ANC’s Economic Transformation Policy document: Not Radical, Not New
- Stephen Grootes
- South Africa
- 12 Mar 2017 (South Africa)
Whenever the ANC has a big conference of any kind, it is the contestation around economic policy that is most keenly followed. This is because everything hangs off the economy; arguments around affirmative action and transformation are easier if the economy is growing and tax revenues are rising, they are harder if it is not. This time the ANC’s discussion policy document, for the policy conference in July, comes within the context of growing calls for “radical economic transformation”, the increasing condemnation of “white monopoly capital”, and a power struggle with the potential to rent the entire ANC asunder. To look through this document then is to do two things; to work out how the ANC’s economic policy could change, and almost more important, to determine the balance of power within the party eight months ahead of the leadership contest. By STEPHEN GROOTES.
It has been said in this publication before that certain phrases around the economy have become a code to demonstrate which leader is supported by which groups. If you hear people echoing President Jacob Zuma’s calls for “radical economic transformation”, and using the Gupta-inspired phrase “white monopoly capital”, they probably support Zuma, and by implication, his ex-wife. If they use phrases like “inclusive growth” and stand against, say, the expropriation of land without compensation, they are probably in what used to be called the “middle ground” of the ANC, and probably support Cyril Ramaphosa.
This document was clearly written by the Ramaphosa crowd/ faction/ grouping. By its second page it uses the key phrase. “The most effective way to overcome these challenges is to move the South African economy onto a path of inclusive growth and employment creation.” The next sentence is this: “It is through changing the structure of the South African economy that inclusive growth will become possible.” And then, a punctuation mark later, “Inclusive growth cannot occur if those who are excluded are not given fair access to economic opportunities.”
Three times, in just three sentences, that key phrase, “inclusive growth”. And nowhere in the document do you see “white monopoly capital”. You do see the use of “radical economic transformation”, but it has been in previous documents and speeches, and so it’s not quite as loaded.
Later on in the document is another telling phrase that would appear less than radical: “The ANC is acutely aware of the fact that economic growth is a necessary, but not a sufficient, condition for an effective programme of economic transformation.”
If you had to sum up this document, that would be the sentence you would use. It demonstrates how the committee that wrote this (chaired of course by Enoch Godongwana), is very much aware that growth will help everyone, and radical redistribution on its own, taking from one and giving to another, will not.
That is not to say the ANC has gone soft on its core aims. One of the reasons for its very formation and continued existence through the last century has been to completely change the racialised nature of our economy. Of course that is there. But that is uncontroversial. Mmusi Maimane would probably happily agree.
Perhaps more interesting, and maybe a nuanced critique of some of the “economic transformation” ideas being put about by those on the Gupta payroll, is when the document says that “radical economic transformation must have a mass character”. In other words, it’s not for the benefit of the few lucky enough to have political connections – it’s for the masses. There’s a huge resonance here with the message from the SACP in the last few weeks. The party has been explaining why the “radical transformation” message from the Zuma faction is really about a small group of people, and that the real mission is to improve the lives of everyone. Again, uncontroversial, except for the nuanced critique that it may offer of those who proclaim to believe in real transformation, but actually believe only in the transformation of their own lifestyle.
The document takes great care to quote from Zuma’s own State of the Nation Address around “radical economic transformation” before saying, “Rather than radical-sounding rhetoric, it is the contest, outcome and pace of the ANC’s programme of social and economic transformation that will bear testament to the radical nature of such a programme.” It’s not words, buddy, it’s actions.
There is another critique of our big problem at the moment, corruption, and the ANC’s inability to fight it, when it says that “South Africa currently has a significant leakage of state resources, which has the effect of reducing the finances available for economic transformation.” Well, finally, someone has noticed. Unfortunately, there are no concrete proposals in this document about dealing with corruption. Of course, that is not the aim of this document, but it is such an all-pervasive problem that perhaps it could have been considered.
Those who will peruse this paper looking for hints of the balance of power, and trying to understand where Finance Minister Pravin Gordhan fits into all of this, will be interested in a particular sentence. “Consideration should be given to expanding the tax incentive for employers that employ young people...”. That’s surely a big nod to what used to be called the “Youth Wage Subsidy” that saw employers receiving a tax rebate for giving young people their first job. It was Gordhan’s brainchild during his first stint as Finance Minister, and was eventually smuggled through Parliament as a money bill, despite the opposition of Cosatu.
And then of course, there is the land issue. The rise of Julius Malema has made this one of the hot-button topic of our times, the lack of real economic transformation has made it more urgent, and Zuma’s behaviour, in directly contradicting his own Parliamentary caucus on this issue, has made this one of the burning political issues of the moment. (Two weeks ago the ANC in the National Assembly refused to join the EFF in voting to change the “Property Clause” in the Constitution, but later Zuma told the National House of Traditional leaders that the “black parties” in Parliament should join together on the issue). After the bog-standard recognition that “ANC policy commits government to returning land to our people”, the document says, “The Constitution’s commitment to ‘just and equitable’ compensation for the acquisition of land for land reform purposes should be codified and should replacement (sic) for market-based valuations of land. The process should be facilitated and accelerated by the passing of updated expropriation legislation by Parliament.”
