Taking the brakes off SA’s growth

Article first published in News 24 on 25 February 2018 

One of the biggest tests for any party in power

One of the biggest tests for any party in power is the ability to conceive policies and strategies that can provide the greatest socioeconomic effect and implement them successfully. The critical success factor in this challenge is a combination of credible leadership, effective mechanisms for determining policies at party level and a capable state to implement these policies. The party leader must command solid support in order to achieve policy consistency and coherence.

However, it may not be obvious for many people that South Africa has been governed by a loose coalition of a special kind since 1994. It has been operating without an agreement that clearly specifies and delineates roles and policy areas of responsibility and mandates for each of the partners. In the absence of such a regulated relationship, unproductive ideological contestations and gridlock become the norm, and chaos and dysfunction often result. The outcome in such circumstances is policy incoherence and inconsistency of the kind that has characterised the performance of the ANC-led government since the beginning of the democratic transition. This is one area that has attracted negative comment from institutions such as the World Bank and the rating agencies.

Conventional practice is that governing coalitions negotiate and agree on structural arrangements that specify roles and areas of responsibility and mandates in specific policy areas. The leading partner would always cherry pick areas such as the economic cluster (including fiscal policy), defence and security, foreign policy and home affairs. The balance is allocated to the other partners on the basis of their strengths. These types of arrangements do not prevent robust debates across all policy fronts, but at the end of the day the final responsibility in terms of political leadership follows the agreed split.

But what we have seen is that the National Development Plan (NDP) 2012 has been the subject of vocal and public challenge by labour federation Cosatu, on the basis that it entrenches neoliberal principles that, in their view, are not aligned with the perceived dominant ideological paradigm within the alliance. As a result, its implementation has been patchy, to say the least. The message behind it, as communicated by different ministers on various public platforms, has become equally very confused. Its originally intended value as an instrument of motivation and grand strategic vision has been diluted and mangled.

A signal example of this fault line in the tripartite alliance is the frequent and absolutely legitimate complaint by both Cosatu and the SA Communist Party of being excluded from key decisions like the selection and appointment of ministers. This is normally a critical output of a well-structured alliance with an effective governance framework. The ANC has been excluding its partners from this important decision-making process. The accusation that the ANC only needs its partners as vote catchers is indeed legitimate.

President Cyril Ramaphosa will need to urgently address this critical weakness and bring stability to policy determination and decision-making processes in the alliance. Failure to do so will continue the current dysfunctionality within the alliance and policy determination.

The NDP 2030 is a grand vision statement, but what has been critical and urgent, though still elusive, is a structured engagement by key stakeholders to determine and agree to a set of long-term, high-impact projects within select anchor sectors that can drive growth and job creation. It is therefore suggested that the job summit proposed by the president should be termed the growth and employment summit.

Its rationale and urgency are beyond doubt. What is needed is the deep and generous goodwill of the intended participants to engage honestly and rationally on this priority item confronting the nation since 1994.

History has demonstrated that this was the practice that was pursued by the successful Asian Tiger countries, who piloted this approach as an innovative way of dealing with profound social inequities.

We have faced similar challenges since the beginning of the democratic transition. These complex and structural socioeconomic inequities inherited from the apartheid era definitely require innovative solutions.

At the centre of such a strategy and approach has been the need to establish a separate and highly technocratic development commission with full political and legislative mandates to manage the implementation of the agreed high-impact projects. Our patchy history of success with policy implementation suggests this may be the best option to follow.

The president emphasised the critical need for a capable state to deliver on state policy choices and strategies at all levels in the three spheres of government. It was a welcome and absolutely necessary commitment. But we have been here before! The concept of a developmental state was a flavour of the latter and early parts of Jacob Zuma’s tenure. What was however ignored was the fact that a critical success factor for a capable and developmental state is having the requisite competencies at all key levels.

The notion that deploying cadres that do not possess the correct skills can sustain capable and effective state machinery is irrational and must have been pursued for purposes of building a patronage network. This is clearly not in the interests of the public.

The state of the nation address (Sona) was anchored in conveying a sense of hope and confidence, given the past decade of regression on all development matrices and an economy that was growing at a pace below the population growth rate. The level of scepticism and distrust in the population requires that the new dawn, as canvassed by Ramaphosa, must be marked by credible and urgent change.

State-owned entities (SOEs) provide immediate and easy opportunities for effecting the urgently desired change. Their governance structures and boards can be quickly changed and improved, provided a careful selection of competent people with relevant skills is made. This has been at the centre of the collapse in performance and governance we have seen.

A protracted area of struggle to bring about the necessary changes will always be at the level of municipalities. Patronage and corruption are deeply entrenched at this critical level, where the state directly interacts with the people. Achieving capable state machinery at this level is more complex, as the challenges relate to the structure of municipalities and how they are funded. Many small municipalities do not have an economic base strong enough to generate the revenues required to support the cost of the services they are expected to provide. A broader and deeper restructuring and policy review are required to change the status quo.

The litmus test for the reforms that Ramaphosa indicated in his Sona speech is the calibre of people he will surround himself with in his Cabinet. It is not clear that the factional leverages within the ANC and the pressure from the alliance partners provide him with sufficient scope and latitude to be visionary and deliver on the credibility he projected in the run-up to his election and in his Sona.

These constraining factors will loom large over the ANC’s prospects in the highly competitive 2019 elections.

Finally, Mr President, it is not only the nonexecutive board members that must be isolated from procurement processes in SOEs. Your ministers must be prohibited from involvement in them because that is where the pressure for devious rent-seeking emanates from.