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Speaker 1: Carol Peyton News twenty four journalist has written on politics

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Speaker 1: over progress why South Africa can't create jobs? Why is

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Speaker 1: the country struggling to create jobs despite endless policy promises

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Speaker 1: and economic plans. According to analysis coming out of the

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Speaker 1: recent on the Record summit hosted by News twenty four,

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Speaker 1: the answer may be far less technical than we think.

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Speaker 1: It's not just economics, it's politics. We join now by

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Speaker 1: Carol Peyton to explain. Carol, good afternoon, and thanks for

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Speaker 1: joining us this afternoon.

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Speaker 2: Good afternoon, Amy, Carol.

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Speaker 1: You argue that politics, and not just economics, is the

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Speaker 1: binding constraint on job creation. What are the key political

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Speaker 1: decisions or dynamics that have led you to write this?

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Speaker 2: Yes, exactly so. I think we often look at the

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Speaker 2: economy and say, well, the problem with the economy, and

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Speaker 2: clearly there is because the economy is not growing. It

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Speaker 2: hasn't grown for the decade. You know, it's been stagnant.

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Speaker 2: It's not growing above population growth, and it's an investment

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Speaker 2: has plummeted over the last decade. You know, the investment

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Speaker 2: is actually less smaller now in real terms than it

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Speaker 2: was in twenty fifteen. As a sort of ratio to GDP.

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Speaker 2: So we look at those things and we think, well,

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Speaker 2: we've got an economic problem. But if you look at

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Speaker 2: what causes those economic problems, what causes the lack of investment?

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Speaker 2: Why is investment so weak? You find that it's actually

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Speaker 2: political things. So it is things like consumer confidence, business confidence,

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Speaker 2: consumer the lack of demand, consumers being unable to not

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Speaker 2: wanting to spend, the governments not wanting to spend because

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Speaker 2: it doesn't have money, and businesses not what you've to

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Speaker 2: spend because they don't have any certainty. So without spending,

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Speaker 2: you don't get investments, you don't get growth. So a

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Speaker 2: lot of these economic problems actually have the origin and

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Speaker 2: political problems and or in political decisions, let's say, and

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Speaker 2: what you know I'm arguing for is to say, well,

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Speaker 2: let's deal with these political blockages, because these are the

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Speaker 2: actual constraints to investment in the economy. It's not just

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Speaker 2: you know, our economy has got a problem, there's no investment.

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Speaker 1: There needs to be, of course, a balance between policies

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Speaker 1: and attracting investment. Do you think government's got the balance wrong?

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Speaker 1: And if so, how can it correct that?

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Speaker 2: I think what has happened, So you know, up until

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Speaker 2: from nineteen ninety four to twenty fifteen, we're actually investment

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Speaker 2: in the economy actually grew quite quite strongly, and there

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Speaker 2: there was new investment in new job growth coming coming

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Speaker 2: into South Africa. After that, things change, and I think

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Speaker 2: that what did happen is that over time the anti

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Speaker 2: government is sort of move further and further away from

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Speaker 2: the priority of let's get investment and sort of stacked

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Speaker 2: economic policy with a whole lot of secondary demands. So

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Speaker 2: we want you, we want investment, but we also want bee.

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Speaker 2: We want investment, but we also insist that you do localization,

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Speaker 2: even though we might not have industries at this point.

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Speaker 2: That supports that, you know, you can come in and

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Speaker 2: and buy and put capital into our company here, but

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Speaker 2: we'll take you to the Competition Commission and you're going

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Speaker 2: to have to jump through a whole lot of hoops

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Speaker 2: so that all our public interest boxes are TechEd. Now,

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Speaker 2: those things just add costs and they undermine returns, and

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Speaker 2: I think that that's a large part of what's happened.

