Implementation paralysis is frustrating and expensive
In just over seven weeks President Cyril Ramaphosa will face a re-election battle for the presidency of the ANC. The governing party’s 55th national conference seems to be a shooin for him simply because potential competitors have thus far been absolutely dreadful in launching their campaigns.
Five years ago the lead-up to the conference was itself a conference of contestations, with various candidates punting different ideological positions as part of their manifestos. The most popular ones related to the nationalisation of the Reserve Bank and the question of how deep the social support systems could go in light of SA’S persistent poverty and income inequality.
Ramaphosa’s victory then was in stark contrast to the resolutions that won the day, which seemed at odds with his convictions. The midterm national general council, where progress towards realisation of the resolutions is usually assessed, was cancelled due to the Covid-19 pandemic.
This meant the only time Ramaphosa could be asked to account for his administration’s progress on the Nasrec resolutions was the policy conference in July this year. As it turned out, so much had happened since 2020 that he managed to get through the policy conference without accounting for the implementation paralysis.
Ahead of the 2022 conference the big talking points will be the fate of state-owned enterprises, the continuity of the social relief of distress grant in place since 2020, and the Eskom problem.
Ramaphosa’s detractors have accused him of being committed to a wholesale sale of state assets, which is at odds with the ANC’S ideological commitment to control the “commanding heights of the economy”.
Privatisation, with all its resultant complications, remains a contentious talking point within the ANC. But as the party has delayed its decisions regarding the reforms and state enterprises have continued to decline, the president needed the finance minister to bail him out one more time by committing state resources to underperforming institutions in this week’s medium-term budget policy statement (MTBPS).
The allocations to Sanral, Denel, Transnet and Eskom, rather than a push towards strategic equity partnerships as trialled in the case of SAA, means the noise around creeping privatisation will be less loud in December. So, while Ramaphosa can be accused of having stalled on resolutions, he can get a pass for not having lurched decisively in the other direction.
For Eskom, the decision to finally take some of its debt to the national balance sheet has been debated since 2018. Surprisingly, the government still has not figured out what that means or how much will be shifted. The continued lack of clarity, at a time when Eskom does not get the tariffs it asks for and its maintenance crisis persists, makes it difficult to know whether the government will actually pull it off.
This long-standing decision paralysis, which is replicated in the e-tolls saga, reflects an inability of the state to make the tough decisions when crisis first looms. The deferred decision model exposes the country to the exogenous factors that make the ultimate — and inevitable — decisions relatively more expensive.
The delayed decision to build new power stations for Eskom means it was much more expensive when it was eventually started.
The delay in finalising the etoll saga, even though the evidence indicated that road-user compliance would never happen, means now that the decision has finally been made the cost of settling the debt is higher.
Such practices are fundamentally problematic for a country whose debt-servicing costs swallow up a significant part of revenues. The extension of the social relief of distress grant to March 2024 means that beyond the ANC Ramaphosa has also been given breathing space against opposition parties, which would challenge any move to abolish the current R350 grant ahead of the general elections.
However, as Ramaphosa would be wise to note, this breathing space is only temporary and tough decisions eventually have to be made.