TEAM SA Up to Ramaphosa to revive can-do spirit
In January 2016, then finance minister Pravin Gordhan took a group of CEOs with him to Davos to present a united front to the international investment community. Under the united banner of Team SA, the country was selling the message then — just as it is now — that it had got its act together and would do whatever it took to avert an economic crisis and further credit rating downgrades.
As Deputy President Cyril Ramaphosa and local business leaders mingle with financial royalty in Davos this week, they are picking up where Gordhan left off. That parlour act worked better than anyone could have imagined. SA managed to stave off further downgrades during 2016 despite the absence of any real economic reform. It wasn’t until President Jacob Zuma fired Gordhan in April 2017 that the country’s ratings were junked.
After Zuma’s betrayal, the social compact that Gordhan had begun to build with business and labour unravelled and the projects that were an expression of that partnership — notably a R50bn youth internship scheme — stalled. Ramaphosa is trying hard to resuscitate it. The ANC’s January 8 statement, which sets out its priorities for the year, stresses that the ANC leadership wants to work with all of society to build consensus and forge a social compact to ensure SA’s economic recovery.
“Yes, we have been downgraded. It’s going to be a mammoth task to get us out of this trench or out of this hole, but working together I’d like to believe that we can,” Ramaphosa said on departing for Davos. Though we’ve heard it all before, he is on far firmer ground than Gordhan was. While Gordhan was undermined by Zuma at every turn, Ramaphosa, as the country’s president-in-waiting, has the main levers of power within his grasp. The fact that he has installed a market-friendly new board and CEO at Eskom suggests he is already moving to wield them.
He also has the firm backing of organised business and labour federation Cosatu. But given the failure of SA’s main stakeholders over the past 20 years to reach a social accord, is it realistic to expect them to finally bury their policy contradictions and put the national interest first? A healthy dose of scepticism is clearly warranted, but with the economy, fiscus and many state-owned enterprises (SOEs) backed against the wall, all the players must realise that they have to make significant shifts for the national good.
Ramaphosa points to the 2016 labour market negotiations at the National Economic Development and Labour Council, which he chaired, to show that pragmatism and compromise can prevail even in a country as polarised as SA. The council’s labour market reforms were achieved against the backdrop of a violent, fivemonth platinum strike. The damage to the economy and workers’ livelihoods and the loss of life it caused forced SA to take a hard look at its fraught industrial relations environment.
The upshot of those talks was that the unions conceded to undertake secret balloting before embarking on strikes and business conceded to a R20 an hour national minimum wage. However, more than piecemeal reforms are required to get the economy really pumping. What SA needs is less government inefficiency, less economic and institutional mismanagement and a more certain, businessfriendly environment.
It has become clear that the state-led development model is crumbling through inefficiency and incapacity. SA’s best shot at raising the growth rate is to give the private sector a bigger role in the government’s traditional terrain, including in providing infrastructure, power generation and in helping to run SOEs. This means the ANC has to fundamentally change the way it thinks about the economy. The baton has been passed to Ramaphosa; SA’s future depends on how he runs with it.