Post-Covid Development Dilemmas: Debt and the Dream of a South African Developmental State (Part 1)

On the 8th of July 2020, the ANC’s Economic Transformation Committee released a discussion document entitled  Reconstruction, Growth And Transformation: Building a New, Inclusive Economy”. The document, described by the head of the committee, Enoch Godongwana, as the basis for a social compact, argues for the South African government to play a larger role in steering the tattered South African economy into the post-Covid global economic terrain.

Finance Minister Tito Mboweni’s revised budget released in late June, states the cruel reality, “the main budget deficit, estimated at 6.8 per cent of GDP in the 2020 Budget, is now projected to reach 14.6 per cent of GDP”.

There is not much new about this vision:

The ANCs New Inclusive Economy recycles infrastructural spending towards greater localisation of production linked to export led growth.

In 2018,  Cyril Ramaphosa announced his new economic stimulus package at the Union Buildings, “Infrastructure expansion and maintenance has the potential to create jobs on a large scale, attract investment and lay a foundation for sustainable economic expansion.”

Through the Forum for China- Africa Cooperation, infrastructural investment in Africa and the development of Special Economic Zones, lauded by the World Bank as a key developmental tool of the People’s Republic of China, has been granted centre stage in escaping South Africa’s development conundrums.

Local job creation promises are linked to the ANC’s disconcertingly vague vision of large scale infrastructural investments are promoted as part of public-private partnerships and foreign direct investment initiatives. In the past few months, trade linkages into Africa have been reinforced by the belated launch of South Africa’s Sustainable Infrastructure Programme.

Special Economic Zones are being promoted by the Department of Trade and Industry as the way of actualizing all of the above. The Zones, brought into legislation in 2014, transformed South Africa’s languishing Industrial Development Zones into tax havens aimed at drawing foreign and local investment.

According to Fikile Majola, Deputy Minister, Dtic, “the SEZ Programme has been prioritised as one of the instruments used by the government to attract foreign direct and domestic investments, integrate local firms into global value chains, increase exports, develop local industrial capabilities, accelerate the beneficiation of natural resource endowments, accelerate the development of the country’s lagging regions and create decent jobs”. 

                       Watch this space for updates!!!

In coming weeks, we will be exploring different facets of South Africa’s promotion of SEZs as a form of “inclusive” development for solving our economic chaos.

There are many warning bells that inclusive development has a distinctly state and private business development focus directed toward FDI to the detriment of local participatory development.

Sustainable development red flags are frequently glibly tackled at both national and provincial state levels. What should be of great civil society interest (and concern) is the  proposed “Dirty Energy” Metallurgical Special Economic Zone in Limpopo Province in the ecologically pristine area of Musina Makhado.

Rob Tooley, Chairperson of the MMSEZ Board stated in March 2020, “The basic appeal of MMSEZ is the underdevelopment of Africa, and as a 4IR logistical hub we are a conduit to development in SADC. The challenge will be to ensure investments also create jobs – it can’t be one without the other. The quid pro quo of an SEZ is that although you lose on corporate tax, with jobs being created you gain on PAYE and VAT as the economy grows”

Will it be another case of where did the (job) promises go?

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