One On One

Q & A – Zwane Unemployment

South Africa’s economy is expected to grow by 0.5 percent this year, down from the 1.5 projected in the national budget in February. This week’s Mid-Term Budget Policy Statement stated this would contribute to a budget deficit of 5.9 percent of the Gross Domestic Product (GDP) by the end of the financial year and 6.5 percent next year. The Weekly’s Martin Makoni asked the Central University of Technology (CUT) senior economics lecturer Mgcinazwe Zwane how far the proposed measures could go towards addressing the country’s economic challenges. Makoni also asked Zwane how the country’s worsening unemployment situation could be addressed, particularly in the Free State. Excerpts:

What are some of the key points that you took from the mid-term budget statement delivered by the finance minister Tito Mboweni on Wednesday?

The only thing that I found interesting was that hint that they are going to do away with some of the state-owned enterprises that are not performing. That will help us. We are faced with a huge fiscal deficit right now and that is bad for our economy. I also found the proposal to cut the spending by ministers very important. I know people are sceptical, but it’s important that it’s done. There is limit of R800 000 for new vehicles and they will be boarding the economy class when they travel locally. But I would have been happier if that had been extended to international flights because local frights are already cheaper. If that had been done to all flights, it would have saved us a lot of money.

But given the economic challenges faced by the country at the moment, do you think the measures he proposed come any close to addressing them?

No. Look, you will recall that he said we need about R50 billion extra tax every year for the next three years to get the R150 billion in total to bail out the country and stabilise public finances and have a balanced primary budget. So, for me, the measures are neither here nor there. Government should cut spending more significantly. The first thing they should have said is, how do we cut the ballooned parliament? Two, those in parliament have huge perks and they are earning more money. They have subsidies for housing, houses in Cape Town and Pretoria and they don’t pay rent. They have free flights, they have motor vehicle allowances… we need to cut those perks if we are serious about saving the economy. Those perks run into billions.

Don’t they deserve such perks so that they can focus more on their work and won’t get tempted into corruption?

You will recall that the minister said that the total bill of the parliamentarians, nationally and provincially and locally, exceeds the entire income or wage bill of the public servants. We need to cut there first if we are serious about job creation. We need to cut that ballooned wage bill. So, for him to say that they are freezing the salaries of those at the top, it is too little too late. We need more significant cuts and use that money elsewhere.

But there is an argument that the real reason the economy is struggling is there is a lot of money being lost to corruption as well as misuse, what’s your view?

That’s correct. There are indeed instances where money is being abused. For example, how many times have we bailed out Eskom, the South African Airways and the SABC?  And for how long are we going to be doing that? Why can’t we give them loans instead of bailing them out? We are taking the money somewhere and that money leaves a gap somewhere… and we are giving it to the same people who can’t use it properly. They have failed to improve each time they were bailed out. They have to change their strategies and start making money. They must be self-sustained. They can’t keep on getting money which could be used in other areas and help improve the economy. If the people at the top have failed, they should be replaced.

So, is the privatisation of SOEs the solution or it’s all about putting in place the right management structures?

Give any economy in the world that has survived on nationalism, and I will tell you that Jesus Christ is coming. For as long as we continue refusing to face reality, our economy will never grow. My take is, yes, let’s privatise. When you privatise, you are not only creating employment, you are also bringing sustainability and growth in the economy. At the rate that were are going now, our labour forces are controlling the economy. When you privatise there will be output and you will employ people who are qualified. At the moment we have so many graduates who are unemployable and unemployed. We must think about the future of this country and not the past. Government must shift focus and become more market oriented. We can’t rely on Marxism anymore. It’s dead. We are living in a capitalist world. In order to build this country, we need people who can take the horn of the bull and say that, look, we are privatising Eskom, SAA and SABC. Look at Multichoice. It has a surplus of billions. You pay, you get the service. If you don’t pay, they cut off the service. Simple like that.

The latest jobs figures don’t paint a good picture on the country. The official unemployment rate is at an all-time high at 29.1 percent and the provincial figure also went up to 34.5 percent, how can the province address this?

There are so many unused and disused mines in the province. Why can’t we go back to there and utilise them? All other aspects have failed. One thing that God has given us in abundance in Africa are the minerals. So, why can’t we go back to what we know best? Let’s go back and check if we can still find minerals in those mines that are lying unused. Let’s go back to what we know better and create jobs. We can have serious production in that sector.

But the companies that operated those mines have said the mines are no longer productive, is really worthy going that route?

It was a political strategy used at the dawn of democracy. Why have those companies sold some of those mines if they’re no longer productive? Why do you think Zamazamas keep going there? Do you really think there is nothing left? Apparently some of those companies have been going back to the mines after 10 years or so, claiming they found more minerals after some new explorations. What we need now is have people organised and given those disused mines to run. We need to identify investors who can run the mines privately and hand over after a certain time so that locals can operate them. It shouldn’t be individuals. We should actually get to a point whereby every province takes charge of its resources.