STATE OF THE NATION
DID 9/12 KNOCK US BACK TO OUR SENSES?
The seismic events of December 2015 following President Jacob Zuma’s decision to fire his finance minister, Nhlanhla Nene, are known to some as “9/12” – the date on which South Africa was propelled into its midsummer madness. The appellation is, of course, a play on 9/11, shorthand for the al-Qaeda attack on the World Trade Center in New York.
Our 9/12 has been a blessing – a very expensive one after a loss of R177 billion to the economy that is still being felt by you and me as, among other things, a loss in the value of our pensions and other investments. The blessing, however, has come in the form of the first clear assault on the crony economy we have been descending into. A crony state is one that is run for the sake of interests other than the nation’s. Cronies are pals of powerful politicians who capture state policy and practice.
The finance minister who briefly replaced Nene, David “Des” van Rooyen, is widely regarded inside government and the governing party as a placeholder for cronies. He was put into Treasury to prise it loose from the civil service mandarins who keep a tight rein on public spending. His rapid removal and replacement by returned incumbent Pravin Gordhan signalled a new era perhaps, which was evident in the state of the nation address (Sona) on Thursday evening.
Crony states are generally profligate ones, as they function for the sake of the short term – but the latest Sona is strong on the idea of cutting the gravy. The most resonant message in it is a plan to cut overseas travel budgets, parties and other extravagant state costs. The other big signal is the caution now being expressed on the nuclear power deal. After the president was belting down the track to get the 9 600-megawatt atomic power plant deal concluded with Rosatom, the Russian nuclear agency, this notable sentence was inserted into the national address: “Let me emphasise that we will only procure nuclear on a scale and pace that our country can afford.”
South Africa, near recession and facing an investment ratings downgrade, cannot afford nuclear. As much as the president wants or needs the deal to happen, I don’t think it will if the balance of forces has tilted in the ways I think 9/12 has directed. There are other examples of the political shift.
Until we were plunged into crisis by the firing of Nene, economic policy power was awkwardly held in a listless balance between Treasury pragmatists and the communist dreamers, represented by Trade and Industry Minister Rob Davies and his economic development counterpart, Ebrahim Patel. For six years, the communists had held the upper hand, attempting state-led growth, which has not really worked, except episodically and by project. This year’s Sona again places economic growth led by the private sector at the centre.
You can see this shift in the structure of President Zuma’s speech: three-quarters of it is an orthodox paean to market forces to stave off a feared ratings downgrade. The last quarter is an account of a largely failed 10-point plan announced in the 2015 address. So, 9/12 has returned us to a state of pragmatism – the left won’t like it and neither is it brilliant for social justice, but it may be just the stabilisation a highly stressed economy needs.
The speech reveals the kind of year we are likely to have: there is no word in it about education, very little on inequality and no sense that the social-grant system will be maintained (by inflation rate increases). In other words, we are in survival mode.
Beyond what it symbolises, the speech was lacklustre, read listlessly by a tired and harried president under enormous political pressure and written by a governing party worried about its dimming fortunes and facing a robust young opposition in the form of both the Economic Freedom Fighters (EFF) and the DA.
The EFF has turned its young guns on the crony state as the central plank of its campaign against the governing party in 2016. Its “Zupta” campaign is named for the relationship between President Zuma and the Gupta family, which has built an awesome business empire by leveraging off its access to high political power.
The success of Sona requires business’ buy-in, but the sector’s initial reception has been as lacklustre as the delivery of the speech itself. Easily spooked, business is sitting on a rumoured R1 trillion in cash it might not invest. The speech was a brave attempt by a tired governing party to push back against the capture of the democratic state, to earn the buy-in of the people responsible for the largest chunk of our economic activity.
Thursday night’s Sona will only succeed if the people who insisted that Gordhan replace Van Rooyen at Treasury after the events of 9/12 have the upper hand. That is no certainty, with the growing primacy of the so-called Premier League, the powerful triumvirate of the premiers of the Free State, Mpumalanga and North West who personify the crony state, with huge personal business interests and their hands on powerful fiscal levers.
Can the gravy train be stopped? Let’s assess it in a year.
UNEASY LIES THE HEAD President Jacob Zuma delivers the state of the nation address on Thursday. The speech was a departure from those given in previous years, with more of a focus on the economy and the introduction of greater fiscal discipline