Ramaphosa’s task is to bring about social cohesion
The “new dawn” banner that unfurled from President Cyril Ramaphosa’s office could not have come at a better time. But cheering the small changes he has made over the past few months is reckless and naive.
The faith in Ramaphosa’s fledgling administration restored faith in SA’s economy, but the challenges, left by a Jacob Zuma administration that pillaged the state, are far too great to ignore in the short term.
SA’s faltering education system has failed to empower most of the youth for the fourth industrial revolution, leaving them marginalised.
The public healthcare system is in crisis, and poverty and unemployment levels are very high compared to middleincome countries with similar socioeconomic dynamics.
SA desperately needs structural economic reforms that foster inclusive economic growth and development. This could be achieved by implementing developmental state policies and reforms.
A developmental state actively pursues an industrialisation agenda as a key aspect of its economic policy. It prioritises active consultation and engagement with all stakeholders in the economy as a prerequisite for action — from policy formulation to implementation.
At the heart of a developmental state is its private and public sectors, with labour and civil society working together to ensure that as many citizens as possible benefit from the country’s economic development through the distribution of income.
Corruption in state departments under the Zuma administration continues to plague SA. Parastatals, government departments and other government institutions have squandered billions of rand, bleeding state coffers with no thought for value creation. To grow the economy, opportunities should be expanded to previously disadvantaged groups to allow them to enter the workforce through employment or entrepreneurship. The financial services sector (asset management in particular), construction, retail, mining and others have failed to use employment equity and transformation measures to effect change at senior management and ownership level.
A recent report by the World Bank highlighted a shocking statistic: the wealthiest 1% of the population own a preposterous 70% of the nation’s wealth, confirming SA’s status as the most unequal country in the world.
The bloated social security system is not an effective redistributive measure. New policies have to be drafted to combat the triple challenges of poverty, unemployment and inequality. The failure to effectively tackle these challenges will intensify social tension while widening the income gap.
The World Bank recommends that SA creates a system in which quality tertiary education for students from poor households is expanded and financed by the government in a bid to curb rampant poverty.
Unfortunately, the Treasury is under significant pressure as government debt has grown over the past few years, placing a limit on the number of students who can be funded.
Nonetheless, the World Bank emphasises that building a more inclusive economy and society rests on the ability to empower the youth through education.
Bureaucratic competence is essential for a successful developmental state. State institutions should facilitate the swift and efficient implementation of the National Development Plan (NDP).
The plan’s shortcomings epitomise the government’s incompetence in crafting policies but, more worrying, also expose the government’s inability to implement a blueprint for the future.
Improving the state’s human capital base by passing on skills coveted in the private sector will be the most important place to start. Ramaphosa’s first cabinet reshuffle signalled his intent to make competent appointments in senior positions in government. Hopefully, this will also happen in local government. The state must attract the brightest young minds to the public service to meet the demands of the fourth industrial revolution.
A competent bureaucracy is essential, but often not enough to create a thriving developmental state. A functional political system that imposes a duty on the state to act legitimately in an accountable and transparent manner is imperative.
SA has strong institutions that derive their power directly from the Constitution and are tasked to ensure the separation of powers between the branches of government and organs of state. Unfortunately, the previous administration usurped the power of key chapter 9 institutions.
Under Zuma, the president’s right to appoint a national director of public prosecutions, especially Shaun Abrahams, allowed for the initiation and withdrawal of prosecutions at the instruction of the president. This is a clear violation of the Constitution.
STATE INSTITUTIONS SHOULD FACILITATE THE SWIFT IMPLEMENTATION OF THE NATIONAL DEVELOPMENT PLAN
The biggest factor contributing to policy uncertainty in the past few years has been the lack of cohesion between the ANC and the tripartite alliance. The far left and the moderates in the alliance have hugely diverging ideologies on pertinent issues.
The South African Communist Party lobbied the government to remove the inflation target of 3% to 6% set by the Reserve Bank and demanded a radical reduction of the repo rate to stimulate aggregate demand through credit expansion. However, this populist approach would invariably lead to inflationary pressures and eventual economic collapse.
The Reserve Bank is an independent state institution that derives its powers directly from the Constitution, not the government. The Bank should not work at the behest of the self-serving political bureaucracy.
The Ready To Govern document released by the ANC in 1991-92 encapsulated the economic aspirations of the government-in-waiting. It referred to the creation of a developmental state.
The NDP presents the public and private sectors with an opportunity to make amends for the lag in creating jobs and reducing poverty. But since its adoption, the government has failed to implement the plan.
SA will never tackle poverty and inequality without achieving social cohesion — and creating an inclusive economy is a prerequisite for this.