April 2011 - Centre for Civil Society - University of KwaZulu-Natal

efining and Karoo gas-fracking are approved; and shipping will also carry a
carbon tax on pollution-intensive bunker fuels.
As for the celebrated new ‘green’ industries, the only IPAP2 strategy that
earns climate mitigation brownie points is the urgent replacement of
electric hot water heaters with solar-powered versions. Yet because
Pretoria gave Eskom this responsibility, a tiny fraction of the promised
output has been delivered. And Eskom celebrated its new loan last week
by cutting its subsidy for consumers installing the solar heaters.
Other components of Davies’ Green Economy and agro-processing strategy
are so bound up in biofuel, genetic engineering and land grab
controversies, that they stand with IPAP’s hopes for forestry (also subject
to growing eco-social criticisms) and nuclear energy (!) as still-born or
dinosaur industries, typically described as ‘false solutions’ to climate
crisis.
The macroeconomic ceiling
If these dilemmas represent a green wall beyond which IPAP cannot
proceed, they pail in comparison to the macro dilemma: Davies wants to
hit the manufacturing accelerator, but the Treasury and Reserve Bank
have their foot on the fiscal and monetary brakes.
In his 2010 parliamentary testimony, Davies gave several reasons why “the
profitability of manufacturing has been low”, including the currency, “the
high cost of capital” (indeed SA’s interest rate remains very high even
after the 2009-10 reductions), “monopolistic provision and pricing of key
inputs”, “unreliable and expensive infrastructure”, “a weak skills system”,
and “failure to leverage public expenditure” into industrial growth.
Davies named the three most serious “negative, unintended consequences
of this growth path: unsustainable imbalances in the economy, continued
high levels of unemployment and a large current account deficit.”
Moreover, although SA witnessed impressive GDP growth during the 2000s,
this does not take into account the depletion of non-renewable resources -
if this factor plus pollution were considered, SA would have a net negative
per person rate of national wealth accumulation (of at least US$ 2 per
year), according to even the World Bank’s 2006 book Where is the Wealth
of Nations?
SA’s economy became much more oriented to profit-taking from financial
markets than production of real products, in part because of extremely
high real interest rates, especially from 1995-2002 and 2006-09. The two
most successful major sectors from during this era were communications
(12.2 per cent growth per year) and finance (7.6 per cent) while labourintensive
sectors such as textiles, footwear and gold mining shrunk by
beween 1 and 5 per cent per year, and overall, manufacturing as a
percentage of GDP also declined.
Other imbalances include the Gini coefficient measuring inequality rose
during the post-apartheid period, with the Institute for Democracy in South
Africa measuring the increase from 0.56 in 1995 to 0.73 in 2006. According
to Haroon Bhorat’s 2009 study, black households lost 1.8% of their income
from 1995-2005, while white households gained 40.5%. Unemployment
doubled to a rate of around 40% at peak, if those who have given up
looking for work are counted, and around 25% otherwise.
Moreover, most of the largest Johannesburg Stock Exchange firms – Anglo
American, DeBeers, Old Mutual, Investec, SA Breweries, Liberty Life,
Gencor (now the core of BHP Billiton), Didata, Mondi and others – shifted