Now SA has to pull off a second miracle
Former president Jacob Zuma pushed SA to the brink. In surviving and ultimately unseating him, SA has seized its second miracle. The democratic transition was its first.
SA knows from the Nelson Mandela years how much the country can progress under good leadership. Zuma taught it just how fast progress can be reversed under bad leadership.
But does President Cyril Ramaphosa have what it takes to unify the nation and repair the trust between the state and society like Mandela did, while delivering faster growth and job creation with the efficiency of a Thabo Mbeki? He will have to do both. Economists agree real GDP will probably come in above 1% in 2018, as a fresh spurt of confidence boosts the rand, lowers inflation and rewards consumers. However, there are few who believe growth will get as high as 2% in the short term.
The problem is that falling inflation and the potential for interest rate cuts have to be weighed against the sure prospect of an even higher tax burden after this week’s national budget.
And while conditions for corporate fixed investment are improving, the near-term outlook for state-owned enterprises remains bleak.
In short, the fiscal austerity required to repair the damage done to the nation’s finances during Zuma’s tenure will act as a hand-brake for several years to come. Ramaphosa is not going to be able to walk into the Union Buildings and open the money taps. It will also take some time for him to drain the swamp of incompetent and corrupt cadres and at least a year or two to turn bankrupt state-owned enterprises from being a drag on growth to an enabler of progress.
There is no shortage of sceptics who say state capacity has been denuded to such an extent that there is no effective implementation capacity left in the government — even if there were the funds. That certainly is true of the National Prosecuting Authority. The South African Revenue Service has also haemorrhaged expertise under commissioner Tom Moyane. With Ramaphosa having promised a commission of inquiry into the tax administration, Moyane’s days must be numbered.
Notably, Ramaphosa made no reference to the National Development Plan in his state of the nation address. But he clearly doesn’t have any intention of reinventing the wheel of economic policy or, thankfully, of getting sucked into an interminable “economic Codesa” process.
Instead, having correctly identified youth unemployment as SA’s most pressing challenge and having promised “practical solutions” that will be implemented “immediately”, he will take the lead himself, guided by a hand-picked presidential economic advisory council. This should keep the circle small and focused.
The policy solutions to SA’s economic decline are no mystery. They have been tried and tested in other countries and many have appeared in various iterations of SA’s own economic policies over the years. What the country has not done is implement them.
Of course, Ramaphosa has to remain committed to the ANC’s policies of accelerating land reform and deepening black economic empowerment, only under his leadership these policies will be implemented in an inclusive, pragmatic way that has faster growth and job creation as its core objective. For he knows that only by delivering a broad-based improvement in the standard of living will he tame the ANC’s worst populist impulses and ensure SA’s fiscal and economic sustainability.
It won’t be easy. He’s going to need staunch support from within the government and without. But SA is ripe for renewal and its people are easily inspired. With the right economic policies and leadership SA will surely fly.