- There is mounting evidence of a middle-class exodus.
- Families are losing faith in South Africa’s turnaround.
- And trade unions can’t be bothered to seriously engage on the economy - hiding behind process and ideology.
- For more stories go to www.businessinsider.co.za.
The ink barely had time to dry on National Treasury’s most detailed policy proposal of recent times to rescue a moribund economy before trades union federation Cosatu shot it down as “incoherent, confused and unreliable.”
That could not be further from the truth. But be that as it may though, Cosatu as an ANC alliance partner can cause trouble for finance minister Tito Mboweni’s reform agenda.
Cosatu’s failure to deal with the detail of the new plan shows that its reaction is little more than politicking, rather than a robust engagement with a first draft of a plan to drag the economy out of intensive care.
It’s hard to see why Cosatu is not supporting the principle of “labor-intensive growth” that permeates the plan; surely the more workers the unions can convince to join them and pay subs, the more powerful it becomes.
This while the official unemployment rate is at 29% and the SA Reserve Bank, which is usually over optimistic in its forecasts, is predicting just 0.6% growth.
It is also clear that South Africa has lost the early advantage we had in the battle for confidence around investment.
It’s been a year since President Cyril Ramaphosa’s optimistic investment summit, that was supposed to kick start fresh capital inflows of $100 billion into the economy. After making a promising start, things came to a grinding halt in January as Stage 4 load shedding removed any illusions of a quick fix.
To make things worse, money and skills are flooding out of the country. SARS commissioner Edward Kieswetter acknowledged this week that their data is showing an increase in individuals seeking tax clearances to move offshore.
See also: South African farmers are moving to Canada – and immigration consultants are seeing a ‘massive’ spike in business owners keen to leave
“It’s a sad reality. As a South African, I am concerned about that. We have seen, in discussion with colleagues at SA Reserve Bank an increase in emigration. There have been unprecedented flows out the country,” Kieswetter said.
“It’s a huge concern, as in the long term, that erodes our tax base."
Results this week from private education group Advtech, which operates a range of high-end private schools and tertiary institutions, suggests the trend is accelerating. Advtech was one of the first listed companies to warn of a rise in emigration. Last year Advtech saw about 930 departures of children where parents named emigration as the reason for leaving.
Six months into the current financial year, the number stands at more than 500. For Advtech's schools waiting lists are a thing of the past.
Government sees these statistics and is aware of the problem. It is unlikely to want to play hardball with unions, which are a key constituency, but the longer it takes to implement the best ideas contained in its latest strategy, the harder the economic repair job will be.
If government is serious it needs to get moving. Fast.
Bruce Whitfield is a multi-platform award-winning financial journalist and broadcaster.
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