Recent articles in Daily Maverick by Mike Abel (“An open letter to President Ramaphosa: It’s time to deliver”) and Mills Soko and Mzukisi Qobo (“South Africa has to find direction – now”), express the frustrated sentiments that many are voicing now. No doubt, many others quietly share them.
President Cyril Ramaphosa has been in office for two years. The New Dawn was a false dawn. The mandate horizon that was the election proved to be a mirage. The long-term decline in GDP growth has continued apace, even accelerated. As Abel says, it’s becoming harder to cheerlead for the president.
True enough, there have been some tentative moves to deal with Jacob Zuma-era legacies. There has been some commendably forthright acknowledgement of the debilitating extent of corruption. The appointment of Shamila Batohi as head of the National Prosecuting Authority was well received, with good reason. But little has come of this. As CNN anchor Richard Quest put it, “how many people have gone to prison so far”?
It’s a question many South Africans are asking.
A more important question is whether South Africa will function any differently. Whether, in other words, “reform” is on the way. Perhaps no one exemplifies the frustration at this quite like finance minister, Tito Mboweni. “What are critical Economic Strategic Reforms?” he vented on Twitter, “Read the National Treasury now Government Document! Let us move Forward! Many Steps at the same Time!! Movement!! No time for procrastinating!!”
In other words, assert fiscal prudence, create an environment receptive to business, and reorient the state to govern effectively and developmentally. Be willing to change course on some long and deeply held assumptions. Privatisation even makes a return.
Mboweni was emphatic about the need to move: “If you cannot effect deep structural economic reforms, then game over!”
Yet South Africa’s fiscal position is disastrous. Bailout has followed bailout in the country’s mismanaged state-owned enterprises. With the Treasury stretched to its limits, some R3.5-billion was pulled from the Development Bank of Southern Africa (DBSA) to stave off disaster for South African Airways. (When its business rescue team decided to cut back on flights, the government stepped in with objections – perhaps Quest was right when he warned that the government would not be able to keep its hands off the airline.)
The big one, though, is to take a chunk from the Public Investment Corporation, the Industrial Development Corporation, the DBSA, along with a few others, and sink R250-billion, or so into Eskom to pay off its debt. In exchange for this, particular reforms come off the table – all jobs protected, despite the entity’s overstaffing and no privatisation. In a very real sense, it’s more of the same.
The president thinks this is a capital idea. No wonder, since it buys some breathing space without much domestic political cost. It also defers tough decisions. (Big business is in favour too, as long as doing so doesn’t stick the cost to “the taxpayer”. Good luck with that.)
And one can’t help but wonder if this isn’t a trial run of sorts for more intrusion into people’s wealth. Think prescribed assets. If workers in the public sector are willing (at least in the view of their union leaders), to gamble their pensions, why shouldn’t the rest of us? As Ramaphosa said last year: “We are faced with a situation where our financial resources have been depleted.”
Indeed. But while everyone seems to know more or less how this depletion came about, Ramaphosa’s own role in it remains strangely unexamined. That he served as Zuma’s deputy in both the state and the party seems to be overlooked.
It shouldn’t be forgotten that he presided over the party’s deployment committee during the height of state capture. The whole system of cadre deployment is, in any event, directly contrary to South Africa’s constitution.
On that note, only three months ago, Bathabile Dlamini, she of the “smallanyana skeletons” – and the not so small ones, if one takes the quarter-of-a-million “Travelgate” indiscretion and fraud plea into account, or her “reckless and grossly” negligent mishandling of the social grant system – was appointed to head the Social Housing Regulatory Authority interim board.
Responding to criticism, Makhosini Mgitywa, spokesperson for the relevant minister, said:
“She remains a member of the National Executive Committee of the ANC, she is the president of the Women’s League of the ANC and we have to accept the fact that there is a deployment committee of the ANC.” An honest appraisal, for whatever it’s worth and confirmation that we’re still in trouble.
Despite the optimistic reading of some in the media, there has been no backing away from this – only the basically unimplementable assurance that better quality cadres will be “deployed”. In other words, the practice that has inflicted such damage on the country, that has compromised the state’s very functionality, will continue.
The immediate future promises little improvement. Something the president has committed himself and his government to is expropriation without compensation. It will do nothing to deal with the problems besetting land reform and it’s no exaggeration to say this is the issue on which South Africa’s future prospects will turn. It signifies an intention on the part of the state to seize property without paying for it – a more chilling disincentive to business is hard to imagine. Business, local and domestic, has called for “clarity” on this, though if the clarity provided is merely that the reach and latitude of our often corrupt, and dysfunctional state is to be enhanced, that will be a warning to business that South Africa is a poor bet indeed.
Ramaphosa has also pledged radical improvements to the business environment. That remains to be seen, although it’s doubtful without major improvements in the capacity of the state and a significant adjustment in official attitudes to business. On the latter, Ramaphosa can claim credit for speaking out against the hostility that many in his party routinely express. His appeal has had a modest effect, with “white monopoly capital” remaining a prime bogey for many of his colleagues.
As for substantive action, there is little sense of the need to reassess policy. Race-based empowerment policies – something that has introduced a slew of perverse incentives into economic activity and whose benefits have disproportionately been enjoyed by those with political connections – remain sacrosanct. As former trade and industry minister Rob Davies said in response to a survey of European business people, which revealed concerns about the policy, South Africa is not “going to be able to renounce BEE”.
Indeed, it is to be “strengthened”, with the costs that it will entail.
All of which augurs poorly for the future. The Medium Term Budget Policy Statement estimated real GDP growth in 2019 at 0.5%. In 2020, it would come in at 1.2%, in 2021 at 1.6%, and 1.7% in 2022. Compare this to the 5.4% rate envisaged by the National Development Plan. And these estimates may well turn out to have been optimistic.
The hard reality is that there is precious little reason to believe that Ramaphosa is the reformer that many assumed him to be. Nor is any purposeful policy reorientation in evidence. At best, what is on offer is more of the same, somewhat more competently executed.
That, in turn, gives us a low-growth, meagre-opportunity and probably conflict-prone future.
“Hope is good, but it is not a strategy,” said Mboweni last year. Neither is cheerleading. With a national malaise presided over by a political elite that is not acting to address it – and which seeks to avoid doing what is necessary – appealing for “action”, or “leadership” is rather pointless. Much of the action taken so far has been within the same political and ideological framework that produced the issues we confront.
The past two years have shown that appeasement, praise, and a discreet word here and there have achieved little. South Africa’s people and those institutions that aspire to something other than the perilous course that we are on, need to speak up audibly and demand something different. Business, above all, needs to step up – in a clear and decisive manner, just as is demanded of the president. A good place to start would be to express unambiguously just how damaging the drive for degrading property protections is, how South Africa’s future cannot withstand it, and how the country’s civil and business institutions will resist it. DM