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It is one thing to know what needs to be done to get our economy growing again. It’s quite another to actually do what needs to be done.
One of the things that need to be done is crafting of a clear and implementable strategies for the physical protection of construction and mining sites. Failure to fix the problem would worsen the deficit between the inherent potential the country has for growth and the reality of economic stagnation.
Now we have the dishonor of being a recession-prone economy on a continent that, on average, is projected to grow by more than three percent, barring the effects of the unforeseen factors such as Coronavirus.
Before Statistics South Africa released the latest miserable numbers showing a 1. 4% slump in the fourth quarter of 2019 – a confirmation of being firmly on the recession territory – the National Treasury had projected growth of 0.9% this year.
Finance Minister Tito Mboweni tried his best with the budget, but he had to work with nearly impossible set of numbers primarily because the economy is not growing. It almost feels like we are an in an economic cul-de-sac while we know we should be on the highway of growth and we know how to get there.
We are, of course, not short of ideas that can take us on the high growth trajectory. Some are complicated and some trigger divisive national debates, making people to protect their narrow positions instead of focusing on the bigger picture of growing the economy.
Under such circumstances the best thing to do is start with the basics where divisions are unlikely and national agreement would certainly be guaranteed.
You can go anywhere in the world, the first thing any investor would ask you before they risk with their capital is whether their investments would be safe. They would want security of their investment from a number of political risks: physical attacks, nationalisation, annexation of property and disruption in business operations.
Once you have all the property right laws and a robustly independent judiciary to adjudicate disputes, as we do in South Africa, you must proceed to demonstrate that they work. This means you must arrest those who violate the laws and bring them to the courts. Unfortunately, we have not seen arrests of people who disrupt construction and mining activities. These sectors are experiencing disruptions from gangs who habitually abuse their right to protest.
They prevent workers and local contractors who are typically medium size business from carrying on with their work. In the process, the gangs worsen the economic hardships of struggling local communities.
Mining is one of a few sectors that registered positive growth in the last quarter, thanks to better prices on a range of commodities. And, as Ramaphosa said in his address to the House of Traditional Leaders, mining can help revive rural economies.
Yet, we are not taking full advantage of the commodity boom because of mainly two negative factors: electricity supply constraints and increasing incidents of mining disruptions. Both need urgent solutions. The good thing is that Eskom seems to be getting all right attention from the government. We can’t wait to see the results: reliable and cheap electricity.
Provision of security is becoming one of the fastest growing expenditure items in mining operations. But only recently did the security of business operations, particularly mining and construction site, begin to receive high-profile attention.
President Cyril Ramaphosa, who has made it his mission to create a business-friendly environment by, among other things, fast-tracking of licenses, has finally spoken against the disruptions of mining and construction activities.
It was pleasing to learn that he has made it a personal priority. In his 2020 state of the nation address, Ramaphosa said: "I have prioritised our response to the growing problem of criminal groups that extort money from construction and other businesses." He also acknowledged that "growth and job creation will in large measure be driven by private enterprise".
Once the president of the country has elevated the security of business to the list of his top priorities, there should be immediate action from law enforcement agencies to protect the country’s national economy. More so because the president is also the commander of the armed forces and surely his instructions on security matters should carry more weight.
The president’s concerns also echoed by Mboweni who also stated: "The disruptive actions of those who storm construction sites or mines harm growth and lead to job losses." He could not have put it better.
Each time there are disruptions, businesses lose income and the costs of capital as well as operations rise. The most devastating part is to see workers, those who are privileged to have a job and local contractors lose much-needed income.
Empowerment schemes such as local procurement suffer enormous harm at the hands of extortionists who typically have enough money to mobilise unsuspecting community members to shut down mines, hauling routes and construction sites.
The government must act urgently on the president’s instruction. Lest the country’s potential will remain just that – potential.
Bayoglu is the MD of Menar, an investment company with over R7 billion worth of investment projects in the pipeline in South Africa.
