“Confidence,” opined former US Treasury secretary Larry Summers, “is the cheapest form of stimulus.” So, how confident should South Africans and foreign investors feel after Cyril Ramaphosa unveiled his slightly less gargantuan cabinet and last week’s central bank mandate debacle?
An apt question is, “Who governs?”, given Ace Magashule’s disastrous intervention in the realms of monetary policy. But nominally, at least, the national executive of the country and not the party is constitutionally mandated to steer the ship of state.
On the rule of law front, some hope is offered by the credentialled and untainted new justice and correctional services minister, Ronald Lamola. Together with Pravin Gordhan back at public enterprises, Godfrey Lebeya as head of the Hawks and Shamila Batohi in charge of public prosecutions, there is a better-than-even chance of this quartet making a fair fist of recapturing the state from its plunderers. And indeed sending some of the serial delinquents to jail.
Purging executive miscreants such as Nomvula Mokonyane of Bosasa braai pack infamy, Bathabile Dlamini and Malusi Gigaba — both found untruthful by the judiciary — adds to the narrative that the previous era of impunity is over. And, to the extent that some change can be recovered from the estimated R1-trillion apparently stolen over the past decade from state coffers, perhaps there will even be some relief for the overstretched fiscus into the bargain.
With our unsustainable public finances, even fighting corruption could soon be second-order business to the first-class economic crisis, or series of them, confronting the country. However, with growth forecasts here set for an anaemic 1% or just beyond in the next year, far less confidence can be placed in the economic team assembled with the even more difficult task of reducing public expenditure while stimulating investment and reducing the mountain of unemployed and largely unskilled job seekers.
“Team of rivals” would be an exaggerated description of the group Ramaphosa has named for this huge and formidable assignment. With his return to the Treasury as finance minister, Tito Mboweni is the only member of the economics cluster who has dared to deviate, in his public comments at least, from the political orthodoxy that has led SA into an economic cul-de-sac.
He has questioned the need for a state-owned airline, bewailed the parlous scale of public debt, favoured privatisation of several government-owned assets and made other obvious suggestions on how to rescue the country from the brink of national insolvency. But as recently as mid-March such perceived heresies were given short shrift in parliament from the recently restored deputy president, David Mabuza.
Mabuza, whose “clearance” by the ANC integrity commission was swifter than Caster Semenya at her fastest and best, dismissed such thoughts as mere personal commentary. Mabuza told parliament and Mboweni: “Whatever the minister said relating to privatisation is that of the minister, not that of the government.” With that parliamentary put-down, little wonder Mboweni’s latest tweets relate to the safer topics of culinary recipes and the best settings for the dining room table.
Another cabinet bon vivant in the Mboweni mould from a now distant era was the late Kader Asmal. When in 1999 I congratulated him on his appointment as education minister in the first cabinet of Thabo Mbeki, he paused and responded mischievously: “I’m like a eunuch in a harem. I have the desire to change things, but not really the power to do so.”
Asmal would not be the last education minister to crash against the reform-resistant SA Democratic Teachers Union, or despair of driving change through grossly underperforming, often corrupted, provincial departments. The reappointment of Angie Motshekga after a decade presiding over catastrophic educational failures, is not reassuring on the reform front. But beyond the need for fixing a broken education system the hopes of economic change must founder on the rest of the team appointed for this task.
New trade & industry minister Ebrahim Patel combines fierce intelligence and personal integrity with deep ideology. He also, due to his demotion on the ANC list, is now answerable to one person, Cyril Ramaphosa, who lifted him back into parliament, and to union federation Cosatu, which insisted on his appointment to this office. Of course, it is possible, if not very probable, that Patel and his deputy, Fikile Majola, another union heavy, and even the new minister of labour & employment, Thulas Nxesi, deputy chair of the SA Communist Party, could do a Nixon-in-China reverse.
That stratagem was coined when conservative Republican president Richard Nixon turned US foreign policy on its head in 1972 when he visited Mao Zedong in Beijing and opened diplomatic and economic relations with the US’s hitherto archenemy. It was suggested that only an impeccable anticommunist in the Nixon mould could achieve and win such a risky gambit, as his triumphant re-election later that year proved. But expecting such a dramatic departure in economic policy and practice here is a big and unlikely ask.
After SA’s recent election, David Pilling, Africa editor of the Financial Times, wrote a very thoughtful analysis of Ramaphosa’s predisposition for effecting such changes and his chances of pulling it off. He sounded sombre notes on both scores, observing that part of the problem with the economic policy pursued by the ANC for nearly 25 years has been the two pillars on which it has been constructed: BEE and the creation of’ a labour elite through laws supporting a strong, unionised workforce. Whatever the morality or merits of this two-pronged strategy, it has ensured “that the majority of black South Africans fall outside those two privileged categories”.
But, as Pilling notes, “Ramaphosa is a representative of both sets of black South Africans who have done well since 1994. He has his political roots in the union movement. And he became wealthy through his skillful exploitation of black empowerment schemes.” Yet whatever personal resistance Ramaphosa might have to making fundamental changes, he faces a stark choice.
He is unlikely to preside over creating a low-wage economy à la India (which has a per capita income two-thirds lower than in SA). Nor is he likely to usher in an era of SA creating a highly educated workforce based on world-class infrastructure. That, in the Financial Times’ view, is the only alternative to breaking down our highly restrictive labour market.
As the now leaderless and debt-piled Eskom is proving, massifying staff only compounds problems: over the last decade its staff has expanded by 17,000, its payroll has ballooned and its electricity charges, to the mines, have mushroomed more than 500%. Yet in the run-up to the elections Ramaphosa promised no downsizing at Eskom. The surge in electricity pricing, absent its reliability, was cited as a key reason for the effective collapse of SA gold mining, which in a decade has gone from the world’s largest gold producer to ninth and falling.
That problem falls into the lap of new-old minerals & energy minister Gwede Mantashe. His Falstaffian disposition does not hide his strong union roots, and his championing of another inhibitor of SA’s power recovery, coal mining. Yet, as energy minister he will have to decide on the long-delayed integrated resource plan. Climate change and SA’s affordable energy needs “demand a switch from coal to renewables and from monopoly to market”, as The Economist suggested. Little in this minister’s background suggests he is a likely convert.
The room to manoeuvre is slight, but the need to do so has never been more urgent. Ramaphosa’s new-old team might be rule-of-law positive but it is economically neutral-to-negative. Mboweni, and the reform-minded, should be placed in the heart of the kitchen and given their heads. Otherwise, expect at best, or worst, thin gruel over the next few years.
Leon, a former leader of the opposition, now chairs Resolve Communications and is a senior adviser to K2 Intelligence of London.
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