It then refers to the “Constitutional Court’s finding that agreement on the quantum of fair compensation is not a precondition for land redistribution to take place”.
Considering that the party gave up on “willing buyer, willing seller” ages ago, this does not appear radical. Rather it seems completely in keeping with the parliamentary caucus view that the Constitution does not need to be changed. This could be a further indication of how wide the distance is at the moment between Zuma and much of his own party. The document also says that “the success of land redistribution will be improved if there is greater oversight over land, farming equipment and technical skills transfer to the beneficiaries of land reform”. This looks like an attempt to fix the old problem: the people who are given their land back, often do not farm it, and are not producing food. This line gives rise to a pet conspiracy theory of ours, that as the party in government, the ANC may be far more worried about rising food prices than it is about fixing the land issue, perhaps because there have been far more revolutions over food prices than there have been about land issues.
If Zuma has tied himself to the idea of creating “black industrialists”, more support could be on the way for those who are simply trying to start a small business. The ANC is proposing a targeted programme to help black entrepreneurs in setting up small businesses and co-operatives. Again, an idea whose time has surely come.
If there is one way in which this document suggests a very real difference with Zuma and some of his fellow-travellers, it’s in the importance of foreign investment. Some of those on Twitter, in the “Progressive Professionals Forum” (including a man whose day job is spokesperson for SARS) and elsewhere in Saxonwold, believe that ratings agencies are part of some European white plot. The word “gangster” has even been used. Of course, this is about the fight around Gordhan, and these claims have been made to strengthen the move to remove him. Clearly, none of these people made it on to the drafting committee here. It says this:
“In the immediate term, investor confidence will be boosted if the rising national debt is brought under control, if South Africa maintains its investment-grade credit rating, if good governance of state-owned enterprises is achieved, if international norms and standards are maintained with regard to the regulation of the financial sector and other sectors. The multiplier effect of government and public sector infrastructure investments will increase as investor confidence in the economy rises.”
Clearly, the ANC does believe international investors and ratings agencies matter. But that then raises the question, if policy certainty is so important, how on earth can the party tolerate Mosebenzi Zwane in the position of Mineral Resources Minister? A man who’s lied in public, and then stuck to that lie in Parliament, about, of all things, a banking inquiry.
And then, there is a small comment about a current burning issue, when the document mentions social grants, saying that they “must be defended, and run as efficiently and seamlessly”. It also suggests that they, and of course of the minimum wage, are important to reduce inequality and poverty.
The ANC’s position as the meat in the sandwich being squeezed from both the EFF on the so-called left, and the DA on the right is put into harsh perspective when the party says that “political opponents on the right have resisted interventions aimed at increasing the state’s role in guiding the process of economic development. On the other hand, populist voices have sought to dismiss the ANC’s position as not radical enough, often calling naively for nationalisation as a panacea...”. In other words, suggests the ANC, a plague on both their houses.
It also criticises those who, for example, demand that higher education should be free, by explaining how and why cross-subsidisation works, and why it’s important. There is a strong defence here of the ANC’s current policies, and a suggestion that they need to be defended more robustly in public. On balance, this defence is probably correct, even if many will find it difficult to stomach the status quo.
Those in Megawatt Park are likely to be reading this document with interest, as they consider whether or not to follow the lead of its own executives in trying to stop signing more contracts with independent power producers, or to listen to government on the matter. The ANC says that the “confusion” in the IPP programme has shown how the current model of Eskom as a generator and a buyer of electricity from competitors is unsustainable. And the ANC “strongly supports the President’s strong commitment in the 2017 State of the Nation that Eskom must continue with the implementation of South Africa’s ongoing IPP programme”. And then it suggests that it “may be necessary to revisit the current structure where Eskom plays a role both as a producer and buyer of electricity”. This is of massive importance, because it may lead to a fundamental change in our power sector, and remove Eskom’s current complete dominance of all aspects of it. Brian Molefe may feel he would have more power as a backbencher than as Eskom’s CEO if this idea does go through.
While a document written like this one, and as long as this (20 pages), can be interpreted in many ways, it is surely hard to claim that it contains any “radical” proposals. In fact, from a political and economic point of view, there is very little that is new. And that is what is important here. It shows that the “middle ground” of the ANC is very different to the noise largely coming from its leader, and his allies. But that doesn’t mean radical policy won’t come one day. In the end, it is not a policy discussion document that matters. What matters is who will win in December, and if there is an ANC left to implement these policies. Zuma may not bother with a discussion document, and just continue doing what he wants to do. Or, this could be more evidence that he, and his faction, are on the back foot. We’ll probably have to wait until December to find out. DM
Photo: President Jacob Zuma and Deputy President Cyril Ramaphosa during the Women’s Day celebration held at Harry Gwala Multi-Purpose Centre in Sasolburg, Free State.09/08/2015 Kopano Tlape GCIS
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