During his first term, President Cyril Ramaphosa sought to recruit R1.2-trillion worth of direct investment to help solve the country’s unemployment, poverty and inequality. This bid, accompanied by a commitment to weeding out red tape, was well received.
The problems are still there. Instead of rolling out the red carpet for investors, his ministers are erecting new layers of red tape. A case in point is the recently published regulations to govern investments in the oil and gas sector, which fall under Gwede Mantashe, the mineral resources minister.
According to the regulations, issued for public comment, bidders for exploration licences will have to include BEE, hand out 20% shareholding to the state for free, show employment equity plans and commit to resolving poverty where they operate. The plans have to be in line with the integrated development plans of municipalities.
These regulations go far beyond requirements for licences in other strategic sectors. They also impose new commitments, including working with the most difficult sphere of government, local government.
Investments in the oil and gas sector have been stymied by environmental lobbyists through litigation.
The new regulations, also to enable the establishment of the state-owned oil company, raise concerns. First, poverty alleviation is not the responsibility of business or the private sector. Second, there is an implicit assumption that the government can adjudicate such complex applications. It doesn’t. Mantashe’s department is an example of this incapacity.
And third, the government has lately shown troubling reluctance to listen to the private sector. An example has been rushing through the implementation of the national health insurance (NHI) despite concerns by the sector.
Also, state licences notoriously end up in costly litigation. This tends to be the result of process irregularities and, in certain instances, pure corruption. Both these factors scare off investors.
The government has battled with mine inspections to enforce safety and health standards and to monitor the implementation of social and labour plans that are mandatory for holders of mining licences. It now gives itself more responsibility.
Some of the regulations make no sense. It boggles the mind why employment equity, which is overseen by the employment & labour department, should form part of an application process. The employment equity plans are an annual obligation for medium-sized and large companies. Small businesses tend to receive exemptions, but only if they apply for them, a costly and tedious process.
The other concern is that there does not seem to have been an impact assessment of these regulations. An impact assessment is the key plank to sensible policymaking. For it to work, however, it has to be done before implementing new regulations, policies and laws.
The proposed regulations appear to be driven more by ideology. A vital strand of this ideology is resource nationalism. One of the requirements, for instance, is that applicants need to demonstrate how they plan to transfer skills to South Africans. First, this is an admission that some of the skill sets may not be readily available in our country and second, the ultimate goal is to have South Africans run everything.
It is also concerning that the regulations also assume a government that works collaboratively. Put differently, there is an assumption that home affairs, employment & labour and Mantashe’s department will work in a joined-up fashion to achieve the goals of these regulations.
Evidence on the ground suggests this is not the case. Even when the ANC, the lead partner in the government of national unity (GNU), was the sole governing party, its ministers squabbled routinely over territories. Much of the time, the president didn’t intervene.
This is likely to be complicated by the advent of the GNU. Rivalries are already evident.
To be clear, this newspaper supports transformation and BEE as an economic imperative. But this has to be carried out through sensible policymaking. We urge the government to engage stakeholders with an open mind to keep SA open for business.
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