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Speaker 2: The other part of what's happened is that you know,

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Speaker 2: political uncertainty has been has been high, and you know,

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Speaker 2: the growing uncertainty of a sort of in the period

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Speaker 2: leading up to last year when we were taken off

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Speaker 2: the grain list, the growing uncertainty amongst amongst lenders and

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Speaker 2: in capital markets about whether South Africa could actually repay

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Speaker 2: their debt or not made you know, us the price

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Speaker 2: of borrowing for government and for everybody else, So it

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Speaker 2: was very expensive to get credit. So once again, businesses

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Speaker 2: don't spend if the price of capital is too high.

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Speaker 2: So so lots of reasons. But I think that underpinning

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Speaker 2: underpinning these reasons are political issues, Carol.

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Speaker 1: We know that one of the biggest proponents of job

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Speaker 1: creation in South Africa is smmes. Do you think government

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Speaker 1: does enough to incentivize small business owners and support small businesses?

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Speaker 2: Well, we've got a problem, you know that that isn't

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Speaker 2: that O. This is a particular problem we inherited from

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Speaker 2: from our economy sort of pre nineteen ninety four, which

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Speaker 2: is that we've got to highly concentrated economy. So we've

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Speaker 2: got big companies that dominate, so it's very difficult for

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Speaker 2: smm to get them and to get into the to

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Speaker 2: get into get into the game. I think that it's

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Speaker 2: fair to say that a lot of governments SMME because

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Speaker 2: you've been several several SMM initiatives where you've got to fund,

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Speaker 2: you can go to government get funding, et cetera, et cetera.

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Speaker 2: It's fair to say that I think a lot of

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Speaker 2: those issues, both those initiatives have failed and we need

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Speaker 2: to look at why. And I think that often, you know,

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Speaker 2: we don't realize that supporting a small or medium enterprise

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Speaker 2: is not just giving the mass to credit. There's a

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Speaker 2: whole lot suite of things that need to come with that,

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Speaker 2: and it's very, very expensive, and I think, you know,

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Speaker 2: you know, you've got to nurture that that company all

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Speaker 2: the way through until it becomes sustainable. And I think

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Speaker 2: we haven't been prepared to put the money there, and

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Speaker 2: we haven't really been compared to you are to make

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Speaker 2: it work. And one of the reason for that is

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Speaker 2: because it's been much easier to say, well, let's just

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Speaker 2: make government procurement our way in which black people can

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Speaker 2: get into the economy. So you know, you can be

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Speaker 2: a middle man in when government procurement contracts, so you

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Speaker 2: don't really have to have your own business or start

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Speaker 2: your own smaller medium company. You can just be the

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Speaker 2: middle man between government and another company. Usually a company

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Speaker 2: externals is South Africa and you can import the goods.

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Speaker 2: And I think that that's another another problem, another kind

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Speaker 2: of unintended consequence of so called preferential procurement or Bee.

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Speaker 1: And Carol just looking at where the world is at

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Speaker 1: today and the fears that are prolonged crisis in the

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Speaker 1: Middle East could cause some kind of global recession. Are

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Speaker 1: we in for an even worse jobs crisis here?

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Speaker 2: Well if that happens, and we don't know yet, but

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Speaker 2: there are lots of indications that it will be a prolonged,

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Speaker 2: a prolonged war, not as short as as Donald Trump

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Speaker 2: said and thought it would be. Yes, definitely, because what

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Speaker 2: happens in this sort of situation is that inflation goes up.

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Speaker 2: And once inflation goes up and around gets Hambret like

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Speaker 2: like it's happening now you need the Reserve Bank to

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Speaker 2: intervene and and raise rates. And we've just been in

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Speaker 2: a cycle where rates have been falling for some time

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Speaker 2: and that's been that's been putting us into a much

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Speaker 2: better space. And so along with the rest of the world,

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Speaker 2: we're probably if this goes on, we're probably going to

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Speaker 2: have to be hiking race well leave it there.

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Speaker 1: Thank you for joining us this afternoon News twenty four

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Speaker 1: journalist Carol Peton