This article was written by Chris Barron

CDE founder Ann Bernstein appeals for urgency in addressing the economic crisis now compounded by Trump

Ann Bernstein, executive director of the Centre for Development & Enterprise (CDE), says unless all constraints to economic growth are removed with urgency South Africa will not cope with its “catastrophic unemployment crisis”.

“Our challenge is that so many things are wrong and hindering growth and employment, so many things we have to fix to get the environment right for faster growth.”

In the latest of a series of reports on priorities for the GNU, the research and advocacy organisation Bernstein founded in 1995 looks at how small business development can be accelerated.

“We’re in desperate crisis, so we’re saying, speed the whole thing up. Let’s move from the talk to actually doing something.”

It’s not like South Africa’s in normal times, we’re in desperate crisis

The first thing is to lose the idea that government officials with no experience of starting businesses are “somehow” qualified to drive a dynamic small business sector.

“The facts show that over 15 years they haven’t delivered.” The state has spent R6bn a year on small business development, “and we can’t see where it has gone”.

The CDE says the government’s department of small business development must be scrapped so people from the private sector with first-hand experience can take over.

“They’re not perfect but they certainly have more experience in how firms work, how you grow them from small to medium and so on, and what support they need.”

India went this route in the early 1990s. It scrapped the red tape stifling small businesses and achieved phenomenal rates of growth, she says.

“We need deregulation. Let’s get beyond the rhetoric of the president’s red tape reduction task team and let’s actually do it. It’s not like South Africa’s in normal times, we’re in desperate crisis.”

Another constraint is enforced localisation, Bernstein says.

“Forcing government departments to buy local encourages higher prices and inefficiency and, as we’ve seen, is a great conduit for corruption.”

Localisation hasn’t worked for Eskom, which is now dealing directly with original equipment manufacturers.

Bernstein says the utility has government exemptions on localisation and BEE.

“They don’t want to talk about it that much but that’s the truth. If government thinks they have to do this to fix Eskom, what makes them think these are such great policies for the rest of the economy?”

Does the government pay any attention to her reports and recommendations?

“Until September last year I wasn’t so sure. But as the GNU has started to operate in its weird and wonderful way, I’m being invited to talk at strategy planning meetings in a number of departments, not all of them led by a DA minister.”

She is now even a member of department of trade, industry & competition minister Park Tau’s advisory think-tank.

The CDE has also made strong recommendations concerning the National Prosecuting Authority “and why they’ve failed to prosecute successfully a single senior politician or big shot involved in state capture or ongoing corruption”.

We’re not doing enough, we’re not making enough progress, and we’re not doing it fast enough

The CDE was “shouted at by a lot of people”, but Bernstein was invited to the NPA’s strategic planning workshop in late November where she joined, among others, NPA boss Shamila Batohi, whom she has sharply criticised for the NPA’s underwhelming performance.

“There are lots of allegations about the capture of the NPA. Our main recommendation is let’s have a retired judge, as we did with Sars [South African Revenue Service], who looks into the NPA and comes out with a solid, quick report. Are the allegations true or not? We’re surprised there haven’t been more prosecutions, but let the retired judge do an analysis.”

She doesn’t think the NPA has the support of the executive. In August 2023 Batohi wrote to President Cyril Ramaphosa asking him to suspend a “very senior” regional director in the NPA suspected of being captured, but has yet to hear from him. And the NPA still doesn’t have full access to the Zondo archives.

The CDE invited the then justice minister Thembi Simelane to comment on its report last year before publication but never received a reply from anyone in the department, says Bernstein.

She says it would be “nice” if the CDE’s recommendations received more support from organised business, which should be raising these issues with the president.

“I think there are big questions facing organised business this year: how do they engage with the GNU? Are behind-the-scenes meetings with the president and ministers on three priority issues [energy, logistics and crime] sufficient for the country, or do they need to couple that with a more public role?”

She feels business leaders should be more transactional in their dealings with the president.

“They’re too keen to get on board with the president and not strong enough in reminding everyone again and again and again that we’re not doing enough, we’re not making enough progress, and we’re not doing it fast enough.

“There isn’t a sense of urgency in public utterances from organised business and certainly not from the president. We have department after department saying the president wants economic growth in the seventh administration but they never tell you what we did wrong in the last five or 10 years. They don’t try to analyse what must change.”

There’s been “surprisingly little” discussion of fundamental reforms by the GNU, she says.

“There isn’t sufficient urgency or boldness about what has to change. The dominant view is we must just carry on with a whole lot of things from the sixth administration that have got us into the crisis that we’re in on almost every front.

“We’ve been saying for years we have a fiscal crisis, we have to cut expenditure, and we just keep going on and on. ‘We want this fund, we want that fund.’ Now we have Donald Trump with South Africa firmly in his sights. This is all very tricky for a country that has no reserves and no cushion for economic shocks.

“We’ve got to send some big, bold signals that we’re going to try to do things really differently to get growth. To the investment community, to our citizens, to the world. We’re in deep, deep trouble, and just doing what we’ve always done, or carrying on with reform in a hesitant, not very fast, manner is not sufficient.”

This article was published on Sunday Times