The Eastern Cape province, with the fourth largest GDP and the fourth largest population in South Africa, has not had the best experience in terms of economic prosperity in the past 25 years of democracy. The province has experienced an extreme brain drain over the past two decades with thousands leaving the province for greener pastures in the larger urban centres in Gauteng (Johannesburg, Pretoria) and Western Cape (Cape Town). In the last 12 years, about 272,000 people have left the EC for Gauteng and the Western Province. The plight of the people of the Eastern Cape was characterised in the insensitive remarks by Western Cape Premier in describing migrants to her province as economic refugees. Indeed, the people of the Eastern Cape have flooded out of the province as a result of the paucity of economic opportunities in the region especially for the young. The Eastern Cape MEC of Finance himself lamented the outward migration trend in the EC stating ‘our people leave their homes to go to places like Cape Town, even if they have to stay in shacks, to get some income’ The MEC further said that the province lost out on about R13 billion as a result of emigration from the region.
In terms of unemployment, the Eastern Cape rated the highest unemployment rate in the country 36,1% compared to a national average of 27,1% in Q4 2018.
A key question for residents of the Eastern Cape (EC), what hope will the ANC or opposition parties provide for the province going forward?
What hope for entrepreneurs and small business?
It’s hard to judge parties accurately, but voters should take their own time to look at the manifestos to see which parties speak to their needs. A focus on the four major parties that are dominant in the EC, the ANC, DA, EFF and UDM will be a good start.
Starting with the smallest party amongst the four, the UDM, led by Bantu Holomisa seeks to create mentorship programmes between established businesses in building and growing SMMEs through sub-contracting arrangements. The UDM also mentions an exciting idea of establishing local stock exchanges. It will also invest in infrastructure for street traders.
In terms of the EFF, the party makes some promises such as passing legislation to force public institutions to spend 50% of their procurement budgets on youth-owned businesses. The EFF also looks to declare special economic zones, where there will be zero taxes in exchange for the creation of 2000 full-time jobs. The party mentions seven regions in the Eastern Cape that would benefit from this including King William’s Town, Butterworth, Mthatha and Cofimvaba.
The governing ANC also touches on ring-fencing government procurement for small business, with 30% to be allocated. The party also mentions the penalisation of institutions that don’t comply. There is also talk of support for a rural and township economy for the development of incubator hubs and industrial parks. The ANC will also seek to protect small businesses from big business domination, with one idea being to buffer the penetration of big retail stores into townships to boost locally owned small retailers. The ANC is also banking on the economic drive by Cyril Ramaphosa to bring in R1,2 trillion foreign direct investment into the country, with hopes that this will be a catalyst for economic growth that will see growth for small business via various linkages to larger investment projects.
The official opposition, nationally and in the Eastern Cape, the DA says it will take an overtly pro-small business approach with a six-point plan. This plan includes measures such as a start-up visa that will encourage foreign entrepreneurs to invest in the south African economy with partnerships with local entrepreneurs. The DA also wants to remove red tape for small business, such as excluding them from specific requirements like BEE and labour laws like the minimum wage. The DA will also introduce a policy to ensure government and big businesses pay their suppliers within 21 days.
While all parties have lofty ideals about being a pro-small business making an analysis and a choice of whom to vote for needs a lot more work especially for entrepreneurs and small business owners. The track record of the various parties is vital, and in this regard, the ANC and the DA are the only ones with an extensive governance record that can be measured allowing for fair judgement. So, looking at the ANC and the DA while the two parties have differing ideologies, there are some similarities in their economic policy views. One could go as far as saying that Cyril Ramaphosa is a lot closer to the DA in economic policies than the previous administration of Jacob Zuma. However, the DA and ANC are still at opposite ends in terms of the role the state should play in the economy. The ANC sees the state playing the leading role in the economy, while the DA considers the state of being mainly an enabler for a fertile environment for investment, innovation and growth where the state cuts red tape to allow a business to flourish.
The ANC and the DA govern the two largest economies in the country, Gauteng and Western Cape. Perhaps one can look at what policies the respective governments have done for small businesses in those two economies. Both provinces are essential hubs for start-up incubators, but Cape Town has been a leading hub on the continent drawing several angel investors setting up projects such as the Silicon Cape initiative. Gauteng dominates accounting for 45% of the GDP, but this is mostly due to South Africa’s long-established businesses that grew out of the mining-energy industrial complex. The Western Cape has the lowest unemployment rate amongst the nine provinces.
A critical criticism that has come for the DA has been race, and whether black people can trust their interests, being looked after. While the party has criticised, the stance taken by the ANC in terms of applying BEE, it has come out in support of using race as a proxy for racial inequality and stated it wants to establish a more transparent and accountable BEE type of policy. The ANC can claim governance of the majority of the country with significant advancement for black people, with the Mbeki years having created the rising black middle class dubbed the ‘black diamonds’ diamonds back in the days.
Economic freedom for people lies in them being able to exploit commercial opportunities in a conducive environment with few obstacles and a lot of more supportive structures, particularly in terms of access to capital and security from falling into the depths of poverty. Entrepreneurs need to take a risk, but this will depend on the kind of environment they exist. One can’t entrepreneur themselves out of power blackouts, corruption or lack of infrastructure. EC voters need to ask themselves which party can provide them with a better future in the province considering the various records.
Written By: Sinethemba Zonke
Sinethemba Zonke is a political risk analyst and commentator focused on Africa