Operation Vulindlela: opening the door, but unable to enter it

In his oped at the weekend finance minister Tito Mboweni tried to whip up enthusiasm for the government ’ s economic reform programme, which he said would be driven jointly by the Treasury and the presidency through

“Operation Vulindlela” or opening the way”.

It was difficult for me to share his enthusiasm, as he announced Vulindlela a year ago but it did not materialise. The document, which came as the economy sank into stagnation and a ratings downgrade loomed, was welcomed with relief by a depressed business and investor community. But the thrust of the paper was no different from every budget review of the past decade.

As before, it said: focus on reforming network industries, introduce competition, attract investment, and invite in private sector money and expertise, all with a view to creating a more efficient, growing economy. The priority areas were electricity and telecommunications, but also logistics, transport and investment in economic infrastructure generally.

As has happened so many times before, after the initial excitement all went quiet. We were downgraded and loadshedding continued, as did complaints about the cost of data and poor internet connectivity. Twelve months after the paper was written, additional broadband spectrum has not been issued; additional energy generation capacity is not under construction; and our economic malaise has become a full-blown crisis, worsened by the Covid-19 pandemic.

So we are back at the interminable negotiating table, where business, labour and government are again negotiating a blueprint for our economic recovery. But there is really one question that needs to be asked and answered: why can’t we do the things we know must be done? It was the main question asked by Economic Research SA, a programme focused on growth and employment, at a seminar last week on SA’s fiscal future. It was attended by several acclaimed international academic economists, including one of the Treasury ’ s favourites — Harvard University’s Ricardo Hausmann.

Hausmann put it like this: SA needs to unravel its growth puzzles. If there has been a failure of electricity planning, as sometimes happens in a country, why 12 years later is the problem still there? Why didn’t the market respond to meet supply as demand rose? Why is internet penetration so low, when it is an intervention that would be so positive for economic inclusion? Why did mining output in SA not grow with the commodity supercycle, as happened in other countries?

One explanation, he suggested, could be blockages caused by rent-seeking and corruption. Another might be that existing interests kept new entrants out. Or maybe it just comes down to lack of state capacity. While SA might have world-class regulation of the financial sector, does it have non-world-class regulation of other sectors of the economy? he asked.

I suspect Hausmann, who knows SA well, also knows the explanation lies in all three, but most of all in the last one. The incapable state — identified as problem number one in the National Development Plan all those years ago — is killing our economy and not enough attention has been given to solving the problem.

In an interaction with journalists last week President Cyril Ramaphosa was blunt: the state had been wrecked ” and now has the incapacity of “a war zone”. Having promised a fit-for-purpose government and done little to deliver it, it should be obvious that fixing the government should be Ramaphosa’s priority. But as he has discovered, a change of political leadership is not enough to inspire change in a weak administration. Painstaking attention to detail is now needed in every department, agency, regulator and state-owned enterprise.

In the interim, extraordinary measures to drive delivery will be the alternative. In the absence of capable departments and regulators, Operation Vulindlela — despite its false start — will have to be a part of the solution. When Mboweni mooted it he saw it as a unit in the Treasury. He has now been well-advised to locate it jointly in the presidency as an implementation unit that can unblock obstacles in departments. It will need the political heft of the presidency.

For the first time in his presidency, it appears Ramaphosa has glimpsed the possibility of failure. As hardship among the people increases, the administration remains persistently weak and inept; his ministers are inordinately slow and lack commitment to improving the lives of people; and the ANC’s credibility among the public has slipped precipitously.

After a six-month freezing of time in lockdown, the political situation is again fluid and time has suddenly accelerated. It is not a good time to be passive.