[Letter] Credibility gap

In asking investors to look past SA’s energy crisis, President Cyril Ramaphosa is in effect saying investors should focus on rhetoric only, and not the hard facts on the ground (“Cyril Ramaphosa urges investors to back investment drive despite power crisis”, April 13).

Investment, business formation, job creation and a general sense of vibrancy occur in the right kind of environment. Economic growth is never a given; absent reliable electricity supply, a strong respect for the rule of law and effective policing, and predictable, pro-entrepreneurship and -capital ideas and policies, investors will head elsewhere.

In appealing to SA’s ever-elusive and useful, but always immeasurable “potential”, Ramaphosa asks investors to focus on easy phrases and ignore the clear lack of meaningful moves on corruption, and on rolling back the stifling policies of the state.

The focus on lofty rhetoric instead of removing perennially underperforming ministers shows that the true priority remains taking care of party interest groups. Regardless of the faction that is in power within the governing party, cadre appointments, networks and influence will take precedence over all other considerations.

Talk of structural reform also rings hollow. In the trade space the apparent move to open access on rail corridors is undercut by the caveat that Transnet will remain custodian of infrastructure. In electricity the country’s growth remains capped by Eskom, with corrupt players at power stations and coal supplies unbothered by ineffective, incapacitated police and intelligence bodies.

SA’s risk premium has increased exponentially over the last few years. The government’s preference for control was most recently concretised in the signing into law of the Employment Equity Amendment Bill, indicating a preference for even more state power over the economy and society (“Business and labour welcome Employment Equity Amendment Act”, April 13).

But even this legislative move undermines the credibility of the state, showing that it is unwilling to adopt the reforms necessary for meaningful growth.

Letter originally published here.

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