The word is President Cyril Ramaphosa will introduce urgent new welfare measures as the number of hungry South Africans swells in the wake of the insurrection of last week.
Even before that, reported Carol Paton, levels of hunger in Covid-wracked SA had stabilised at about one in every seven households (“New welfare grant is on the table — the question is how much”, July 21). That’s a huge number and last week will push it higher. A hungry household is one in which a child has gone hungry once in the past week.
Ramaphosa will revive at least the R350 a month relief grant paid to some 7-million citizens during the lockdowns of last year. That would cost the state an extra R2bn a month. But only people on no welfare at all got that money. If you add in other poor people now, the cost rises.
What struck me about the news though wasn’t the welfare, which must be done. What struck me was how easily successive ANC governments slide from policy to reality when the chips are down. And the chips are always down.
The only reason Ramaphosa has money to help the hungry is because the economy has been boosted by unexpected demand for its minerals as the world recovers from the pandemic. We have probably earned between R50bn and R100bn more from commodity exports than we budgeted for. Tax collection is R80bn above expectations.
But in cloud-cuckoo-land, where the ANC makes economic policy, we would not be exporting these commodities. We’d be beneficiating them (turning them into more valuable products, like the people we sell them to do).
In reality, our traditional economy is a vital part of an enormous global supply chain. In cuckoo-land, we step out of the supply chain and insert ourselves higher up in it.
It all sounds so rational. We’ve got the minerals, so why shouldn’t we be making microchips, lithium batteries and aircraft wings out of them? Think how rich we’d be.
Except that if we stop exporting our minerals to the customers we already have, they’ll source them elsewhere. They have impatient customers too. Our call is that we can take our current customers out and take a slice of the business they already have.
This is magical thinking, but the ANC does the same thing with every policy round. Be it beneficiation or BEE, it cannot resist a loser. We are a mining and agricultural economy and we’re really good at these things. We were once one of the biggest mining economies in the world, but no-one has established a new underground mine in SA in a decade.
It is one thing to want to re-industrialise. There are a few new jobs in manufacturing, but not many. Manufacturing’s future is automated and the world has moved on since we lost our ability to produce cheap electricity. It is another, entirely, to erect tariff barriers around your remaining industries to protect them from competitive imports, as the government is now doing.
Trade, industry & competition minister Ebrahim Patel has been forced to withdraw duties designed to protect local potato chip producers and SA’s underperforming primary steelmaker, ArcelorMittal SA, but he presses on on multiple fronts, rewarding large businesses with tariff protection, and on the other hand threatening executives with prosecution should they not meet their obligations in the many “master plans” he is designing.
All this to create jobs. Somehow, the minister and government believe they can reshape the structure of the economy by forcing change on it. They do this by ignoring the vital industrial middle that keeps SA standing, medium-sized businesses that are not always signatories to the big sectoral pay bargains struck by big business and big labour and overseen by the state.
If you’re not one of those you don’t exist, which is why localisation and the dream of re-industrialisation will fail to create jobs. They simply ignore the majority of the jobs that already exist in the middle.
The only way to drive this economy hot is to dig as much ore and coal (while it’s still usable) out of the ground and export it as fast as possible; to grow as much produce and process it and/or export it as possible. We’re now the world's second largest citrus exporter, thanks to the skill of our farmers.
Then what you do is stop trying to disrupt your customers’ supply chains with your own (beneficiated) supply. You get them to come and do whatever it is they do here. Make it cheap and easy. We already know this with the auto industry. Foreign carmakers invest in SA and create jobs and skills and service their global customers from here.
To create jobs you first have to create employers (duh!) and we are running out of South Africans. A concerted drive for skilled immigrants is our only salvation in the long term.
On Wednesday pharmaceuticals giant Pfizer announced an agreement with our Biovac to produce all its Covid-19 vaccine for Africa in Cape Town. That’s how you do it, Mr President. Well done! Think of the skills transfer to come. Let’s have more. Let’s industrialise quickly, the way the Thais did.
In 1960 the Thai economy was smaller than Ghana’s. Today it is eight times bigger, and they did it by opening up their economy to industrial investors. We’re doing the opposite.
• Bruce is a former editor of Business Day and the Financial Mail.
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