SONA: Government intervention and poor policy will hamstring the economy

By Janice Roberts
Editor

President Jacob Zuma

Trade union Solidarity today said that President Jacob Zuma’s proposed steps for “radical economic transformation,” referred to in the State of the Nation address, are a continuation of a harmful policy that will not get the country out of the fix it is in, but would rather suppress the economy even further.

According to Gerhard van Onselen, economics researcher at the Solidarity Research Institute, the current policy environment, supported by last night’s state of the nation address, gives rise to an economy that is currently being held hostage by external factors such as the demand for resources.

“Despite higher commodity prices and a stronger rand, experienced of late, which could support economic growth, the state of the nation address offers little hope that the economy will fully benefit from it.”

He said President Zuma referred to various steps in his much-discussed address which would apparently boost “radical socio-economic transformation”.

“Those proposals constitute a further continuation of the worn-out ideology of progressive central government interference in the economy, which will not really benefit the economy.”

Van Onselen added that the heightened focus on black economic empowerment (BEE), expropriation and an ill-considered land reform programme would further compromise private ownership rights, entrepreneurship and private investment, the very factors needed for economic development.

“Unfortunately, the state of the nation address did not nip uncertainty about harmful policy in the bud; if anything, it aggravated the uncertainty. In so doing, private investment and entrepreneurship are inhibited, which in turn, hamper development of the private sector, the real engine of the economy and the source of tax revenue.”

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