DA's Plan for Growth and Jobs - Democratic Alliance

In the interests of sustaining strong economic growth, it is essential that South Africa’sdeclining relative attractiveness as an FDI destination is halted and reversed.Three essential ingredients are required in order to achieve this.First, investors need policy certainty. Under the ANC, the direction of national policy changesdepending on the machinations of different factions within the party and its alliance partners.Under a DA government, policy-makers will follow a consistent line that places job creationthrough rapid economic growth front and centre.Second, South Africa needs to be proactive about identifying potential investors, and activelylobby them to invest in the country.To do this successfully, we will need a coherent and focussed strategy; a properly trainedcohort of diplomats that can promote South Africa as a reform-minded and business-friendlydestination; as well as a welcoming and facilitative domestic institutional set-up to helpinvestors integrate into the South African economy.Third, the government needs to create the right environment for business to flourish so thatboth domestic and international players receive good returns on their investments.This requires that tax rates are competitive relative to other developing countries, and thatthe South Africa’s physical infrastructure is upgraded and expanded to meet the needs of avibrant and growing economy.The current national government has, until now, furthermore neglected the importance ofinvesting in economically strategic infrastructure - such as roads, rail links, ports, dams andpower stations – instead preferring to allocate the country’s fiscal resources to items such ashigh salaries for politicians and state employees. This is a trend that also needs to bereversed.According the Department of Public Enterprises, the country has, over the past fifteen years,accrued an infrastructure backlog of R1.5 trillion. This means South Africa has effectivelymissed a generation of infrastructure investment, with adverse consequences for thecountry’s competitiveness, as well as its long-term economic growth.Take the example of the logistics sector where the economic impact of poor infrastructureplanning and maintenance is very evident.Without adequate rail infrastructure, goods have to be transported by road. This, whencombined with the impact of rising administered and regulated prices of inputs such aselectricity and fuel, has contributed to transport becoming the single-biggest factor impactingon logistics costs: 53.2% compared to the global norm of 40%.Breaking down barriers to trade with the rest of Africa and the world, and building thefoundations for long-term growth by reorienting fiscal policy to prioritise investment, are thetwo cornerstones of the DA’s growth strategy for South Africa.To achieve this we have to deepen engagement with the rest of Africa as a strategiceconomic partner; radically simplify the rules and procedures involved in importing andexporting goods in and out of the country; actively promote investment; increaseinfrastructure investment to 10% of GDP to deal with our current backlogs; and eliminatewasteful expenditure through tighter fiscal governance, so that our resources go to buildingthe economic base, rather than lining the pockets of politically-connected elites.69 | P a g e