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Glimpses of what could be a prosperous future

WHY does South Africa seem, economically, like the sick man of the continent? Across Africa, the story is of rising GDPs, improving foreign direct investment levels and education systems that produce better, more agile, talent.

In his budget speech two weeks ago, Finance Minister Pravin Gordhan spoke about this new Africa story, adding: “Investment into Africa has reached R36-billion a year, in a range of industries.”

He was the latest to add his voice to this narrative. Former presidents Thabo Mbeki and Olusegun Obasanjo had preached the possibility of such a story in the late 1990s and early 2000s.

The world only caught up 10 years later, with major corporations falling all over themselves to fashion a positive Africa story after consulting firm McKinsey’s influential 2010 report, titled Lions on the move: The progress and potential of African economies.

Mcebisi Jonas

After that, the world didn’t hold back. “Africa Rising,” declared Time magazine in two different cover stories.

The Economist did the same, and has followed up with variations on the same theme. It helped that the global economy was tanking, and Africa and other emerging markets were open for lucrative business.

Mbeki and Obasanjo’s optimism of the early 2000s was not misplaced.

GDPs are rising; middle classes are growing; peace is the norm, rather than an anomaly; education levels are rising; elections are held regularly, relatively freely and fairly, in many jurisdictions; prosperity is increasing and poverty and unemployment are declining.

Except in South Africa. Here, GDP growth is anaemic at 1.9% last year. Hardly a dent is being made on unemployment. Inequality is rising. Business sentiment is poor. Violent service-delivery protests are on the increase.

Yet, on a visit to Eastern Cape last week, it struck me that perhaps there is something to be said and done about our being the sick man of Africa.

In fact, perhaps what the much-maligned Eastern Cape is trying to achieve should become a template for our future.

The Eastern Cape has no mineral resources. It has neither gold, oil nor that much gas.

It is not like Ghana or Uganda, which have newly discovered deposits of these resources. All that Eastern Cape has are its people, soil and coastline.

In the past, it sent people off to work in the mines in Johannesburg and elsewhere.

But the mines are on the decline.

So now what does one do with the men and women of Eastern Cape?

They are doing something about it, albeit slowly, in Eastern Cape. They are trying to encourage manufacturing, to build industry, to get people to work in the province. They are trying hard to attract investment from across the country and across the globe.

After launching the Coega Development Corporation in the 1990s and the East London Industrial Development Zone in 2000, these two special economic zones are finally beginning to come alive and attract serious investors.

In the beginning, they were merely glorified factory developments, with absolutely nothing to incentivise investors to abandon their current locations and move to Eastern Cape.

Only in the past four years have real incentives been introduced — including lower tax rates — and that has led to billions of rands worth of investment being attracted.

On the weekend, Trade and Industry Minister Rob Davies and Energy Minister Dikobe Martins launched two key projects at Coega.

What’s happening here?

The truth is that Eastern Cape is trying to build an economy that creates jobs without hinging on mineral resources.

Manufacturing is what Africa’s economies are lacking. They depend too much, perhaps solely, on extractive industries. But what happens when the oil dries up, when the platinum runs out?

The key for this continent is to create real, sustainable jobs and industries. Eastern Cape’s MEC for economic development, Mcebisi Jonas, is already speaking of the implementation of two special economic zones on the Wild Coast and Mthatha area.

Gordhan, in his budget speech, allocated money to developing these zones, saying: “Manufacturing development incentives are allocated R10.3-billion over the next three years, in addition to tax relief through incentive programmes. Special economic zones are allocated R3.6-billion to promote value-added exports and generate jobs in economically disadvantaged parts of the country.”

The narrative about Africa’s growth needs to move from applauding rising GDP figures to asking about where the jobs are, where the manufacturing is.

In Eastern Cape last week, I began to see glimpses of what could be a more prosperous future for the region as it attempts to industrialise.

This is a good beginning. Both Coega and the East London IDZ took too long to come to fruition. I sincerely hope that launching the new special economic zones will happen far faster. We need them.

Justice Malala is a political analyst


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