Cutting red tape at municipalities is key to growing the economy, says economist

Economist Charles Wait says bureaucratic road blocks at local level are blocking job creation.
Economist Charles Wait says bureaucratic road blocks at local level are blocking job creation.

Until municipalities cut red tape in processing business applications, growing the economy at a desirable rate, which will create much-needed jobs, will remain a pipe dream.

This is according to emeritus professor Charles Wait, who was addressing a Nelson Mandela University webinar yesterday, where he unpacked President Cyril Ramaphosa’s economic recovery plan.

Ramaphosa pinned his hope on big infrastructure projects to get the depressed economy moving again when he tabled his plan in October.

However, Wait said, without municipalities coming to the party by having a quick turnaround in processing business applications, Ramaphosa’s plans would fail.

“Municipalities are where factories are built and extended and the handling of these applications are bottlenecked.

“Municipalities need to come down to earth in the handling of these applications if the country wants to create much needed jobs,” he said.

In June, The Herald reported on how property developers in Nelson Mandela Bay were battling red tape and endless delays in getting their applications processed by the municipality.

Some building and rezoning applications take between 18 months and three years to be processed, stifling investment and new jobs for the city.

These applications included the approval of new houses, rezoning applications and even new shopping mall plans.

According to Stats SA, more than 2-million South Africans lost their jobs between April and June 2020.

During his speech, Ramaphosa said the government would spend more than R14bn in this fiscal year alone creating about 800,000 job and economic opportunities in a programme that would build on existing public works programmes and create new ones.

Wait also reflected on finance minister Tito Mboweni’s medium-term budget policy statement, which he delivered in parliament last week, saying he was not impressed by the R10.5bn bailout for troubled national carrier SAA.

Wait said the funds allocation was alarming because it cut funding from important portfolios such as education.

“Money was diverted from the two education departments. What informed this decision is unknown,” he said.

The billions given to SAA are meant to implement its business rescue plan.

Mboweni told MPs that the National Treasury reduced spending plans of government departments to raise funds for the airline.

He also said: “The R10.5bn allocated to SAA is not a bailout. A bailout would have made a huge injection into SAA. This is not what the budget has done. What’s in our budget now are allocations for the requirements of business rescue practitioners.”

Salary budgets for government employees in the departments of basic education, higher education and health, among others, will be reduced over the next three years.

Wait said  a lot of work needed to be done to achieve some of the named goals.

He said resources such as manufacturing, financial, human and social were key in achieving the objectives.

“Ramaphosa’s objectives are job creation, re-industrialisation, accelerate economic reforms, combat crime and corruption and improve capability of the state.

“Expansion of energy creation and public employment programmes are some of the priority interventions,” Wait said.



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