Tito’s Plan: Towards an Economic Strategy
Given the catastrophic economic management of South Africa over the last decade, it’s not surprising that our current concerns have pushed many competent South Africans to choose a new life overseas. However amongst the rubble, there are signs that a strategic planning framework is being developed which encourages those of us who are staying.
- In August Tito Mboweni published a plan to stimulate economic transformation, inclusive growth, and competitiveness in a Treasury policy document entitled “Towards an Economic Strategy for South Africa”.
- In September a Facebook group #ImStaying was created “dedicated to the South African women and men of all races and all religions, who remain loyal to South Africa”
- Now President Ramaphosa has invited South Africans to subscribe to his weekly newsletter “From the Desk of the President”, which will discuss “some of the issues that interest and concern South Africans, and talk about the work we are doing in government to tackle these issues”
- These developments are interesting, as they indicate that national government and normal South Africans have realised that you can’t just sit back and hope that things will improve. You need to stand up for what you believe in, get out and promote your message, take control of the narrative, and change the course of the country.
- Importantly, they provide an avenue for all South Africans to monitor and assess positive developments
I’d like highlight how we can use these communications to get value out of the writers efforts:
- Sign up to Ramaphosa’s newsletter to hear what the President is dealing with
- Pay attention to what the ANC communicate about Tito’s plan to assess what is important within the party, and the various factions
- Join the #ImStaying group to receive regular positive signs of non-racial co-operation
What happened behind the scenes
Tito surprised the market with the timing of his 77-page document, as it was expected closer to the mid-term budget on 23 October. It appears that this was done to lead the narrative and challenge internal opponents of constructive reform.
He illustrates a good grasp of the economic and social realities that face South Africa, and lays out interventions and reforms that offer the chance to add more than 2% to GDP growth and one million job opportunities. Admittedly, we have heard grand plans for creating jobs and delivering growth from the ANC over the last decade or longer, and the bar is currently not high, but the document is encouraging for what it addresses.
Here are the key sections of the document:
- Modernising network industries to promote competitiveness and inclusive growth
- Lowering barriers to entry and addressing distorted patterns of ownership
- Prioritising labour intensive growth: agriculture and services
- Implementing focused and flexible industrial and trade policy
- Promoting export competitiveness and harnessing regional growth opportunities
The aspects within each section that appeals are:
- Network Industries:
- Unbundling Eskom to create an independent electricity transmission company
- Leverage private sector expertise in broadband roll-out
- Grant third party access to the rail network to encourage private sector participation
- Comprehensive management strategy for investment in water resource development
- Lowering barriers to entry
- Draft new legislation around competition and market structure
- Development finance to be made more accessible
- Late payments by government to small business should be addressed
- Red Tape Impact Assessment Bill should be revisited
- Labour intensive growth
- Agriculture and services, especially the tourism sector, are conduits
- Greater budgetary support for tourism agencies
- Visa regulations amended to ensure a better balance between security concerns and growing the tourism sector
- Focused industrial and trade policy
- High value added sectors such as manufacturing promote productivity growth, diversifies exports, and are an important contributor to the country’s skills
- The International Trade Administration Commission, which considers trade measures on a case-by-case basis, should be capacitated so that it conducts broader value chain analysis of the impacts of submissions and is proactive in addressing the current biases of trade policy
- Export competitiveness and regional growth
- Quality and access to infrastructure can be improved through competition and private sector participation
- Government needs to review border control procedures, plant and animal health standards
What’s Happening Now
Immediately after the release of the strategic plan, it received a mixed response from political and economic commentators, along the lines that it lacks specifics, it is not Tito’s place to announce ahead of ANC deliberations, and let’s wait and see. Nothing new.
- Pali Lehola, former CEO of Stats SA gave the plan a 30% rating, “big on words, poor on facts”, and carries on to highlight the severe sector knowledge deficits in the treasury document.
- Steven Grootes in his piece “Tito Mboweni’s economic plan landed like a political bomb – will it be defused?” via Daily Maverick suggests that the aim was to try to push people into two camps – and it succeeded
However, at the recent ANC NEC it appears that components of the strategic planning framework have found their way into the press releases and intentions.
As always, the story continues. But at least there is a strategic plan that involves a lot of common sense that has entered the debate. Progress is too slow for most, but at least there is progress
Watch this discussion led by Hilary Joffe on the ramifications, as well as breaking news around Steinhoff