Ramaphosa faces big test on vision for new economy

It has been clear President Cyril Ramaphosa had a tightrope to walk with his party's factional battles as well as shoring up broader support among business and labour, the writer says.
It has been clear President Cyril Ramaphosa had a tightrope to walk with his party's factional battles as well as shoring up broader support among business and labour, the writer says.
Image: GCIS

Announcing a R500bn relief package last week, President Cyril Ramaphosa gave his most important speech yet as president with his reference to building a new economy in a new global reality.

It is one thing to make pronouncements about change. It is another to make it happen. The poetry and fanfare about the "new dawn" has made that all too clear.

Since he took office, the question has been whether Ramaphosa has the courage to take the bold decisions necessary to turn around SA's socioeconomic fortunes.

It has been clear he had a tightrope to walk with his party's factional battles as well as shoring up broader support among business and labour.

Announcing a cut to the public sector wage bill was the biggest sign yet that his administration is ready to rattle cages towards shifting the state into a better fiscal position. But the latest downgrade by Moody's indicated that this was not enough. Tougher decisions lie ahead. Leadership is everything. Making good on his vision is the greatest test for Ramaphosa. And right now, he has some momentum.

In his address, he began to speak to the broader mass of society, the ANC's core constituency. Topping up grants as well as allocations for the unemployed should go a long way to increase support for his leadership. More than the support to households and additional tax relief for businesses, the address was significant for his vision for the SA economy and society beyond the Covid-19 crisis.

Ramaphosa framed his bold vision in the following terms: "Our country and the world we live in will never be the same. We are resolved not merely to return our economy to where it was before the coronavirus, but to forge a new economy in a new global reality.

"Building on the cooperation that is being forged among all social partners during this crisis, we will accelerate the structural reforms required to reduce the cost of doing business, to promote localisation and industrialisation, to overhaul state-owned enterprises and to strengthen the informal sector."

Until the Covid-19 pandemic, Ramaphosa seemed to be unable to get significant movement towards the structural reforms he refers to.

His interventions in state-owned enterprises (SOEs), for example, have not gone far enough to signal significant shifts of direction. For all the talk of strengthening state capacity, some cabinet selections and governance at provincial and local government signal uncomfortable continuity with the past.

But the coronavirus pandemic could be just the crisis needed to finally deliver on required reforms. That's if he follows through.

The national state of disaster has indeed placed him in the driving seat. With very limited space for dissent in the context of a global and national crisis, Ramaphosa is stronger than he has ever been, and perhaps will ever be.

He has the ear of business, those domestic investors and corporates said to be hoarding around R4-trillion which they could be investing in SA Inc. Trade unions are reeling over the effects of the economic shutdown on workers - and should be poised to take seriously any reasonable proposals. Communities and broader civil society now more than ever need the country and economy to work better.

His administration has the cover to take unpopular decisions. These include re-purposing SOEs, renegotiating power relations with public sector unions, providing the necessary combination of sticks and carrots to get big business to invest and participate in economic reform.

This is an opportune time. What waits to be seen is whether Ramaphosa will have the courage to deliver on his bold vision for a new economy.

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