DUMA GQUBULE: A growth plan that frustrates and offends

I have never worked so hard as I have speaking to South Africans from Sandton to Khayelitsha over the past week, helping them make sense of finance minister Tito Mboweni’s plan to grow the economy. As I spent the day with unemployed activists at a workshop organised by the Tshisimani Centre in Cape Town to help them analyse the plan, it became clear how disconnected the government is from the people it is meant to serve.

“This is a document for the elite. We don’t have money for internet to get access to it,” one participant said. Most people could not understand the strategy’s dense terminology and repetitive language.

The document is not a growth strategy. It covers a limited set of issues in a limited number of sectors. Most of the issues it identifies as building blocks for growth are not addressed. The majority of recommendations are not new. Most refer to issues that have been stuck in bureaucratic processes for years — for more than a decade, in some cases. For example: plans to introduce competition in rail and ports are repackaged policies that have featured in numerous state of the nation addresses by three of the country’s former presidents.

According to the Treasury’s own assessment, it is a bad plan that will have a limited effect on growth and employment within the first three years because most interventions will only be implemented after the fourth year. What is the point of a plan that does not tackle the immediate crisis?

The modelling that informed the Treasury’s forecasts makes no sense. Those that use the expenditure approach to measure GDP forecast additional growth of 2.3% a year over the next decade. However, those that use the production approach forecast additional growth of 5.4% a year over the same period. Economist Asghar Adelzadeh says there is either a huge mistake or the sectoral effects of GDP growth are exaggerated. “You can only have one GDP growth rate. The methods of calculating GDP are two sides of the same coin.”

If one projects the forecast sectoral GDP growth rates for a decade from December 2018, the reforms will result in a collapse of primary and secondary sectors to 24.1% of GDP from 31.5%. The primary sectors (agriculture and mining) will collapse to 5.3% of GDP from 10.5%. Mining will decline by an implausible 5% a year. The sector’s share of GDP will plunge to 2.9% from 8.1%.  Although mining’s share of GDP has halved from 15.7% in 1994, Minerals Council CEO Roger Baxter says it is possible to present a plausible scenario where mining’s share of GDP does not fall over the next decade if certain policies are implemented.

The share of tertiary sectors will increase to 76.2% of GDP from 68.8% as a result of implausible increases in the relatively skills-intensive transport, storage and communication and finance, real estate and business services sectors. The transport, storage and communication sector will increase by 9.7% a year. Its share of GDP will soar to 14.7% from 9.8%. The sector grew by an annual average of 2.3% over the past decade.

The CEO of a telecommunications company told me that the awarding of new spectrum will have a small, direct effect on the economy. “The industry will spend an additional R20bn a year, of which half will involve the export of capital to pay for imports. The rest will be lower-order work that involves digging holes.”

The finance, real estate and business services sector will increase by 8.4% a year. Its share of GDP will increase to 26.1% from 19.7%. The sector grew by an annual average of 2.8% over the past decade.

Finally, the strategy has a colour-blind definition of transformation that perfectly illustrates its deeply problematic race politics. It avoids using the term black and refers to black people as the “non-white majority”. This offensive and hurtful language that defines black people in the negative harks back to the days of apartheid when there were segregated facilities for “nonwhites” and “nie-blankes”.

• Gqubule is founding director at the Centre for Economic Development and Transformation.