DA’s new economic policy aims to relieve debt burden, support small businesses

South Africa’s debt burden will be relieved, small businesses will be supported to register on the Johannesburg Stock Exchange and be exempt from regulatory red tape, while the minimum wage will be frozen to create jobs and boost economic growth, under a new Democratic Alliance (DA) economic plan.

The plan presented by DA leader John Steenhuisen on Friday also aims to scrap import duties on business tools, such as small bakkies, while the social relief of distress grant will be converted to a job-seeker’s grant, the child support grant will be raised from R530 to R760, and the the ban on imported second-hand vehicles will be reconsidered.

The DA touted its 68-page Plan to Unleash Enterprise, Grow the Economy and Create Jobs 2024, presented by Steenhuisen and policy head Matthew Cuthbert, as a “historic” and “groundbreaking” document which focuses largely on confronting the unemployment crisis by supporting the growth of small businesses and major labour reforms.

It also aims to create an environment conducive to business and job creation by stimulating economic growth, reviewing import duties and administered prices — which include the price of fuel and electricity — reducing debt to recover from the fiscal cliff, breaking up local “cartels” and boosting global competitiveness. 

South Africa is in “serious economic turmoil”, faces one of the world’s worst unemployment crises, threats to the independence of the Reserve Bank and has uncompetitive industries, Cuthbert said.

“The DA’s plan to rescue the economy begins with improving the ease of doing business and recognising the vital role of small businesses and entrepreneurship in driving economic growth and development in South Africa,” he said.

“Some of the mechanisms include removing the import duties on critical business tools, establishing resources and facilities to support small businesses and job creation, and reforming the regulatory environment to create a conducive business environment.

“South Africa’s fiscal situation is rapidly deteriorating with high levels of debt and escalating interest payments or debt payments, all reducing the budget available for frontline service delivery. 

“The DA will ensure that the South African state has the fiscal space to deliver on its constitutional mandate by reducing the national debt.”

Cuthbert said the party would ensure responsible monetary policy and the independence of the Reserve Bank. 

Steenhuisen said the policy document had been created “in consultation with some of the best economic thinkers in the world” and was based on global examples of best practice. It was built “very simply on a fundamental truth that the wrong choices made by the wrong people have led to the wrong outcomes and that better choices made by the right people can … solve this crisis”.

“The DA is the right party to be able to create jobs in South Africa and liberate the people of the country from 30 years of failed policies that have pushed 12 million South Africans into the unemployment queue and which force many of our citizens to live under the yoke of economic disaster. So, this is a historic moment, not only for our party, but I also think for South Africa,” he said.

He said the party’s most important pledge, announced at its election manifesto launch in February, was to deliver 2 million new jobs and “to lay the foundation for a new, rapidly growing modern and vibrant economy”.

“The policy sets out how we will improve the ease of doing business, which alone will unlock between 250 000 and 400 000 new jobs. Through making better fiscal choices, we will generate another 250 000 to 500 000 new jobs,” he said.

“Reforming labour policies through better choices, including our introduction of a new Youth Employment Opportunity Certificate, will unleash hundreds of thousands more jobs for young people.

“One of the most heartbreaking things for me as a political leader is to travel around the country and see young graduates who’ve done the work at TVETS [technical vocational education and training institutions] and universities standing at traffic lights, clutching their certificates, begging for jobs. It cannot be right that young graduates with these skills cannot find work in our economy.”

He said making better choices on collective bargaining to expand representation and exempting small, medium and micro enterprises from agreements they could not afford, would create a further 500 000 to 1 million new jobs, while changes to the government’s industrial policy and trade policy would generate between 250 000 and 500 000 jobs and between 100 000 to 150 000 jobs, respectively.

“Unlike other political parties that are thumb-sucking jobs promises, every single pledge contained in the DA’s economic policy is the product of thorough costing and cutting-edge research,” Steenhuisen said.

According to policy document studies conducted over six years, tracking 500 small, medium and micro enterprises’ businesses spend, on average, between 4% and 6% of turnover is spent on compliance with regulatory requirements, hindering capital investment and job creation.

Similarly, the informal sector, despite constituting approximately 17% of total employment and contributing around 6% to gross domestic product, struggles under the current adverse conditions.

The DA proposals aim to “strengthen the start-up ecosystem, make it easier to start a business and help foster entrepreneurship and business growth” with financial support, one-stop shops, business tool kits and by making essential tools more affordable.

“Removing import duties on essential business tools, such as single-cab bakkies (pickup trucks), can significantly support small businesses, entrepreneurship and economic activity, especially in rural areas,” the policy document says.

It notes that despite South Africa’s strong automotive manufacturing sector, locally made models are still more expensive than imported alternatives.

“However, automotive industrial policies inflate cheaper imported alternatives through import duties of 25%, resulting in higher prices for consumers and widening the affordability gap for small businesses, especially in underserved communities.”

The document proposes learning from Sweden, where stock exchanges such as Nasdaq Stockholm, provide platforms, such as the Nasdaq First North, for small businesses to list and raise capital through initial public offerings.

According to the policy, the DA will also safeguard the unemployed and provide further business opportunities by converting the social relief of distress grant into a job-seeker’s grant which would assist recipients in actively looking for work opportunities and starting small businesses, such as selling fruit and vegetables.

“It is a serious policy and a policy that shows South Africans that we are serious about governing after decades of governing dozens of municipalities and major provinces, of learning and internal reform,” Steenhuisen said, challenging President Cyril Ramaphosa to join him in a policy discussion before the 29 May general elections.

“I am issuing a challenge today — because I am so confident in my policy — to President Cyril Ramaphosa, to stop hiding away,” he said.

“Let’s have an open, honest, and frank debate about the future of South Africa and the choices that lie before the people of South Africa. I will bring my policies and I will happily debate them with you, toe to toe, and let the South African people decide.”