%.
The DTIC is responsible for planning and executing of industrial and trade policy, which is the heart of economic growth, helped by the Department of Planning, Monitoring and Evaluation and contributions from Tourism, Mining and Agriculture.
The DGs for these departments must meet to be coherent. To some extent the Treasury DG must be included as he/she was responsible for the Jobs Fund which also failed to deliver.
South Africa Annual Growth rates from 2011 to 2019
From 2011 to 2019 growth averaged 1.6%, far too low compared to world average.
It is admitted that industrial growth, which falls squarely on the DTIC DG, failed to gather traction as admitted on page 56 of DTIC’s IPAP10 covering the period from 2011 to 2019, which period contributed low growth and more unemployment.
On 14 November 2012 the DTIC DG presented the 2011/2012 funding report to the Parliamentary Select Committee on Trade & International Relations.
Of the R3.5 billion Treasury allocation to DTIC, the main beneficiaries of DTIC Incentive Grant schemes were RNRF which received R904 million, Sappi – R552 million, Omnia – R237 million, Sephaku-R484 million, Sasol – R353 million, Unilever – R606 million, Old Mutual – R2 million etc.
Over R10 billion was provided to the motor industry, over and above the R3.5 billion treasury allocation. There were no black beneficiaries. From then on, the beneficiaries were no longer disclosed.
It may be that members of the parliamentary Portfolio committee did not understand the nexus of the report as the paucity of startups funding was there to see.
Further Parliament cannot go to departments and instruct on operational issues. Clearly Parliament has no overriding powers over the DG.
The DG failed to achieve high growth rates because he refused quality advice, that the number of formal businesses should reach 5% of the population of the country.
Figures were provided for formal businesses in developed countries to justify the 5%. In July 2014 the Davis Tax Committee released an Interim Report which shows that the number of corporate taxpayers (formal businesses) was 600,526 in 2011, which was 1.2% of the population of 52 million. 5% of 52 million is 2.6 million.
South Africa was therefore short by about 2 million (2.600,000 – 600,526) new formal businesses.
The DGs’ focus on foreign investors or white businesses cannot generate 2 million new formal businesses.
The only growth options are startups, as properly defined, and in manufacturing where the scope for growth is.
The DG refuses to consider startups for grant funding, which is where the majority black people are.
Seeing that the majority of black people are excluded from incentives, citizens set up a research team, on their own, which produced an industrial program and how to handle funding for startups in a way to eliminate failure rate, currently at 72%, and the method of handling the financing and how to set up the factories in an organized way.
This program was delivered, together with the first factory business plans, to DTI on 17 March 2014. The same program was delivered to several stakeholders for their evaluation.
Five stakeholders recommended this program to DTI as follows – The South African Communist Party (29 November 2013),
The Presidential BEE Advisory Council (7 May 2014), the Presidency (October 2014), South African Human Rights Commission (12 April 2018), and two members of the DTIC officials. The DG refused them all.
Asked why, by the South African Development Foundation the DG wrote in a letter dated 08 October 2014, that “dti programmes are approved through the relevant parliamentary and budgeting processes”.
Pressured by the South African Human Rights Commission, the DG wrote in a letter dated 15 September 2017 that section 195(b) of the Constitution and section 40 of the PFMA would be breached if he funded people who have not started business operations.
The Presidential BBBEE Advisory Council (PBAC) said they have no further powers to push the DG.
The Presidential BEE Advisory Council (PBAC) is chaired by the President, deputized by the DTIC Minister, three other Ministers and 15 esteemed representatives of the entirety of South Africa communities.
To refuse 5 recommendations is a mean fest, especially when the economy is stagnant. Only a court of law can tame the DGs to stop the sabotage.
– CAJ News