(miningweekly.com) – South Africa must urgently break the ongoing deadlock on the regulation and transformation of the mining sector to ensure the proper use of this country’s world-class mineral resources, says Deputy President Cyril Ramaphosa.
In an article on the CR17 Siyavuma campaign website, ahead of this weekend’s important national elective conference of the African National Congress (ANC), Ramaphosa writes that it is imperative that South Africa begins to attain higher levels of mining exploration and investment to assist the country to create jobs and boost export revenues.
He describes the South African economy as being in urgent need of a recovery programme that lifts the rate of investment, stimulates growth and begins to create jobs at a faster pace and states that this is possible if all social partners work together on a common programme for investment, growth and jobs.
“We’ll be able to unleash a wave of investment if we act boldly to remove political and policy uncertainties, root out corruption and reassert the positive, long-term fundamental strengths of the South African economy,” he says, while highlighting the need to balance the two potentially competing objectives of stimulating demand to increase economic activity, and bringing public finances under control to avoid a debt trap and the related loss of policy sovereignty.
Under the first objective, he states that if South Africa can boost demand in the economy through restoring confidence and removing obstacles to investment, it will begin to create more jobs, improve consumer confidence and lay fertile ground for further investments. Under this objective, he also draws attention to the need to increase the numbers of foreign tourists and expand exports to a wider range of trading partners.
Under the second objective, he writes of the need to stabilise public finances by cutting back expenditure and increasing certain taxes while acknowledging that this fiscal consolidation will have the undesirable effect of dampening demand in an economy already suffering the effects of a prolonged period of low growth.
He postulates that the surest way of countering this impact of fiscal consolidation is to stimulate new sources of demand through boosting private sector investment.
“In other words, we must take active steps to ensure that we bring dynamism to the South African economy over the next few years by unleashing a massive new wave of private sector investment,” Ramaphosa writes, adding that this macroeconomic vision for South Africa will be more readily achieved if the country undertakes a range of complementary microeconomic reforms.
“These reforms will be best identified, discussed and agreed to by social partners from government, labour, business and communities. They should form part of a New Deal for our country which is capable of unleashing our competitive and entrepreneurial energies,” is his view.
After years of de-industrialisation, the manufacturing sector in his view needs specific support measures, including improved tax incentives for research and development, energy efficiency, small manufacturing enterprises and special economic zones.
Manufacturing exports must be boosted through better management of port tariffs and plans that integrate manufacturers into global production processes.
He advocates an emulation of the industrial policy success of the motor industry in other sectors, while expanding the number of black industrialists producing high-value manufactured products for domestic and international customers.
He expresses the view that a ‘buy and build local’ campaign to boost demand for manufactured products can be achieved through strict adherence to government local procurement policies and by placing positive pressure on businesses and consumers to be more Proudly South African in their choices.
Within the rules of the World Trade Organisation, he says that the country must use government’s procurement muscle to bolster manufacturing, while targeting specific areas where we can replace imports with local products.
Ramaphosa wants a review of all regulatory requirements on new start-ups to encourage entrepreneurship, increase innovation and accelerate growth. Similarly, the cost of doing business for all enterprises, but especially smaller firms and township businesses, must be reduced.
He is set on land redistribution being accelerated, together with systems that improve land productivity and support for farming activity by black commercial farmers. He sees the need for greater investment in irrigation, and helping small-scale farmers to gain profitable access to markets for their products.
He describes South Africa’s tourism potential as being world-class, and proposes to unlock the country’s vast tourism potential by simplifying visa requirements, expanding marketing efforts and stepping up the safety and security of tourists.
“It is critically important that more black South Africans are empowered to participate fully in owning and managing tourism assets,” he adds.
He sees vast potential to grow South Africa’s services sector, including financial, consulting and professional services, where the country enjoys strong capabilities that he wants to be expanded both internally and through extension into other countries, particularly the rest of Africa. He views the continued expansion of the services sector, as well as building stronger links to the productive sectors of farming, construction, mining and manufacturing, as a priority. Also, prioritised under his watch will be the transformation of this sector to ensure growth opportunities for black South Africans.
He calls for uncertainty hanging over solar and wind projects to be removed and describes the country’s renewable energy resources as being world-class.
“We can then position our country aggressively for energy-intensive investments based on our green energy advantage,” he writes.
Ramaphosa regards as urgent the restoration of good governance at all State-owned companies, whose networks and services he sees as crucial investment enablers.
“An immediate task is the appointment of boards and executives who are skilled and experienced in a mix of relevant disciplines, have impeccable credentials, are incorruptible, and are committed to public service and transformation. State-owned companies must be restructured and more effectively regulated where necessary to take pressure off the fiscus and improve efficiency, competition and social outcomes,” he writes.
He wants attention focused on improving the delivery of public services and describes recent statistics on the reading competencies of young learners as very troubling and providing a clear signal that the standard of basic education urgently needs improvement.
Similarly, the quality of public health services urgently needs to be addressed.
“Unless we repair the functioning of the developmental state, we will not be able to transform the lives of our people,” he warns.
As the public sector cannot, on its own, lift investment to the National Development Plan target of 30% of the gross domestic product, the public sector must shift much of its focus to creating an investor-friendly environment and infrastructure for a great increase in private sector investments.
“We have it within our powers to rebuild confidence – particularly as much of the prevailing negativity is the result of political and policy uncertainty. A restoration of confidence is the quickest and cheapest form of stimulus available, especially in light of our fiscal constraints,” Ramaphosa concludes.