Opinionista Jan Hofmeyr 12 February 2015

SONA 2015: Robust oversight institutions stand between us and the detrimental state

A recent report by StatsSA has illustrated, beyond a reasonable doubt, that contrary to the president’s claims, Eskom is not a victim of its own success – but purely of its own incapacity.

Last week Statistics South Africa released a preliminary report, titled Electricity Generated and Available for Distribution, providing a breakdown of the country’s power generating capacity in recent years. One of its most revealing graphs, in a report that would have gone by almost unnoticed a decade ago, shows that Eskom’s electricity generating capacity was lower in January 2015 than during the same time in 2006. This puts paid to President Jacob Zuma’s recent assertion that the power utility, and by extension government as its primary shareholder, has become a victim of its own delivery success. The latest evidence by StatsSA puts it beyond dispute that it is Eskom’s incapacity, not its achievement, that is choking the economy.

In instances like these, when ones sees Luthuli House’s spindoctors plying their craft in ways that are increasingly testing the boundaries of the imagination, it reminds one of a casual, tongue-in-cheek remark by one of the main protagonists in Milan Kundera’s novel, The Joke, which ultimately lands him on the wrong side of the former Czechoslovakian communist regime. Intended as light-hearted banter in a postcard to amuse his lover, Ludvik paraphrases Marx and writes that: “Optimism is the opium of the people. A healthy atmosphere stinks of stupidity! Long live Trotsky!” His message gets intercepted by the authorities, and before long Ludvik, an otherwise loyal party supporter and member of a folk music troupe that crosses the country praising the virtues of the new socialist order, finds himself being drafted to perform hard labour in the mines as part of a military unit, reserved for suspected counterrevolutionaries. Call it if you like a redeployment of sorts.

At this point it must be clear where this column is going. It is, however, not an ode to cynicism. To the contrary, good news stories are crucial to sustain a country’s progress in good times, and doubly so in the bad ones. Without a widely-held belief that the combined energies of the state and citizenry are capable of propelling it towards something better, a country is for all intents and purposes headed for ruin. Or nowhere, if providence favours it. When things go well, the hope that stems from optimism has an infectious way of sustaining and reproducing itself, but when they are not, citizens, especially those with diminished agency, will look to government leadership to point out the silver lining, to give the assurance that as a nation it is still on course and, importantly, that nobody will be left behind. Now is one of those moments. Present-day South Africa needs optimism, more so than at any time since the country’s transition 21 years ago, to sustain its momentum towards a fairer, more just society.

Yet, unlike its sedative Eskom variant, optimism ought to be grounded in an obvious causal relationship between targeted investment of the state’s energies on the one hand and tangible outcomes on the other. In a world that has become increasingly interconnected and complex to navigate, where much of what happens inside the borders of a country are determined by economic and political events elsewhere over which states have limited control, governments should be judged on how they navigate complexity, adapt, and manage the factors over which they still have leverage.

Tonight, President Zuma will account for his administration’s performance in his sixth State of the Nation Address (SONA) to both houses of parliament. No doubt the economy will take centre stage, and so it should be. The president will almost certainly weave a narrative of continuity that links outcomes to the National Development Plan (NDP), although few of the latest headline indicators are there to back him up. This may partly be put down to government’s notoriously ineffective communications machinery, but reports, such as the recently-released results of the 2011 Income and Expenditure Survey by Statistics South Africa, show that regardless of the poverty line one adopts, progress in the improvement of the quality of life for most South Africans has been painstakingly slow. We also know that inequality remains crippling and is becoming increasingly polarising, given its pronounced racial character. And while unofficial unemployment remains stubbornly stagnant at around a quarter of the working age population, there is a steep upward trajectory for those who have simply given up in their search for employment. From a fiscal perspective our latitude to address these challenges has shrunk significantly since the global economic crisis, and increasingly economists are warning that we may run out of fiscal runway if government sustains its present spending habits that prioritise current expenditure over future investment. And then we have not even dealt with the stench seeping from the open sewer that is corruption. This may be a hard one to swallow for those who still punt South African exceptionalism, but in an era where volatility has become the new normal, our good story can come to an abrupt end.

Over the past year government’s stock response to this challenging environment has been a promise of radical economic transformation in which it envisages a more active role for the state in directing the economy towards its developmental objectives. How this will be radically different from the developmental state that is touted in the NDP is not perfectly clear, but if it amounts to the fast-tracking of its implementation, it will most certainly have to prioritise the creation of a modern, dynamic and capable state, also envisaged in the plan. Yet, unlike the Chinese prototype, which successive government delegations to Beijing have studied in recent years, the state’s role will be circumscribed by the demands of transparency and public accountability to ensure that huge amounts earmarked for infrastructure spend does reach it intended beneficiaries.

The parlous state of the country’s state-owned enterprises (SOEs) should make it abundantly clear that increased state influence in the economy, without a strengthening of oversight capacity, is a recipe for disaster. Originally envisioned as strategic champions of the developmental state, key SOEs have become cash furnaces with credit ratings verging on junk status. Let’s be candid, their management has resulted in some of the detrimental liabilities that hold us back, rather than developmental assets that propel us forward. Radical economic transformation, based on the achievement of rapid growth, will remain improbable without these entities functioning at their optimal capacity.

And this is what lies behind the widening chasm between the promise and the reality of the NDP, which was embraced with so much enthusiasm at the time of its release. Promises only become guarantees when their authors can be held accountable. Whether it is the long-running internal battles within the National Prosecuting Authority, the Hawks, and more recently the South African Revenue Services (SARS); the damage done by the aspersions that have been cast on the personality of Office of the Public Protector; and the almost farcical proportions that ad-hoc official investigations, such the Seriti Commission has taken on; it is clear that government’s oversight capacity has become severely compromised. And much of this turmoil seems to be instigated from within the state. The key institutions created to ensure that we remain on track towards a more inclusive economy, the guardians if you will, are in disarray. Their ability to provide the kind of oversight to ensure that not only SOEs, but also the three spheres of government, execute their mandates has been compromised. We have become the authors of our own instability at a time when those in power owe struggling citizens more certainty and predictability.

Somehow government does not seem to appreciate the cost exerted by its institutional volatility. Asked about the content of discussions in the run-up to last week’s government lekgotla, Min. Jeff Radebe remarked that over the past 20 years a solid foundation of democratic institutions have been laid, and over the next 20 it will shift its focus more directly to the economy. His assumption about the robustness of our institutions should not be taken at face value, when many seem too self-absorbed by their own power struggles to guarantee clean governance and the rule of law. This is not merely the author’s opinion, but a broader reflection of public opinion as captured in the Institute for Justice and Reconciliation’s annual SA Reconciliation Barometer Survey, a national representative poll on socio-political trends, which have pointed to a precipitous decline in trust for key governance institutions since 2006.

One would hope that SONA 2015 will give recognition to the fact that our democracy is still a work in progress. It indeed has many good stories to tell, but nothing can be taken for granted, and hence we should empower, rather than weaken its institutional checks and balances. Unfortunately, the name of the one who will have to deliver this message tonight too often crops up in the controversies around these institutions. For how long we, the nation, can afford it will depend on the collective wisdom of the ruling party. DM

Jan Hofmeyr heads the Institute for Justice and Reconciliation’s Policy and Analysis Programme. He is also the co-editor of the soon-to-be released Transformation Audit. You can follow him on Twitter @janihofmeyr.


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