ANALYSIS

Government’s post-Covid-19 reconstruction & recovery plan exposes factional paralysis and lack of capacity

By Marianne Merten 17 August 2020

President Cyril Ramaphosa. (Photos: Flickr / GCIS)

South Africa’s socio-economic recovery details will be thrashed out over the next two to three weeks at the National Economic Development and Labour Council. But the government’s opening gambit has been a little more than disappointing. Patience is running out.

Entitled “Economic Reconstruction, and Recovery Plan”, the government’s economic recovery proposals to National Economic Development and Labour Council (Nedlac) sets out three phases:

  1. Engage & preserve;
  2. Recover & reform and;
  3. Develop & transform.

Short on detail, long on rhetoric dressed in PR words such as “value proposition” and “leveraging”, it sets out priorities in each phase, including “ensure social stability” and “massive healthcare response” in phase one, with phase three listing, among other, “SOEs (state-owned enterprises) Reform” and “cutting red tape and “ease of doing business”.

A closer look reveals little detail, nor any indication of a time frame. Much of what the government’s Nedlac submission for what President Cyril Ramaphosa in his 15 August address to the nation described as an “urgent economic recovery programme” has been around. In some cases, for a long while.

But some exceptions are raising eyebrows, particularly the repeat mention of gas, and gas-to-power projects.

“Implementing price and market regulatory changes to increase usage of LPG as an alternative energy source for heating and cooking” is a point under phase one, “engage & preserve”. As is “issuing a request for qualification on the gas-to-power programme”.

Given that the government has indicated South Africa is now in phase two, or “recover & reform”, neither these initiatives materialised in the intended timeframe, but the intention is there. In phase three, or the recover and transform phase, gas to power programmes are listed alongside “prepare for nuclear build programme” as energy security points.

The mentions of gas as an energy component springs to the fore precisely because the rest of the document is, well, stale.

It’s important to take a detour to explain why a 17-page presentation without detail or timeframes, but with graphics that a matric learner might have drafted for a year-end assignment, is not just wanting, but inappropriate.

In many ways, this Economic Reconstruction and Recovery Plan document highlights the government’s weak policy-making, hamstrung implementation and systemic vacuity.

Some examples:

SOEs reform is old hat. It was the subject of the 2010 presidential SOE review commission that finished its work in early 2013, with Cabinet accepting its recommendations in April 2013. One recommendation for a presidential SOEs council was established a year ago, with 10 appointments made as recently as June 2020.

Or the spectrum licensing process that was supposed to have been completed by December 2018. That spectrum release, on Ramaphosa’s agenda since early 2018, is important for the roll-out of broadband, and also to digital migration for which South Africa missed the June 2015 International Telecommunication Union (ITU) deadline, and several others.

Coincidentally, the last Nedlac presidential working committee meeting of 2 March “noted the progress made towards broadcasting digital migration”, and how more needed to be done to fast-track the installation of decoder stock – what had been known as set-top boxes.

In October 2018 the Cabinet made a policy flip-flop after several years of insisting on set-top boxes, effectively decoders for old television sets that would become useless once the digital migration is complete. That decision, coming at a cost of R10-billion, was announced two communications ministers ago, by then-incumbent Nomvula Mokonyane.

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For several years, cutting red tape and making it easier to do business has been a refrain from various ministers, and it made a strong showing at the 2019 presidential investment summit.

And infrastructure build — for services but also job creation — dates back to the administration of former president Jacob Zuma, whose economic development minister Ebrahim Patel, now Trade and Industry Minister, enthusiastically talked of the government’s R1-trillion infrastructure build plans.

Some of this policy paralysis is linked to ANC ideological debates that largely follow factional lines. That the government Nedlac document takes its reconstruction and recovery title from the ANC National Executive Committee (NEC) economic transformation document, “Economic Reconstruction”, indicates co-ordination, at least on the messaging front.

