SOPA: A Definitive Moment or a Missed Opportunity
KIMBERLEY – In his State of the Nation address, President Ramaphosa acknowledged that ours is a highly unequal society in which poverty and prosperity are still defined by race and gender. He also noted that our economy has not grown at the pace required in recent years to remedy this and that we need to take additional measures to grow our economy and lift the poor out of the misery of their poverty. In a nutshell he said that we need to prioritise pro-growth policies and strategies and set the country on a new path of growth, employment and transformation. Few would disagree that this should be our highest priority.
While the President correctly identified ensuring policy consistency and certainty, boosting business confidence, leveraging increased private investment, strengthening public finances, stabilizing our national debt, improving collaboration between the public sector, private sector and labour, as well as restoring key state owned enterprises to a normal state of health, he was light on the detail of how this would be achieved. But we can overlook this in the context of the rapid change in political leadership and the limited time available to prepare for the SONA. Or can we?
In the context of the budget tabled subsequently by the then Minister of Finance, Malusi Gigaba, it became patently clear that there is almost no wiggle room for government to expand its investment in economic growth and development. Our budget deficit simply doesn’t permit it. While the President is right that we need to capitalize on the new shoots of growth evident in the global economy, a slow but significant upturn in mineral commodity prices and improving business and investor confidence, we are far from being out of the woods yet. He is right to talk about the need to work with mining companies, unions and communities to grow the mining sector, attract new investment, create jobs and set the industry on a new path of transformation and sustainability.
A new Mining Charter will go a long way to achieving this outcome but there will have to be recognition of the difficulties mines continue to face and a cessation of hostilities between the State, the mining houses and labour. The President was also right to say that decisive action will be necessary to realise the enormous economic potential of agriculture. But here at home in the Northern Cape little has been done to transform agriculture in the province. Vast tracts of land and water go unutilised year after year.
Existing paradigms for promoting agricultural development have not worked. A new way forward is required. Which takes us to the State of the Province Address recently tabled by Premier Lucas. If the President’s speech was light on detail, SOPA was ethereal! Lamenting about why an increase in mining activity and productivity and the increase in renewable energy operators didn’t increase our contribution to GDP can’t surely be all this provincial administration has to say about mining? Yes, the iron-ore and manganese sub-sectors on which this province depends for mining jobs and livelihoods have begun to turn the corner. But where was the declaration of intent to engage with Mr. Meyer and Mr. Mkhwanazi of Assmang and Kumba respectively on matters pertaining to the remaining life of mines, implementation of their Social and Labour Plan commitments, deepening local procurement, enhancing the impact of Corporate Social Investment spend, and most of all, calling for legacy investments intended in the medium to long-term to stimulate sustainable non-mining economic activity ahead of mine downscaling? Where was the commitment to facilitating dialogues between aggrieved mine host communities, dysfunctional local governments and the mining houses to find common ground on which to build a new consensus for the transformation of the sector?
The Premier, like the President before her was right to note the major role played by the agricultural sector but, is it really true that the sector has “ensured a reduction in the unemployment rate in the province while cushioning our country’s economy from recession”? Agriculture in our province remains embarrassingly untransformed more than twenty years after liberation. Even those HDI communities endowed with their own land and water have been neglected and in some cases have for decades been constrained by a lack of capital and skills. The opportunity cost of this failure to make productive use of high potential resources is mind bogglingly enormous. But instead of recognising this and committing her administration to a renewed effort and the adoption of new approaches to old problems, the picture created in the SOPA was that all is well and things are progressing nicely. Tell that to a resident of Riemvasmaak! More vague platitudes about a “nine-point plan”, Special Economic Zones, Agri-Parks, a new port development, and a claim that these will “address economic challenges in our Province…” are vacuous.
News of the impending development of another Provincial Growth and Development Plan and a revised Provincial Spatial Development Plan in order to enhance implementation of the National Development Plan sounded like the Premier just following her leader. That there was no mention of diversifying our provincial economy in the SOPA is alarming whether or not you are an economist. Inviting “members of society” to participate in forthcoming dialogue sessions on the PGDP is to be welcomed however. So too is the declaration of intent to convene a Special Task Team to investigate why so many resolutions and decisions taken in the past were never implemented. The announcement of a Social Cohesion Summit sounds interesting albeit that it isn’t clear from the few words spoken as to what this really is. Something akin to the social compact referred to be the President? Given the impact of drought on our provincial economy, the announcement of a Northern Cape Climate Change Adaptation Response Strategy should also be welcomed. So what to take from the SOPA and the multitude of issues therein that received such superficial coverage? It probably depends what you were looking for or were expecting to hear.
Was it a defining moment in charting a new path for growth and development or was it a missed opportunity? You will have to be the judge. But from an economist’s perspective, there still doesn’t appear to be sufficient coherence in what this provincial administration says it wants to do to stimulate our provincial economy. For now, it seems our provincial government remains a passive witness to what happens in our provincial economy instead of a being the main driver of the growth and transformation we so desperately need.