Great leadership is needed after the crisis

There is a fight already brewing over the future of economic policy in SA. It will come to a head as we debate the recovery strategy for after the Covid-19 crisis.

The fundamental problem is that different objectives are in tension with each other including growth, transformation, sustainability and inclusivity.

You want growth? Slash red tape everywhere. Make it easy to get and keep mining licences and begin operations; easy to explore for gas and then extract it; simple to obtain environmental clearance for new developments from liquid natural gas plants to housing complexes.

Invest big in economic infrastructure such as rail links from urban centres to ports, bulk municipal infrastructure to drive urban nodes; bring the private sector in to operate public sector utilities that are failing to operate optimally. Restructure the electricity supply industry so anyone can produce and sell through electricity markets into the national grid to reduce cost and improve stability.

Conclude digital migration of TV signals and auction off the resulting spectrum to the highest bidders. Slash labour regulation to make it easy for firms to hire and fire. Make visas easy for both tourists and skilled foreign workers. Reduce taxes, particularly corporate income taxes.

You want transformation? Use the purchasing and regulatory power of the state to advance black people’s interests in the economy. Designate criteria companies must meet criteria to qualify for state tenders, including that they must meet criteria for their own purchasing.

Invest in black industrialists who can build globally competitive national champions.

Require all registered companies (and others requiring licences to operate) to meet staff and ownership transformation requirements. Include black industrialists in economic diplomacy.

You want sustainability? Impose the carbon tax and police it ruthlessly. Resuscitate the Green Scorpions and give them the resources to probe environmental abuses widely and impose fines and criminal sanctions and companies and their leaders that fail to obey the law. Focus on the biggest polluters: Eskom and Sasol, forcing them to cut carbon output, then move on to other large industrial polluters.

Set a sunset date for all internal combustion vehicles. Train and equip metro police forces to impound vehicles that fail emissions guidelines. Fund investment into green technology. Use licensing systems to only allow low carbon manufacturing and energy production in future. You want inclusivity? Bias development towards the poor and rural. Ensure infrastructure spending is directed towards linking poor areas with urban centres. Demand labour intensity in production by including the labour/capital mix of production as a criterion for all licensing processes, including mining.

Make the unemployment grant permanent and increase grant amounts in that and other categories. Ensure a progressive tax system that imposes the burden of funding the state on the wealthiest. Remove bargaining councils and reduce labour standards to ensure the unemployed can really compete for the jobs available.

Encourage the informal sector and provide low-cost registration mechanisms to progress them into the semiformal. Require high proportions of low-cost housing in urban development. Accelerate transfer of title deeds. Introduce a national health scheme.

It should be obvious that these policy objectives are often in tension. Unbridled growth would be bad for the three other objectives. But this is true of each. Stringent environmental intervention would make growth, transformation and inclusivity difficult.

Rigid imposition of transformation criteria would restrict growth, and with it, inclusivity and green technology development. A strong rural bias will starve economic hubs of infrastructure to grow.

The challenge facing the government is to deliver all of these, and more. The tensions, however, cause confusion and conflict, starting within the government and the ANC, and then spilling into wider society as it tries to interpret and engage with the state.

This means the government becomes a many-headed hydra that can make it difficult to comprehend at times. It can be pulled in different directions by different lobbies and political groups. It must also cope with a big skills shortage and internal corruption that undermines policy implementation.

But this is the reality we must deal with. Great leadership is, the cliché goes, the art of the possible. Attempting to do the impossible leads to squandered resources and heartache. As focus shifts to the economic policy we want for the future, leaders must balance competing priorities while being pragmatic about capacity. There are easy wins that meet the objectives of all of them. Then we must conjure policy that draws on the best of all elements — growth that creates transformation, sustainability and inclusiveness. In our democratic history, we have had steps in that direction — the Reconstruction & Development Programme and the National Development Programme are examples.

A risk now is that policy attempts the impossible — efforts to drive pension funds to invest in development at the expense of their members’ interests, or the state to enter into complex manufacturing with huge operational risks such as pharmaceuticals. But it is possible to build a coherent strategy that draws on the strengths of all, enabling them to realise their dreams in a way that benefits everyone.

To deliver the possible, we need a spirit of genuine partnership between all South Africans in an atmosphere of trust and mutual understanding. And that will take great leadership.