The South African economy is under pressure. The mining sector is suffering, the rand continues to weaken, and electricity and water shortages are hampering manufacturing.
The situation is so bad that South Africa slashed its 2015 growth predictions from 2% to 1.5% in October.
The International Monetary Fund projected that South Africa’s economic growth will be below 1.5% this year, and that it will be no better next year.
Sasfin Securities’ David Shapiro said that while our economy is partly suffering because of global issues, there are also many structural problems keeping the country back.
Apart from electricity and water shortages – labour problems, business-unfriendly policies, and poor decisions by the government contributed to the poor performance.
Here are some of the worst decisions from the South African government, which hurt the economy and the country as a whole.
Government’s delay in handing out spectrum is costing SA billions each year
The delay in providing South Africa’s mobile operators with LTE spectrum is costing the country billions per year, and consumers are the biggest losers.
In a mobile network the spectrum is shared by different users in the same cell. More spectrum means that you can offer more bandwidth to users.
When spectrum remains unchanged while usage increases, the user experience can deteriorate. This is why operators have been asking for additional spectrum for years.
Because of incompetence and bureaucracy, valuable spectrum remains unused in the country.
Spectrum is not a resource like gold or platinum which can be mined later – every day spectrum is not used the benefit is lost, forever.
The fact that spectrum is sitting unused means that South Africa is losing billions of rand each year.
E-tolls did not get the support of the people, and is now a liability
When the government announced the Gauteng e-tolling project, most experts agreed it was not the way to go.
Many economists and stakeholders said the fuel levy was a more efficient way to pay for improved highways in the province.
The government ignored the people, and pushed ahead with implementing e-tolls in the province. The results were disastrous.
Most Gauteng motorists are not paying for e-tolls, and The Sunday Independent reported in October that the e-toll project is teetering on the brink of collapse.
According to the report, monthly e-toll collections have dropped to R60 million – far less than Sanral’s monthly bond repayment of R260 million.
The financial situation is so dire that the Gauteng government allocated R123 million to help fund the gap needed for the new e-tolls dispensation.
Outa’s Wayne Duvenage said the bailout is a drop in the bucket for the financial black hole that the system has become.
Government tried to stop Seacom and EASSy from landing in South Africa
In 2008, the Department of Communications (DoC) tried to prevent Seacom and EASSy from landing in South Africa.
The DoC altered its policy guidelines regarding the ‘Rapid Deployment of Electronic Communications Facilities’, stating that all undersea cables are to be landed or operated with the authorisation of the Minister.
To get authorisation, these cable systems had to have an IECNS license, and have a South African shareholding of over 51%.
This fight was eventually won by the stakeholders who supported the landing of Seacom and EASSy.
Seacom’s launch in South Africa paved the way for cheaper international bandwidth, which resulted in lower ADSL data prices and affordable uncapped products.
Government fighting against competition in the South African telecoms market
The South African government protected Telkom’s fixed-line monopoly for years through its “managed liberalization” policies.
Former DoC DG Lyndall Shope-Mafole famously said: “Why were we protecting Telkom? [It was] so that we could get big value for it because it was going [public on the stock market].”
In 2008, Altech Autopage approached the courts to fight for the right for Value-Added Network Service to build their own networks.
The DoC and Icasa fought against Altech, and against competition in the fixed telecoms market.
Altech won the case, but communications minister Ivy Matsepe-Casaburri tried to appeal the ruling. The High Court refused Matsepe-Casaburri the right to appeal its judgement.
The ruling meant that most telecoms licensees can roll out their own telecoms networks instead of being forced to buy network access from the large operators.
In 2006, economist Dawie Roodt said the lack of competition and Telkom’s monopolistic behaviour cost the economy at least R50 billion in lost growth.
South Africa’s new visa requirements damage the tourism sector to the tune of R7.5 billion a year
In June 2015, South Africa introduced new visa legislation, forcing foreign nationals travelling with children under the age of 18 to produce unabridged birth certificates. This was aimed at preventing child trafficking.
The new visa requirement was widely criticized, and it was estimated that the blunder could cost the South African economy R7.5 billion a year in lost tourism revenue.
Many tourism experts warned against the new requirements, but the government pushed ahead with them.
After a massive outcry, which included Tourism Minister Derek Hanekom highlighting the negative impact on tourism, the government decided to relax the regulations.
However, the tourism industry said it is too early to say whether the relaxed regulations are enough for the sector to recover.