The ANC document in many ways repackages existing policy while emphasising how the governing ANC “being in power should enable us to guide the development process (not necessarily own every aspect of it or even finance it)”.

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Echoing this, the Alliance Framework Document also talks of reconstruction and development, but links this up with inclusive growth into the wordy “post-Covid-19 Reconstruction, Development and Inclusive Growth Path”.

But the politics of the political economy never are quite straightforward.

As the ANC’s economic reconstruction document has endorsed amending the Pensions Act so pension funds could invest, for example, in state entities or infrastructure projects, National Treasury confirmed it was looking into that as far back as June.

It’s about Regulation 28 that limits the exposure pension funds may have in certain assets in order to protect investors. Currently, the threshold for so-called alternative investments is 10%, although significantly less actually has been so invested.

That something was up, emerged on 24 June when Finance Minister Tito Mboweni mentioned the missing Regulation 28 bit from his speech when he tabled the Special Adjustment Budget in Parliament.

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It is against this backdrop that labour’s submission is unusually strongly worded, indicating a not-often-expressed level of gatvol.

Not only is labour “angry” over repeated postponements of the presidential working group meant to meet once a month since its last meeting on 2 March, but also over repeated promises without action.

“Labour is as always ready to engage. However, government and business must be willing to do so too and to honour agreements and ensure their implementation. Their track record to date does not give labour confidence,” says the joint labour Nedlac presentation seen by Daily Maverick.

In the more than 10-page document it sets out economic musts – from a R1-trillion stimulus package to be announced in the October Medium-Term Budget Policy Statement (MTBPS) to job creation targets in all departments and entities — but also massive employment programmes with guaranteed paid work.

“The reality is that our economy is on its knees and millions of jobs are at risk. We simply cannot afford to delay our response to the economic crisis a day longer. We simply cannot continue to accept that 11 million South Africans must be condemned to unemployment. This is literally a ticking time bomb that threatens our very survival as a nation,” says the submission by Cosatu, the Federation of Unions of South Africa (Fedusa) and the National Council of Trade Unions (Nactu).

Central to these calls is the disappointment over the stimulus package Ramaphosa announced on 21 April. At R500-billion, of which R145-billion is money scraped together across government, and boosted by including tens of billions in tax savings, it fell short of the R1-trillion package Nedlac social partners were made to believe was in the offing.

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Cosatu parliamentary co-ordinator Matthew Parks said business needed to come to the table, particularly the banking sector, with real payment holidays and measures to support small business recovery.

To date, only R12-billion of the R200-billion loan guarantee that’s part of the R500-billion package had been allocated. In contrast, Parks said, with support and assistance, the Unemployment Insurance Fund (UIF) has gone up from paying R17-million a day to R700-million a day between April and July. Effectively, just over R40-billion has been paid to workers under the Covid-19 Ters (Temporary Employer/Employee Relief Scheme).

While business has analysed an economic wasteland, Parks said social solidarity was needed at this point:

“The daily salary of a CEO of the five big banks is R150,000. A bank clerk earns R300 a day”.

In Saturday’s address to the nation, Ramaphosa held out the Nedlac discussions as not only an example of co-operation and social compacting, but as central to protecting, and creating, jobs in an economy that’s better for everyone.

“We will use this moment not only to return South Africa to where it was before, but to transform our country to a more equal, more just and more dynamic economy.”

To date, the government has been dawdling. The exact mix and interplay of a lack of political will, intra-ANC factional politicking and deficient state capacity remains unclear.

In many ways, it’s becoming unimportant. Attitudes — not just in the ANC tripartite alliance, but also across society — are hardening. The Covid-19 personal protective equipment (PPE) scandals from Gauteng, Limpopo to Eastern Cape and Free State seem to highlight how weak public administrations that battle with constitutionally stipulated service delivery are able to facilitate the enrichment of the politically connected.

That’s exactly not what South Africa needs. Whether what is needed is delivered — beyond nice words and optics — remains to be seen. DM

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