Recently our Chamber has committed itself to a policy position on the South African economy and its prospects. I believe that readers of this publication might be interested in reading what we stand for and, consequently, extracts will be featured over the next few weeks. This week, they deal with general issues.
The Pietermaritzburg Chamber of Business believes in the economic effectiveness of free market principles. The Chamber recognises that such descriptions as ‘socialism’ and ‘capitalism’ in their traditionally purist forms are no longer relevant in a global economic environment. There are several developed countries that have embraced the fundamentals of a welfare state to a lesser or greater degree, while retaining the essentials of capitalist business activity. The best model for a developing country is a hybrid in which free market imperatives are judiciously balanced with state-initiated social upliftment programmes. These should be underpinned by support for individual endeavour rather than gratuitous hand-outs.
The Chamber acknowledges that there is no true entrepreneurship without risk and, in consequence, respects the rights of shareholders and others who court such risk to benefit from their investments and their business efforts. The profit motive as the fundamental driver of successful business has to be respected.
Economic growth of any significant proportion is the product, primarily, of private sector activity. While government spending and, in particular, its capital investment, contribute towards the country’s GDP, or a region’s GGP, there is a limit to the extent to which this is possible given that the state’s resources are dependent, for the most part, upon taxes and duties. Thus, spending is possible only to the extent that tax-payers have the capacity to pay. The responsibility of government, at whatever level, in the economic sphere is to create and sustain an environment most conducive for the growth of business, the extension of entrepreneurial opportunities and the liberation, in particular, of the small business sector.
The Chamber supports the many initiatives of government aimed at reducing the country’s reliance on imports and promoting export as a means to bring about and sustain a trade surplus. Efforts in this regard need to be accelerated while attention is required to the procedures involved in the various programmes which have proved inhibitive to many applicants for grants and other assistance. Of equal importance is the need for the promotion of manufacturing processes which are considered to add value. The export of too much that is not beneficiated in any way provides other countries with opportunities for economic growth which South Africa should be retaining for itself.
Public sector spending, at all levels of government, requires careful control to ensure that the best value for every rand spent is obtained. Spending should be informed by clearly-identified priorities which must include the proper maintenance of state assets and the consolidation and extension of infrastructure.
All government endeavours to accelerate economic growth should be based on the objective of the nation becoming one of producers rather than consumers. Within the economic sphere, this goal should constitute a significant element of the country’s transformation.
Andrew Layman: PCB CEO
This article appeared in The Mercury on the 30 July 2008
