Dear Editor
The Democratic Alliance (DA) takes pleasure in releasing our submission to the Department of Trade, Industry and Competition’s so-called Transformation Fund today. Download the submission here.
The Department’s concept document has attracted much attention, in terms of impractically. Organised business and think tanks have all been vocal against the Fund, as it will not deliver economic growth and job creation.
Further, a recently released survey shows South Africans are against government continuing B-BBEE, after 20 years of failed implementation.
The DA opposes the so-called Transformation Fund for several reasons:
- Its continuation of B-BBEE policies which have failed to bring disadvantaged South Africans into the economic mainstream and have left 8 million people unemployed while enriching a small elite;
- Its failure to address barriers to foreign investment inherent in B-BBEE and other heavy-handed government policies;
- A lack of focus on new business formation and growth, which should be the main source of jobs created in the economy;
- No alignment with existing enterprise and supplier development, or ESD, ecosystems and programmes run by private sector and their business partners;
- No solution for businesses lacking the collateral or business records required to qualify for financial assistance; and
- A contradiction to the GNU’s inclusive growth commitments by choosing race rather than broader, more systemic reforms.
Our submission details these inherent weaknesses and why the Department must abandon its plan to implement the proposed fund.
The most effective tool for empowering South Africans is a growing economy that delivers jobs. Without growth there can be no transformation. Transformation, as practiced by the ANC, benefits a select, connected few, which the Transformation Fund will worsen.
Poverty must be the matrix used to achieve real transformation and redress rather than focusing on benefiting an elite politically connected few.
The growing line of unemployed South Africans and fifteen years of tepid economic growth will not be reversed by doubling down on these failed policies.
Instead, the DA’s position is about giving South Africans the opportunity to achieve their fullest potential through better education and skills development, reduced crime and corruption, upholding the rule of law, access to work and an enterprising market economy that attracts investment.
To grow our economy to deliver jobs, the DA offers these pragmatic proposals to South Africans:
- An independent review of the B-BBEE legislative framework and regulations, with a focus on their impact on economic growth and job creation. This includes a review of the sector codes and preferential procurement for designated groups by state entities, which have historically raised costs and reduced competitiveness;
- Replacing B-BBEE with the attainment of globally recognised United Nations Sustainable Development Goals, as outlined in our Economic Justice policy. These have outcome-driven targets, including eliminating poverty, providing quality access to education, health and reduced spatial inequality;
- A focus on true empowerment through measures to stimulate the formation and growth of new businesses in which black South Africans can participate as entrepreneurs, owners and employees. This focus on enterprise, innovation and competitiveness contrasts with the past emphasis on transferring ownership of existing businesses to a small number of soon-to-be very wealthy ANC-connected cronies;
- As has already been endorsed by Cabinet, a wholescale review of regulations in ensuring that businesses operate in an environment conducive to their formation, growth and the delivery of jobs;
- Boosting our exports, through a revitalised manufacturing sector and fast-emerging value-added services sectors.
The so-called Transformation Fund is a misguided proposal in its contradiction with Government’s Medium-Term Development Plan, which is to foster inclusive economic growth.
The DA calls on Minister Tau and the department to step back and acknowledge the need for a re-think.
Regards
Toby Chance MP
DA Spokesperson on Trade, Industry & Competition