Mmusi Maimane was elected as the first black leader of the Democratic Alliance in May 2015. As the official opposition in South Africa, Maimane’s appointment before the 2016 municipal elections should provide an interesting opportunity for the DA. His eloquent rhetoric which has him compared to Obama, was also highlighted in his A Broken Man, Presiding Over A Broken Society challenge of Jacob Zuma in the 2015 State of the Nation debate. Accelerate Cape Town hosted Mmusi Maimane at our CEO Dinner to discuss what the DA sees as requirements to grow a robust and inclusive economy.
Mmusi opened the evening by reflecting on South Africa under Nelson Mandela who had a strong reliance on the private sector for investment, infrastructure development and economic growth. But while South Africa got off to a good start, there are concerns with our current economic growth and if one reflects on Greece who were welcomed into the EU only 15 years ago, a lot can happen in a short space of time. Mmusi looked at a few main points that South Africa needs to address:
Corruption takes many forms, from misappropriation of public funds to personal and corporate tax evasion. For Zuma, corruption is a victimless crime and our tenders tend to have an inflationary increase to incorporate corrupt practices. South Africa is not dealing with this problem seriously which is a great concern as it is a factor that is deterring global investment. If you look at Nkandla, Marikana and the Waterkloof Gupta landing, accountability is weak with little consequences. We need to target corrupt officials and ensure harsh sentences are handed down to the guilty.
Ensure Effective Tax Collection
We need to ensure that the South African Revenue Service (SARS) remains healthy and that South Africans pay their taxes. The Greeks did not believe in paying taxes which is one of the reasons for their downfall. Only 5 million people contribute to our tax revenue while18 million are on social grants. This situation is not sustainable. Recently many senior SARS executives have been suspended, dismissed or have resigned which has raised serious questions about political interference. For a well-functioning economy, an effective revenue service is vital.
Manage our Public Sector Wage Bill
South Africa’s public sector wage bill has grown from 5% of total expenditure in 1994 to 40% this year, costing us more than R450bn a year for our public sector. Our Cabinet is too large and state-owned enterprises such as SAA are not profitable. Our ballooning public sector wage bill needs to be limited. One of the key requirements of Greece’s bail-out is that their bloated public sector wage bill which reached €24.5bn in 2009, needs to be cut.
Manage our Debt
South Africa’s debt ratio has almost doubled over the past five years, from 21.8% of GDP in 2008-09 to 40.8% in 2014-15. The 2015 Budget Review says ‘government has expanded its borrowing programme in response to difficult economic circumstance’. We cannot rely on debt and higher taxes to fund our state which was Greece’s undoing. If SA wants to get itself out of a debt trap, it needs economic growth and private sector investment.
It was a stimulating evening with Mmusi Maimane and you can see photos from the dinner.
This article has been published with the permission of Mmusi Maimane. The content of this article also appeared in BDLive prior to our engagement and is not a commentary on opinions that would fall under Chatham House rule.