ANC credibility rests on growth

It might be tempting to mock Enoch Godongwana’s belated admission that the ANC’s maladministration under Jacob Zuma’s leadership was largely to blame for the country’s economic woes. After all, Godongwana is the head of economic transformation for the same ANC that kept Zuma in power, and blocked attempts by the opposition to force him out.

The various motions of no confidence had no way of passing without the support of ANC MPs. And they never came to the party. This meant that despite growing evidence that state capture was not a figment of journalists’ imaginations, and that attempts to take over and undermine the national treasury were afoot, Zuma survived three such motions in parliament — all the while cheered on by ANC backbenchers. He might have lost the last one. By then Cyril Ramaphosa had taken over as ANC president. It was clear, this time even to Zuma, that the game was up. He resigned before the vote could take place.

The country had to bide its time and wait for his term to end, hoping all the while he would not hand-pick a successor, who would keep the country on its path to ruin. It was a close run thing, but the nation gave a collective sigh of relief when Ramaphosa, rather than another Zuma, emerged victorious in December 2018.

There is no need to restate the grim statistics that mark the Zuma years. A stagnant economy, record unemployment, a surge in debt which doubled SA’s interest payments and the destruction of what once were world-class utilities are a sad testament to a lost decade. Almost daily, the Zondo and Nugent commissions of inquiry into state capture and governance at the SA Revenue Service illuminate some of the worst excesses of the period.

The country has paid a big price for the ANC's neglect. The question now is, where do we go from here?

After the initial optimism that accompanied Cyril Ramaphosa’s appointment, the mood has definitely darkened. This week’s data showing the economy had slipped into a recession was merely confirmation of what has been apparent for a while, reflected in the rand’s slide since Ramaphosa’s dangerous and needless announcement of the ANC’s plan to change the constitution to explicitly allow for the expropriation of land without compensation. Moody's Investors Service’s decision to downgrade its growth forecast for 2018 was hardly a surprise, after a number of investment banks did so in the immediate aftermath of the growth data.

Moody’s pronouncement is extra relevant as it is the last of the major ratings companies to have an investment-grade rating on the country’s debt. If they expect growth to be half what they initially expected, it is inevitable that their projections for the budget deficit will also be adjusted. And that has implication for how they view our credit worthiness, especially at a time when political pressure is forcing Ramaphosa to promise a stimulus package.

Another downgrade would be a disaster for the country as it would mean investors dumping our bonds, which would push borrowing costs higher. That means more of the money we should be spending on schools will instead be used to pay interest to bond holders.

Finance Minister Nhlanhla Nene’s reaction hasn’t exactly inspired confidence, telling the country to wait for his medium term budget policy statement due late in October. From what we know about the state of the nation’s finances, it is safe to assume whatever stimulus is announced will not be big enough to make a substantial dent in the unemployment crisis. What is needed is for the ANC to show some leadership, and take bold actions to promote growth and encourage investment.

Unfortunately, Ramaphosa has failed to give the impression that he has a plan and vision. He looks easily distracted by appeals to populism for short-term political gain. The Zuma years are a stain on the ANC. It might go a long way cleansing itself by showing it can make the tough decisions needed for growth.

Another downgrade would be a disaster for the country as it would mean investors dumping our bonds