Reporter's notebook: Pravin Gordhan's gloomy breakfast speech
Minister of Finance Pravin Gordhan offered no more than President Jacob Zuma on the ANC’s proposed “radical” changes to an economy it says is still shaped by apartheid’s mould. It makes one wonder, why attend the party’s policy conference at all. By GREG NICOLSON.
Gordhan delivered his speech to the Progressive Business Forum on Wednesday behind a lectern lined with the flags of Brazil, Russia, India, China and South Africa (BRICS). He focused on SA in the international economy, speaking without notes and referencing the day’s Financial Times.
The forum wants to create a dialogue between business and government and the morning diners listened as the finance minister discussed local growth in a global economy defined by uncertainty. “The last three years have shown you can’t get the state to disappear,” he said.
The breakfasts at Gallagher Estate are being held alongside the ANC’s fourth national policy conference and mean to bring business and government together. Gordhan’s comments followed the president’s emphasis on a state-led “second transition” on Tuesday.
But, Gordhan said, the global economy poses challenges until it settles into “a new normal”. “Probably for the next three years and likely for the next five years the world will have a pretty gloomy environment,” said Gordhan, who claims he’s an optimist.
He outlined the key structural challenges for growth in SA. There’s inefficient and insufficient infrastructure around power and transport. South Africans’ low level of savings creates a dependence on foreign savings to balance the country’s books. The currency remains volatile and small business owners need more assistance, he said.
The key ingredients are already there – investment opportunities, available cash for businesses to direct, and a strong fiscal position. But, he asked, “How do we make this investment-led growth trajectory a reality in South Africa?”
His answer, like Zuma’s, featured the state playing a significant role in promoting growth and reducing the effects of poverty, inequality and unemployment.
“To improve government performance, we must develop an effective democratic developmental state. The state has a number of instruments that it can use to improve and drive transformation,” said the president in his opening address in Midrand.
“On the economy, we need to go back to the basics and take the difficult decisions that we could not take in 1994 with regards to the economy.”
The conference’s second transition document, supported by Zuma, argues the ANC’s inability to restructure the economy was due to the necessary compromises made while negotiating for a democratic South Africa.
It explains the neoliberal Growth, Employment and Redistribution plan, the pinnacle of the ANC’s about-turn from touting policies like nationalisation before coming to office and denouncing them when they entered the Union Buildings.
“Thus we explained that Gear was a tactical detour necessitated by objective conditions (high public debt and deficit, bloated public service, low growth, etc) and subjective conditions (distrust by private capital of the new dispensation).”
The failure of such policies, combined with the ANC’s internal difficulties as it took power, was always likely to draw the party inward for answers to the economy question.
Academic Ben Fine wrote in 2003 in a review of the political economy of the transition: “As and when the economy seriously falters through being driven to as much openness as possible, and grievous inequality intensifies, so it is likely that the ‘Africanisation’ card will be played in a desperate attempt to shore up political credibility.”
But as Zuma plays his cards at the policy conference, the new idea seems woefully inadequate and adds little to the trajectory government’s already taking.
On Wednesday night, media sources started to reveal that the second-transition proposal is being trashed in the conference commissions by Zuma detractors and supporters alike.
It’s been interpreted as a blow for Zuma’s leadership charge to Mangaung. But just what the second transition is, few people know. The document’s proposals to deal with the triangle of concern – poverty, unemployment and inequality – are so vague that a rejection simply proves the delegates have read it.
Looking at the second transition from outside the battle to lead the ANC, the document doesn’t bode well for the economy.
Gordhan stressed on Wednesday that the country needs a new discourse. “If we can build trust and confidence we will get the kind of growth that will give us jobs… We need to give 50 million people hope.”
The finance minister called for a more unified discussion and said business, media and government should challenge the old economic truths as the country traverses changing global dynamics.
“We’re noisier than we need to be,” he said, suggesting panic over government proposals are harming confidence and curtailing crucial investment. If the discourse doesn’t change and achieve investment-promoting consensus, “We will be shooting ourselves in the foot.”
But as Zuma throws his weight behind the idea of the second transition, the country will remain divided on the economy. The proposal doesn’t detail how government can implement “radical” transformation while assuaging the fears of local business and international investors.
As ANC delegates began discussions within the conference, Gordhan’s speech to a host of influential business representatives and diplomats was symbolic of how the government is tied to outside interests.
But as he bemoaned panicked criticism, which can verge on reactionary, and the delegates inside discussed a proposal blaming the ANC’s compromises on the country’s diverse interests and international pressure, there was no indication how the second transition would be different to the first.
South Africa, more than ever, is entangled in the global economy and criticism shows no sign of slowing. Zuma’s government is on its way to implementing a developmental state, but the second transition is an outdated idea failing to address the obstacles the ANC faced in 1994.
It makes one wonder: why leave the cushy confines of the business breakfast to follow the party’s conference at all? Unless, of course, it’s all about the leadership struggle. DM
- The second transition: vrot with peril in PoliticsWeb
- ANC policy conference: the illusion of change. To ensure more of the same in Daily Maverick
Photo: Pravin Gordhan (Greg Nicolson/iMaverick)