Post by cjm on Nov 16, 2015 17:17:04 GMT
Davies’s dogma trade off leaves SA worse off
by Geordin Hill-Lewis, November 16 2015, 06:00
ROB Davies has been a competent trade minister. He runs a comparatively efficient department, is scrupulous and responsive. Ordinarily, these would be the ingredients for an excellent member of the Cabinet. But Davies is unfortunately also an implacable ideologue, steeped in 1970s Marxist dogma. This manifests in a relentless drive to exert control over the productive economy and extend state power, with disastrous implications for business, employment and growth.
Trade and industry is the second most senior economic portfolio in the Cabinet after the Treasury. It is a department vested with huge (and ever-growing) regulatory powers. In this role, the minister’s core responsibility in the past 12 months should have been to work to restore economic confidence and investor sentiment towards SA.
With the precipitous devaluation of the rand, the past year also presented an opportunity to reinvigorate the manufacturing sector and grow exports. But in these important tasks, Davies has failed. In fact, he has made things worse.
Davies’s public pronouncements and policy decisions have contributed to growing concern among the global investor community about the African National Congress’s policy trajectory and its commitment to market economics.
Every new set of regulations from the Department of Trade and Industry seems to come from the same ideological mould. He has promulgated punitive new black economic empowerment (BEE) codes that pervert the original broad-based goal of economic transformation and, in fact, double down on the same narrow-based elite enrichment for which BEE has become so hated.
The "100 black industrialists" programme is another chance for the government to pick a tiny group of well-connected winners and make them rich, at the expense of real empowerment.
Davies has also attempted to exert price controls over raw minerals, and may still succeed in doing so in a wrong-headed attempt to force domestic beneficiation. He has proposed a liquor policy that would render nearly every liquor outlet in the country illegal. He has been increasingly truculent towards the business community, contributing to record-low business confidence.
Even on trade, Davies has increasingly pursued an isolationist agenda. Our relationships with our biggest trading partners have never been worse. The government seems to be of the view, inexplicably, that a closer relationship with our Brics partners can only be achieved at the expense of our existing relationships. He has also bungled the management of the renewal of the US’s African Growth and Opportunity Act, and the market access negotiations related to it. He has acted to alienate and antagonise the US, one of our most important trade partners, and has put our economy at great risk in the process.
On investment attraction, Davies has cancelled bilateral investment treaties with the countries from which SA received most of its foreign direct investment, but has hypocritically signed new treaties with other countries, such as China. He has also introduced an investment bill that serves only to further undermine investor confidence, and adds impetus to the doubts about the government’s commitment to private property rights. On his watch SA has, for the first time, fallen completely off the AT Kearney list of the world’s top investment destinations.
Overall, Davies’s broad policy direction, and his decisions over the past year, have been damaging to the South African economy, deterring to investment and ultimately are costing jobs. Increasingly, his policy disposition is towards greater state control, more punitive measures, wider ministerial powers and heightened mistrust and antagonism towards the business community.
The government must put dogma aside and stop oversimplifying our complex economic problems. What we need is common sense, evidence-based economic policy making.
Hill-Lewis is DA shadow trade and industry minister