On the logic that jackals are the best guardians of chickens, this week the minister of small business development, Stella Ndabeni-Abrahams, offered a stern warning on her website.
“As government we have a responsibility to enforce regulatory compliance in the SMME [small, medium and micro enterprise] sector and close businesses that are trading illegally,” she said.
Interesting that the minister charged with creating, nurturing and enabling economic life in the only sector that has a prayer in hell of denting the mountain of unemployment should fixate on making things difficult for it.
More fascinating, though, is the minister’s obsession with red tape enforcement. Readers might recall that during the excessively harsh lockdown in April 2020, when Nadbeni-Abrahams was minister of communications, she popped up on social media lunching and partying at a colleague’s home, in breach of the regulations.
President Cyril Ramaphosa, who cannot or will not act against the current minister of tourism for defaming the constitution and the courts of law, responded in the Ndabeni-Abrahams case both swiftly and, by his standards, punitively. She was suspended from office for two months, forced to offer an apology, had her salary docked, paid a fine and obtained a criminal record into the bargain.
Her violation of the law was no bar, however, to staying in the cabinet. In the August 2021 reshuffle Ramaphosa moved her to the ministry of small business, assuming she would do less harm there. All this of course is working out exceedingly well as we survey a broken landscape of economic inactivity and diminishing growth prospects.
Why, in a country where one out of two work-seekers cannot find employment, does the government hate business and constantly ramp up the engine of state against it?
There is a more fundamental issue beyond ministerial miscreants. Why, in a country where one out of two work-seekers cannot find employment, does the government hate business and constantly ramp up the engine of state against it?
About 10 years ago and thousands of kilometres away, as ambassador to Buenos Aires, I was offered a great insight into such state-sanctioned acts of self-harm. Argentina, along with other countries straddling the Andes, offers a cornucopia of mineral riches. Yet due to the government’s anti-business and investor-hostile acts, most go untapped or under-exploited.
Undeterred by such a politically unpromising environment, a South African mining investor sought to obtain exploration consent from the governor of one of the poorest yet potentially mineral-rich provinces in this vast country.
The provincial governor met our entreaties with polite indifference and indicated that mining activity, despite offering a sustainable ladder out of poverty for his voters, was not to be entertained.
Puzzled by this obvious contradiction, I sought the opinion of an Argentinian analyst. He was surprised by my surprise. “The governor there is the third generation in his family to hold the office. His provincial government is the mainstay of employment there. The last thing he wants, however economically sensible it might seem, is an alternative provider of jobs and income for his voters. That could break his family’s hold on power.”
This lesson seems to apply, in all its awful logic, here and now in our country.
Take the issue now being touted by Ramaphosa and his government, to make permanent — in the form of a basic income grant — the R350 a month social relief of distress grant, which is due to end in March. This would nearly double the current social grant bill of R222bn per annum and could only be met by imposing steep additional taxes.
Of course, lost in translation at every election is that there is no such mythical beast as “government money”. There is only taxpayers’ money, and many of the prime funders of the state would not be found voting for the ANC government. But it’s an absolute vote winner: “If you don’t vote ANC you will lose your grant” is the effective, though entirely untrue, mantra.
Yet the quantum is very slight. At the exact same moment, the minister of employment & labour, Thulas Nxesi, proudly announced that the minimum wage for nearly 1-million domestic workers will increase about 20% to R23 an hour, bringing it in line with other sectors. Assuming an eight-hour working day this roughly means the monthly legal minimum pay will be about R3,680.
This is not exactly a king’s ransom. But it is more than 10 times more than the basic income grant now being touted. And given our government’s newfound interest in legality and enforcement, any employer unable or unwilling to meet the new minimum is likely to be penalised and their employees will lose their jobs.
It would be interesting to survey how many of the 3-million South Africans who currently survive (or not) on less than $1 a day would like to obtain legal work for more than that but less than the mandatory minimum wage
It would be interesting to survey how many of the 3-million South Africans who currently survive (or not) on less than $1 a day would like to obtain legal work for more than that but less than the mandatory minimum wage.
But if millions of small business creators were providing work opportunities in an enabling environment — and paying much more than R350 a month but less than the statutory minimum — it would reduce the extent to which people are dependent on the meagre largesse of the state.
And of course, the source of the new income for the workers, pulled out of poverty and up the rungs of employment, would be independent of the government. The veritable hand up in place of a handout.
But what is both economically sensible and advances real social justice can also be a vote loser for an at-risk incumbent government.
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