It’s commendable to want to cut red tape for job creation. But then plans must actually be implemented and the necessary business licences issued.

President Cyril Ramaphosa is moving gear on his economic recovery plan as he focuses on nitty-gritties, insisting on deadlines and boosting the capacity of his office. He seems to have taken time to fully grasp the negative impact of slow bureaucracy on investment and job creation.

An assessment of his response to the delays in the granting of water use licences shows how he is identifying stumbling blocks and wrestling with them as he goes along. It’s important for industries to monitor the president’s directive and assess whether they are gaining traction within the state.

Take the water use licence issue as an example. In 2020, Ramaphosa announced that water use licence applications to enable investments and job creation wound be processed within 90 days from the 1 April 2020. This was critical to enable private sector investment decisions to be executed with speed.

The announcement was part of a package of commitments to change the country’s economic trajectory. It was music to the ears of investors with capital in hand and projects in place awaiting execution but stuck in the bureaucratic queue. They were ready to sink mine shafts, clear ground for farming, build factories and develop properties.

The president’s economic reform agenda was now tackling a specific challenge hobbling these and other sectors from investing and creating much-needed jobs in the process. Granted, he had not lost his language of broad appeasement to the whole society. But at least, he was tackling something specific and looking for concrete results.

His announcement at that 2020 State of the Nation Address was followed by a further commitment by his then-finance minister Tito Mboweni that government would heed the president’s call. Regulatory approvals would be sped up to unblock investments.

As part of implementing the president’s directive, then minister of water, sanitation and human settlements Lindiwe Sisulu announced that the licence application systems were undergoing changes. The timeline to process applications would be reduced from 300 days to 90. Commendable, right?

In June 2020, Sisulu issued a joint statement with Anil Singh, deputy director-general of regulation in the Department of Water and Sanitation, committing themselves to give effect to the president’s directive. They said they were in discussion with various economic sectors. Obviously, licence applicants had good reason to celebrate this rare joint political and bureaucratic will.

The 2021 State of the Nation Address (SONA) noted mining’s role in the economic recovery amid Covid-19 threat and stated: “We are working with the industry to promote renewed investment through a conducive policy and regulatory framework. This includes efforts to reduce current timeframes for mining, prospecting, water and environmental licences.”

Following the 2021 July unrest, the president reshuffled his Cabinet. He appointed Senzo Mchunu as water affairs minister. This portfolio and human settlements were split. In the announcement, he highlighted the importance of water not only for household consumption but also for industry growth. He reasoned, correctly, that water needed special attention, hence the split.

By the time of the 2022 SONA, the president had realised that his 2020 and 2021 undertakings to reduce the time it took to approve licences to 90 days had not been fully implemented. He then reiterated his undertaking, this time with a clear directive that water use licence applications backlog must be cleared by June.

No investment must be lost in the maze of bureaucracy. Fortunately, investors are still in the queue with their billions waiting for the government to allow them to invest. The Minerals Council, an organisation of mining companies, estimates that its members have ready-to-invest projects worth R90 billion. That’s equal to thousands of new jobs to be retained as well as new ones to be created.

All these jobs are held back by various regulatory process including inordinate delays in issuing water use licences. There are many other investors in various sectors not well organised enough like the Minerals Council to be able to quantity the value of projects on the pipeline.

Easing red tape

The president’s commitment to tame the beast bureaucratic red tape, even going as far as securing the assistance of respected businessman Sipho Nkosi, is highly commendable. So is his categorical message that the private sector is responsible for creating most jobs.

The president knows what he is talking about: he has already extended government’s short-term public employment scheme at the cost of R12.6 billion over a three-year period. Clearly, government has limited resources. The private sector, on the other hand, has loads of cash waiting to be invested. The greatest potential for government to create jobs is not as an employer, but as an enabler of employment.

Trade unions usually accuse the private sector players of being engaged in a “investment strike”, keeping their profits in the bank while the poor wallow in joblessness and poverty. But if there’s indeed a strike of this nature, it must be the easiest one to be brought to an end without violence.

All you need to do is to improve investor confidence and create a well-founded perception that the whole South Africa is scene of job creation. One easy way to do this is to implement a carrot-and-stick approach: speedily approve business licenses and threaten to revoke them if investors don’t use them.

Once it issues mining licences it expects right holders to make progress on the jobs that investors and on local economic development opportunities promised by investors.

After the state capture years, mining licence processes have improved but water and environmental authorisations now seem to be the biggest hold-up to investment and job creation. The application processes need urgent simplification for Ramaphosa to implement his priority to create jobs.

As things stand, the government’s job creation agenda is often derailed by non-state interests, including foreign interests with no regard to our dangerous unemployment numbers now standing at 46%. The government is being pushed back from its role as a regulator and issuer of licences by nongovernmental organisations and some state entities through legal appeals and counter-appeals. They don’t care about jobs delayed or discouraged investments because they clearly don’t agree that South Africa has an unemployment crisis. 

Ramaphosa is right: we need a new consensus. He must bring into the new consensus all the organisations and various interests that are stifling jobs and sabotaging his economic recovery plan. Alternatively, he must cut them out because they are adding to the red tape.

If he doesn’t, they will embarrass him by applauding at his speeches when he talks about jobs while frustrating his attempts to create jobs. He must make sure that those in and outside government who oppose investments in various sectors must come out and provide alternative employment avenues of the same or better magnitude than those they oppose.

The president’s growing impatience – he says he loses his sleep over the economy – shows that his heart is in the right place. All of us shouldn’t sleep while unemployment continues to pose a threat to the country’s social stability. Those who still sleep better under the circumstances must explain how they do it and whether they aren’t having nightmares about 70% of unemployed and desperate youth.

This opinion piece was published in Fin24: https://www.news24.com/fin24/opinion/opinion-to-cut-red-tape-ramaphosa-must-first-cut-those-sabotaging-sas-economic-recovery-20220307