Centre left

I read an article in the 1st August 2009 edition of the Economist that the centre lefts are gaining ground. Looking at South Africa it seems that the unions and communist are the one’s setting policy. Thank goodness, I must say, for pragmatists like Max Sisulu, Trevor Manual and Ben Turock.

Nationalisation of the mines would undermine South Africa’s ability to compete for Foreign Direct Investments. The argument, by the leftists, may be that this is not forthcoming during the world economic meltdown. This meltdown will be short lived and boom times will be back again. The recession may take a while to turn into a recovery, but it will be back either this year or next or the year after. A policy of nationalisation will have a long term effect on business confidence and FDI, two of the main driver of the economy.

A country needs to use it resources productively. This includes, people, capital and assets. Nationalisation has not allowed this to happen. Some prime examples in South Africa are Eskom, SAA and Telkom. These nationalised assets hold the country back rather than feeding the purses of government who in turn promotes poverty alleviation. In-fact it increases poverty due to the inefficiencies these state owned assets have.

I know times are tough, money is in short supply and people need to be employed. Building a large middle class in South Africa is of paramount importance. CSI (Corporate social investment) initiatives, upliftment projects and educational development by the private sector must be encouraged. It is to their benefit. As more people move out of the quagmire of poverty so does the private sectors potential for growth increase through an increase in the market size.

Companies must be involved with CSI projects because it is the best thing for the country and its people in the short term and good for the company in the long term. Companies must not engage just to look good. (See article on Brand legitimacy on http://ornicomediainformation.blogspot.com/ )

Governments, especially those in the developing markets, must remember that growth can only occur if the government enables business to grow. This will allow them to invest. The less risks and higher returns business has, more likely they will employ, the more taxes they will pay and the more government coffers will increase. This increase in taxes then can be used on enabling the economy with better education for it’s people, better healthcare and better infrastructure.