What business does the EFF think it’s got in business?

Business

What business does the EFF think it’s got in business?

Party’s manifesto gibberish includes support for special economic zones, which makes sense ... up to a point

Tim Cohen


What does one say about the EFF’s manifesto? It’s hard to react without exasperation and frustration. One really despairs.
Some commentary out there suggests it is a fundamentally dishonest document because the absurdities and contradictions are so extreme it really constitutes a set of lies aimed only at catching votes, written in the knowledge that its loony ideas will not have to be implemented. It’s a kind of clickbait manifesto on crack. But it’s much worse than that.
It’s so fundamentally outside the realm of modern economics it's positively martian. It not only declares itself in favour of the nationalisation of land, mines and banks but also of “other strategic sectors of the economy”. Without compensation naturally. And then it claims SA’s growth will be 6% in the first two years, and 10% every year after that. Oh dear.
And yet, just when you are shaking your head in gloom, you read something sensible. The EFF says it will abolish the 30% pass mark and increase it to 50% Great! But then the very next sentence is that all scholars will have to learn sign language. Oh dear. It’s such a mixture of good intentions, pridefulness, ambition and cluelessness.
I suspect that from the ANC’s point of view the manifesto is a problem, because as the ANC has moved to incorporate EFF ideas such as expropriation without compensation the EFF has just moved even further leftwards. The ANC has the inconvenient disadvantage of actually having to implement its manifesto, so it cannot keep following the EFF leftwards. Doing so would make administration of the state impossible. It’s hard enough already to introduce land expropriation and maintain an investment grade rating.
What the EFF has done is move so far left that it has achieved what the DA is struggling to do: create clear air between it and the ANC. It demonstrates, or at least ought to demonstrate, the futility of chasing the vote-catching ideas of others. As soon as you start going down that road your policy agenda ends up being controlled by your opponents. And that is as applicable to the ANC as it is to the DA.
There is one aspect of the EFF manifesto that interested me, however: its support for special economic zones (SEZs). In some ways, that’s understandable. The EFF now needs to suggest it has an economic game, especially since the ANC has trumped its land expropriation card. I sense that the poor economy is beginning to have political consequences. Voters need to be convinced it won’t collapse any further. So the EFF has grasped this idea of special SEZs, or export processing zones. Its support for the idea means there is now one idea all major parties support – it’s a miracle! The problem is that there are SEZs and SEZs.
The government has been working on the implementation of SEZs for a long time now. The first, Coega, was implemented in 2001, East London and Richards Bay the next year. Then there was a big gap before the Dube Trade Port outside Durban’s King Shaka Airport was designated in 2016. But the idea is catching on. There are another four that have been designated but are not yet operational, and six more have been proposed.
Outside of its increasing popularity, has the programme been a success? It’s hard to say, but I would guess it’s been a stuttering, marginal, uneven, partial success-like thing. And that is entirely consistent with the rather halfhearted deal investors get – they can, but won’t necessarily get, a corporate tax discount to 15%, some other tax benefits, and some infrastructure allowances. There are now about 88 investors who have put in about R15bn and close to 12,000 jobs have been created. On the other hand, the government has spent about R11bn developing the idea. In truth, it’s a bit of a government boondoggle.
That too makes sense. One aspect of SEZ legislation is that business has precious little influence over the process. In the body that decides who gets to put up a factory there is one business representative, compared to seven from the government and state-owned enterprises. Business has no bigger voice than Eskom or the community representative.
It reminds me of that old truism of innovation — innovators are very often in the perverse position of having to ask permission from precisely the companies they intended to disrupt for permission to operate. A good example is Airbnb and Uber, which both have to somehow wind their way around lobby groups from the government and their competitors just to operate.  Imagine a business proposing to disrupt one of the hundreds of existing businesses the Industrial Development Corporation (IDC) supports. You think the IDC representative on the SEZ board is going to approve that one? Not so much.
I support SEZs – it’s a great idea. But one aspect worries me: their increasing popularity is a suggestion of a desperate desire for economic silver bullets. Sort of like the EFF’s manifesto.

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