The EFF’s 2021 local government election campaign under the theme “Land And Jobs Manje [Now]” illustrates that SA’s economic challenges lie in the absence of practical industrial policy and the total collapse of municipalities.
There is no relationship between the powers and functions of local government, resource allocation and any effort to industrialise. More than 70% of SA’s economy and revenue base comes from Gauteng, KwaZulu-Natal and the Western Cape.
The rest of the provinces, cities, towns and municipalities outside the three provinces that contribute the majority of economic activity do not have viable economies, let alone viable municipalities that can deliver basic services such as water and electricity.
At the core of SA’s failing municipalities is a lack of clear industrial policy that locates economic growth in the production of goods, job creation and redistributive policies to address apartheid legacies. SA’s industrial policy has proved futile because it has not been centred on capable municipalities.
Instead, the industrial strategy adopted has incorrectly prioritised incentives and the continued support of industries that export raw materials without any effort to build capable municipalities to support industrialisation. Municipalities do not engage or have capacity to facilitate and lead industrialisation that is localised.
Companies that receive incentives and tax breaks, such as the automotive sector in East London, Port Elizabeth and Rosslyn, Pretoria, have mechanised their factory floors instead of creating jobs. Even the recently opened Ford Silverton plant in Pretoria is a highly mechanised plant that will boost production without creating meaningful localisation for downstream businesses. The same goes for mining, construction and even the retail sector, which are choosing imports, machines and small-scale operations.
Industrial sites that were constructed in an effort to decentralise and depopulate cities in the 1970s and 1980s are today standing empty. While these industrial sites used to produce clothing, machines and food that were consumed locally, they were poorly conceived, without a long-term strategy and for nefarious reasons.
Yet they undoubtedly contributed to decentralised economic activities away from the overpopulated cities of Johannesburg, Cape Town and Durban. As a result, industrial sites were in remote places such as Shayandima in Limpopo’s Vhembe district; Dimbaza and Fort Jackson in Buffalo City, Eastern Cape; Qwa Qwa in Thabo Mofutsanyane, Free State; and Botshabelo in Mangaung, Free State; and economic activity took place outside municipalities.
SA is deindustrialised today because of neoliberal policies and premature abolishment of industrial protective policies. Neoliberal policies and the removal of industrial protective policies not only collapsed manufacturing but also the viability of many of the cities, towns and municipalities that derived economic activities from these places. Today, the majority of the things consumed in these areas are brought in from outside and imported from overseas. These include some basic foodstuffs, from bread to maize and other consumables that could be produced locally.
Many in the business sector, particularly construction, manufacturing, transport and other services, cannot operate viable businesses because of a lack of basic and reliable services such as water and electricity. Critical infrastructure such as roads for trucks to deliver necessary production inputs and finished transport goods does not exist. Consequently, the cost of doing business has become unattainable.
While companies such as Astral can afford to take Lekwa in Mpumalanga to court and get a judgment against the municipality in a fight for service delivery, many businesses are choosing to close operations and relocate to areas with functional municipalities.
While building municipal capacity can ignite economic growth, the actual economic growth with the capacity to lead to redistributive policies is localised industrialisation. The EFF calls for insourcing of security, cleaning, maintenance, catering, construction services and other recurring services to form part of municipal functions as the foundation necessary for economic growth. This ensures that municipal budgets are not the only site of economic activity in a municipality but also serve as necessary capacity to support localised industrialisation.
Any viable economic growth will come from an industrial policy centred on capable municipalities. Any industrial policy that is not dependent on capable municipalities will not lead to any meaningful economic growth to deal with structural problems of poverty, unemployment and unequal redistribution of resources.
Only when municipalities have the capacity will they declare special economic zones that will give companies infrastructure and building allowances in exchange for jobs and investments in productive industries. Furthermore, municipalities with capacities should build markets to ensure that locally produced goods are accessible to people.
On this basis, municipalities can use procurement budgets wherein 80% of all goods are procured from special economic zones to link municipal capacity with industrial policy for economic growth that will create jobs and reduce poverty and inequality.
• Shivambu is EFF deputy president.
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