Economy takes back seat for ANC and allies
Economic and political uncertainties are battering SA, and are likely to be resolved only in 2017
AS economic indicators continued to warn of the possibility of a recession, the ANC last week summoned its alliance partners to an emergency seven-day summit.
But judging by the declaration the alliance issued on the last day of the indaba, the precarious state of the economy did not dominate the agenda.
The declaration — a joint statement on what the ANC and its alliance partners agreed to — pays most attention to problems in Cosatu, ill-discipline within the ANC and the judiciary’s alleged propensity for ruling against the government in court cases.
Where the economy is mentioned, it is in relation to continuing turmoil at many of the parastatals, which the ANC alliance regards as “essential components” to its grand idea of turning South Africa into a “developmental state”.
Yet the economy is at the heart of the tumultuous relationship that has characterised the alliance in the past 19 years.
For most of that period, differences between the ANC and its partners, Cosatu and the SACP, caused the government to dither on crucial economic policy issues — causing uncertainty in the markets.
Ideological differences continued to dominate even after President Jacob Zuma came to power — a politician so popular within the alliance that, many believed, he would be able to unite all the factions in a common position.
The adoption of the National Development Plan — supposed to be a blueprint for how South Africa should look in 2030 — has deepened the ideological differences in the alliance.
As a result, Cosatu has effectively split, with the National Union of Metalworkers of South Africa, which was its largest affiliate, and former general secretary Zwelinzima Vavi being kicked out.
The emergence of Julius Malema’s EFF was also partly a result of Malema’s vehement opposition to the NDP.
But even some of those who remain in the alliance are opposed to aspects of the plan.
The SACP’s Jeremy Cronin this week said the party wanted sections of the NDP to be changed in line with the alliance’s promise to initiate a “radical phase” of what it calls the National Democratic Revolution.
In a discussion document adopted at its special national congress in Soweto yesterday, the SACP called for a change in policy direction.
It argued for the country’s “re-industrialisation” by “relatively de-linking” itself from Western economies and instead strengthening ties with Brics and African countries.
It slammed the government for relaxing exchange controls, which it said resulted in massive outflows of capital over the past two decades.
Critics dismiss the SACP as an irrelevant political party stuck in a discredited ideology and in 20th century solutions. But it is clearly taken seriously by the governing party.
So much so that Deputy President Cyril Ramaphosa described the SACP as an organisation “equipped with a profound understanding of the South African situation, its contradictions, its challenges and its possibilities”.
But critics abound, and Zuma often appears to be seeking to satisfy all sides even when their positions are in direct conflict — a stance that results in ideological incoherence and policy uncertainty.
The problem is not only ideological. Strong lobbying from interest groups sometimes result in sudden changes to government policies.
A recent example of policy flip-flopping relates to digital migration in the broadcast sector. Whereas the initial policy, championed by then communications minister Yunus Carrim, would have seen the opening up of the pay-TV market to new players, his successor, Faith Muthambi, introduced changes that favour the dominant operator, MultiChoice.
The sudden change in direction came at great cost to industry players who had modelled their business plans on the assumption that five million set- top boxes to be rolled out by the government would allow for encryption — which would enable them to operate in the pay-TV space.
Similar turmoil ensued in other industries when the Department of Trade and Industry suddenly changed the rules on how BEE scorecards are calculated.
Suddenly, companies with broad-based BEE and employee ownership schemes scored lower than those that struck BEE deals with individuals.
An industry backlash, which included threats of legal action from firms unwilling to have their BEE status lowered, forced Trade and Industry Minister Rob Davies to backtrack.
There have been other flipflops.
What all of them highlight is a need for the government to take firm policy positions that give certainty to investors.
With Zuma’s second and final term in government in its second year, there are informal conversations over who should take over from him.
Despite what DA leader Mmusi Maimane said about unseating the ANC from power in the 2019 elections, it is likely that the ANC will emerge the winner in that poll.
Hence the debate about who will succeed Zuma as ANC president in 2017.
The smart money is on Ramaphosa, although he could be challenged by AU Commission chairwoman Nkosazana Dlamini-Zuma or National Assembly Speaker Baleka Mbete, both running on a “woman for president” ticket.
But the real battle, which might indicate the economic direction the country will take after Zuma, will be over the ANC deputy presidency.
If Ramaphosa is deputised by current ANC treasurer-general Zweli Mkhize, the country is likely to take a more centrist position, with the SACP pushed to the fringes of government.
But if ANC secretary-general Gwede Mantashe is elected party deputy president — with Ramaphosa as president — it would signal a march to the left.
Whatever the outcome of the leadership battle, the current policy uncertainty will continue if the leadership succession discussion is not accompanied by a rigorous dialogue on how to fix the economy.