Home Opinion COMMENTS ON THE FREE STATE DRAFT INTEGRATED LOCAL ECONOMIC DEVELOPMENT AND TRANFORMATION BILL – By Tiisetso Makhele

COMMENTS ON THE FREE STATE DRAFT INTEGRATED LOCAL ECONOMIC DEVELOPMENT AND TRANFORMATION BILL – By Tiisetso Makhele

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TIISETSO MAKHELE

COMMENTS ON THE FREE STATE DRAFT INTEGRATED LOCAL ECONOMIC DEVELOPMENT AND TRANFORMATION BILL – By Tiisetso Makhele

1. Introduction

The Free State economy is characterized by high levels of market concentration, with large companies and conglomerates creating barriers to entry for new entrants. We are also confronted with high levels of unemployment, especially among youth from historically disadvantaged communities, women and persons with disabilities. This is an economy that therefore calls for even higher intervention by the state in order to ensure that our economy is inclusive, that new entrants are not confronted with barriers, and that small players are not necessarily bullied by bigger players. The Free State Draft Integrated Local Economic Development & Transformation Bills seeks to achieve the above, and even more. It therefore seeks to revolutionise our economy so that the economy benefits the people as a whole.

2. Rationale for the Bill

According to latest statistics, there are about 900 00 people in the Free State who lived below the food poverty line. This represents about 32 percent of the Free State’s entire population. Furthermore, and linked to the poverty data shared above, more than 38% of the people in the Free State are unemployed, and this is only in terms of the strict definition of unemployment. Data shows that the majority of those aged 15 – 35 are the worst affected by the scourge of unemployment.

Since the 1994 breakthrough, there has been mushrooming of foreign owned tuck- shops in the former townships. This has been at the expense of the local citizens, who socio-economic fortunes declined as the same rate at which these tuck-shops mushroomed. To add more salt to the wound, big retailers and shopping malls also encroached into the former townships, killing the already suffering means of survival for many.

Government has a responsibility to ensure that whilst we allow freedom of trade by those who are allowed to do so by the Constitution, we have to intervene and ensure that even local people are protected and be given an opportunity to participate in the economy. The Bill does not seek to achieve wholesale exclusion, but seeks to reserve some economic activities solely for citizens. This is not in any way xenophobic, but seeks to achieve fairness, balance and an inclusive economy.

3. What the Bill seeks to achieve

3.1 Diversify ownership patterns

  • In the current context, some economic activities, especially in the townships, display ownership patterns that essentially exclude locals, and are foreign owned. This includes the spaza shops sector which, according to research by the University of the Free State, generated more than R500 million in 2011, in Bloemfontein. This dominance by a populace that, according to research, barely using our banking system is a cause for concern, and raises risks for illicit financial flows. So the Bill doesn’t only seek to diversify ownership patterns, but also seek to address some criminal activities like illicit financial flows.
  • The government is one of the largest consumer of goods and services. The Bill seeks to ensure that government procurement is used to empower local producers and service providers. This Bill seeks to ensure that those who receive contracts from government procure a certain percentage of their procurement spend on “town-based enterprises or entrepreneurs and cooperatives”.

3.2 Growing an inclusive economy

  • The unemployment and poverty statistics shared above, which involves South Africans, places urgency on the government to actively participate in the economy to ensure that the status quo is changed. I refuse to be convinced that South African citizens don’t have the necessary entrepreneurial capacity to run businesses.
  • Often, immigrant foreign nationals running businesses do not comply with laws and regulations, do not have permits, do not pay tax, and are not registered. South Africans, on the other hand, are confronted with higher costs as a result of compliance. This given immigrant business owners unfair advantage. Through this Bill, we seek to ensure that all those operating businesses are registered. This in our view will bring fairness.
  • Research shows that the encroachment of retail malls and large retailers have had negative impact for small entrepreneurs operating around the areas where malls were constructed. Many businesses closed down because they could not compete with these retail and business giants.
  • Government has a responsibility to protect, especially the small players, against economic bullying and sabotage.
  • The Bills seeks to introduce an enabling framework to ensure retail malls and supermarkets partner with local enterprises, including the sourcing of some of the products and services from local producers, service providers and manufacturers.
  • An example is Botshabelo Mall, which a stone’s throw away from the Botshabelo Industrial Park, where there are manufacturers of a whole lot of items, yet the shops at the Mall probably get their products from Gauteng or KZN. The Bill seeks to ensure these partnerships so that we keep the money inside the Free State, and that we consume what we produce.

4. Conclusion

This is the most progressive and patriotic Bill ever to be produced in the Free State. It seeks to achieve economic fairness and empowerment, whilst in the process attain inclusive economic growth. This Bill must be supported so that we turn the socio- economic situation of the Free State for the better. The assertion by some that the Bill seeks to discourage investment is not supported by economic theory. To the contrary, this Bill will ensure political stability which is essential for attracting investment. Once promulgated as an Act, it will curb the tensions and protests brought by conflicts between immigrant and local business people.

The Bill is not Xenophobic, and there nothing in the Bill that suggests hatred fr immigrants, but seeks to correct the socio-economic situation that has been alluded to above. It is in the interests of all South Africans that this Bill is promulgated as an Act.

Tiisetso Makhele Bloemfontein, Mangaung Email: makhelets@live.com

CALL FOR COMMENTS ON FREE STATE INTERGRATED LOCAL ECONOMIC DEVELOPMENT AND TRANSFORMATION BILL
CALL FOR COMMENTS ON FREE STATE INTERGRATED LOCAL ECONOMIC DEVELOPMENT AND TRANSFORMATION BILL

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