Why it’s decision time for South Africa

Why it’s decision time for South Africa

We know what the problem is and its time to make some tough policy decisions

Movie legend Elizabeth Taylor was married eight times to seven husbands. This led to a joke regarding the last of them:

“I feel like Liz Taylor‘s eighth husband on their wedding night; I know what I have to do, I just don‘t know how to do it differently.”

I thought it apt to use this joke at the Cape Town launch of the new book by South African academic Greg Mills and US academic Jeff Herbst, How South Africa Works and Must do Better. This crisp work on what ails our tanking economy and what to do about getting it out of the rut joins a very long line of “how to” manuals examining the state of our state.

As the authors pointed out at the launch, there has been an overwhelming excess of government plans since the dawn of democracy more than 20 years ago.

A veritable alphabet soup of them — mostly discarded and seldom fully implemented — litters the landscape: RDP, Gear and Asgisa were the opening salvos in the Mandela and Mbeki eras. Under President Jacob Zuma there are a trio of them — often mismatched and with different diagnostics and outcomes — namely the National Development Plan, the New Growth Path and the Industrial Policy Action Plan.

These plans all promise higher growth, of between 5% and 7%, and more jobs — you can take your pick from 5 million by 2020 (NGP) to the projection of 11 million by 2030 (NDP).

All these plans have been aimed at strangling the serpent of unemployment and its evil cousin, the dragon of low growth. And all have failed.

The grim reality is that, despite the welter of ideas and projections, since 1994, the number of unemployed people in South Africa has risen from 3.7 million to 8.3 million. In the words of Ann Bernstein, head of the Centre for Development and Enterprise, our unemployment crisis is at “the root of our overlapping economic, social and political crises”. And, she adds, that with half of our volatile youth without work and without any real prospects of a job, South Africa faces “the deepest unemployment crisis in the world”.

Due to government interventions, most notably distributing 17 million monthly social grants, South Africa in Herbst‘s view is not (yet) a “failed state”. But he was hardly reassuring when he told the book launch audience that we resemble more “a slow puncture”. And while he believes the situation is not as dire as it appeared in the 1980s , he cautioned that once a nation settles into a low-growth path it becomes ever more difficult to climb out of it.

Patting ourselves on our backs for the distance we have covered and the progress made in the past two decades might lead to not only complacency but to a serious misreading of the international comparisons.

Amidst the welter of statistics and graphs and rich data in How South Africa Works one leapt out of the pages. It was a table comparing the change in per capita GDP (the rate of economic growth divided by the population) here with other countries in the 20 years after they embarked on their own journeys of independence.

In South Africa the rise has been just 31%. In Vietnam — site of full-scale foreign and civil warfare for more than 20 years before 1984 — the rise thereafter was 166%. In Botswana, where there were only a few kilometres of tarred roads at independence in 1966, the percentage improvement was 581%. Of the six countries to which we are compared, we beat only one: Zimbabwe.

Herbst wisely cautioned the audience, “Just don‘t produce another plan!” Rather do something which actually works.
Instead of turning parastatals into playgrounds for friends of the president (SAA), or dumping grounds for corrupt cadres (Prasa) or introducing a visa regime which keeps foreign tourists away, try another tack: focus on employment at all times. The departure point should be: “Do these actions promote employment?”

Such a laser-like focus requires hands-on — even heroic — leadership. We don‘t see too many signs of that on our horizon.

Since Saturday witnessed the celebration of Nelson Mandela‘s birthday, it is worth recalling his contribution to economic leadership. Mandela, by his own admission, was no economist, but he got the “big idea”.

At our first meeting, in 1992, he told a dinner to which he had summoned two party colleagues and me about an encounter he had that year at the World Economic Forum.

The book recounts how Mandela, confronted by business leaders there, turned his back on the comfortable assumptions many of his inner circle held dear. He realised that “the rhetoric of the 1950s and the ideology of the 1960s — full-blown socialism — would no longer suffice as economic policy”. He said, “We either keep nationalisation and get no investment or we modify our own attitude and get investment.”
We‘ve drifted a long way since then and mostly downward.

The book quotes Reserve Bank governor Lesetja Kganyago reminding those in power that “To govern is to choose. Policy is about trade-offs”. Perhaps someone in the Union Buildings will start applying the lessons.

This article first appeared in The Times

By |2015-07-22T11:34:23+00:00July 22nd, 2015|South African Politics|0 Comments

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