France can teach us football — and economics

Going into today’s World Cup final many South Africans have been supporting France as the last “African” team left in the tournament. As much as 10% of the population of France is of African origin, and that is more than evident in its football team.

But France’s fortunes should interest South Africa for more reasons than just football. French President Emmanuel Macron and South African President Cyril Ramaphosa have both promised structural reforms to boost economic growth, but the contrast between their approaches is striking and holds lessons for South Africa.

South Africa has 14-point plans and laundry lists of the structural reforms which the Ramaphosa administration promises will increase the economic growth rate and create jobs. But it’s hard to find an action plan anywhere with detailed targets and timelines. Even the Treasury’s list of five reforms estimated to raise South Africa’s potential growth rate from 1.5% to 3.5%-4% provides little detail on what exactly these measures entail or when they might be implemented. One doesn’t envy the investment envoys who are out there seeking $100-billion in investment without any finished product to sell.

By contrast, the Macron programme is clear, consistent and concrete. According to Elysee Palace officials who briefed South African journalists on a French government-hosted visit to Paris recently, the methodology is simply to execute what Macron detailed in the election campaign that saw him seize the presidency just more than a year ago. “We say clearly what we are going to do and we do it,” said one official.

Investors had tended to steer clear of France, which was seen as a country of high taxes, strikes and bureaucracy. The Macron campaign’s turnaround plan rested on just a handful of policy pillars, and it promised stability and predictability.

There’s a five-year plan to cut the corporate tax rate from 33% to 25%: the first cuts have been implemented, along with changes to the wealth tax.

It promised labour-market flexibility and has introduced new measures to enable workplace-level negotiations and ease of hiring and firing. It is investing in skills and cutting red tape for entrepreneurs. It is going all out to attract long-term foreign investment, showcasing France as a country of innovation and technology. It has indicated it will privatise nonstrategic state assets. The reforms are starting to work: EY reports foreign-directinvestment projects in France jumped 31% over the past year against 6% in Germany.

Compare that to South Africa, where the initial reform impetus has stalled and Ramaphoria is unravelling with frightening speed. Confidence has fallen, the second quarter’s growth figures could again be negative, and huge pressures on public spending could see an October mediumterm budget that risks a ratings downgrade.

What Ramaphosa should be saying is that the Jacob Zuma era has left a dire economic legacy which will take time and tough measures to repair. What he should be doing is making tough choices and crafting clear plans to revive the economy.

But Macron’s French revolution shows also how hard reform can be. Public-sector unions are striking, his popularity ratings have plummeted and he is being accused of being a president for the rich.

Macron has a strong party and a strong parliamentary majority behind him. For Ramaphosa the biggest economic challenge, perhaps, is to get the political support for and consensus on growthboosting reforms. The longer he leaves it, the harder it will be.