ANC ignoring harsh economic reality on the ground
In August, finance minister Tito Mboweni's growth plan will be a year old. It identified the most important reforms needed to galvanise growth. But despite being adopted by the cabinet, its implementation has been glacial.
The logical supposition was that, given SA's desperate need for reconstruction post-Covid, it would be rapidly accelerated.
Instead, the ANC's national executive committee asked its economic transformation committee under Enoch Godongwana to go back to the drawing board. Its final reconstruction, growth and transformation discussion document was released last week.
The lightweight 30-pager contradicts Mboweni's document in letter and spirit. In fact, it fails to mention Mboweni's document.
Conveniently, the pandemic is used as an opportunity to press reset, having "legitimised a greater and more active role for the state in guiding the economy". It implicitly rejects the central thrust of Mboweni's document, with its reliance on reducing state monopoly power to improve efficiency and unleash the energies of the private sector.
Business for SA's (B4SA) accelerated economic recovery strategy, released on Friday, chimes strongly with Mboweni's approach, especially its emphasis on lowering the cost of doing business and increasing competitiveness.
What is new is the concurrence across the ANC and business papers that a big, joint infrastructure push should be the catalyst to rebuild the economy and that renewable energy should form an integral part.
The ANC sees a "massive expansion of social and economic infrastructure" as the impetus to boosting growth. But SA's looming sovereign debt crisis is ignored. What should arguably be SA's priority - stabilising national debt - is mentioned in passing. According to the ANC, the fiscus is only "currently constrained", as if this is just a temporary inconvenience.
In a rare bit of introspection, it concedes that "poor cadreship", compounded by corruption, has weakened the state. It even admits there's been a lack of honesty about what the state can realistically achieve. But then it compounds this dishonesty by asserting that the post-pandemic economy must continue to be state-led.
If the government takes the right actions now, SA is "capable of delivering economic growth of 5% per year, doubling GDP over the next 10 years".
Only state-led doesn't mean what it used to. "A developmental state does not necessarily mean higher levels of state ownership," it states, "but it does require that the state is able to provide strategic guidance to the operation and direction of the economy."
So, the ANC espouses a bigger role for the state - including punting a state bank, state pharmaceutical company, the expedited rollout of national health insurance and the nationalisation of the Reserve Bank - while justifying the state provides guidance and leaves implementation to the private sector. Confused?
If the ANC document was more honest it would admit that because of SA's intractable fiscal crisis and incapacitated state, President Cyril Ramaphosa's infrastructure push will never happen without the private sector.
Fortunately, business is on board. The B4SA document says the sector could fund R500bn of infrastructure over the next three years - but it wants a seat at the table. It hopes for "a new form of partnership" with the government.
The ANC also seeks a new social compact whereby "business will be required to look beyond profits" and "workers beyond the next round of wage negotiations".
While it's positive that both sides want to work together, all consensual bargaining has achieved under Ramaphosa is watered-down compromises and zero growth. This approach cannot replace the need for decisive leadership and bold action if SA is to avoid a death spiral. As Mboweni said last week: "God help us."
*Bisseker is Financial Mail assistant editor
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