Accountability and the NPA could change it all for SA
My heart sank. In the space of about half an hour on Friday. I opened the ANC’s discussion document, hot off the presses, on “Reconstruction, Growth and Transformation: Building a New Economy”. Then to the Business for South Africa (B4SA) “Economic Recovery Strategy for South Africa”, released just an hour or so earlier, almost 140 pages of it.
Before that, another piece justifying why more than 100 economists and academics want finance minister Tito Mboweni’s supplementary budget of late last month cancelled because he wants to create space for growth by saving money rather than spending it.
It is exhausting, and this is only the start. The entire government is drawing up post-Covid plans. President Cyril Ramaphosa is going to drown in them. The economists are furious with Mboweni because he did not fully (not even close) fund Ramaphosa’s R500bn Covid-19 rescue plan in this fiscal year. But that plan was only phase 2 of what Ramaphosa outlined right at the start. Remember? Phase 1 was the lockdown, two was the R500bn. Three was about the New South
Africa, shimmering enticingly on the sunlit uplands of a new economy.
We and the rebellious economists are going to have to wait until
Mboweni’s mini-budget in
October to hear even the faintest outlines of how that might happen. The finance minister reckons he can hold our debt to 87% of
GDP, but almost no-one believes him. If GDP falls, as is inevitable, even our current debt may get to be
87% of it. Second, he will have to slaughter the budgets of most of his fellow ministers, many of whom also sit on the ANC national executive committee, where they can put real pressure on Mboweni’s boss to stop him.
There is some good news, though. Both the business and the ANC growth papers broadly agree on a few things. They agree on infrastructure spending and lots of it. They agree it is a good thing the infrastructure management will be out of the presidency. They agree green energy is the way forward. They agree that the private sector will have to play a central role in the recovery. They both want decisive action.
They also seem to agree that use of the word “exacerbate” (to worsen, deepen, sharpen or widen) is a good thing, and make liberal use of it. If I were a foreign investor I would worry that my interlocutors cannot speak plain English.
Nonetheless, the papers are full of hope, even where they disagree. The ANC document flatly states that “changes should be made to regulation 28 under the Pension Funds Act to enable cheaper access to finance for development”. And it also raises the usual, and useless, hopes of re-industrialisation.
The B4SA document ignores that and utterly fails to explain what it means by inclusion. It also warns that “additional borrowing [as alluded to by Mboweni last month] will see total public sector debt increase from R4trillion to more than R6.4-trillion by 2023 … this level of funding need cannot be met by domestic sources, nor is it possible for the [South African Reserve Bank] to address the shortfall in a responsible manner through monetary measures”.
So we are where we were. Where does the money come from to rescue SA? Our pension funds (not a completely absurd idea provided returns are reasonable), or from international investors and institutions?
The fight that we are now entering will determine the answer. There’s little doubt Ramaphosa and his closest ministers are acutely aware of the moment. They may dither but they have not thrown the Reserve Bank under the bus and Mboweni is still finance minister.
And the ANC paper could not possibly be more friendly to the president, which may mean that parliament’s finance committee, which heard the appeals to reject Mboweni’s budget, and which has voiced its own reservations about his 87% target, will let it pass. The economists will then simply move the fight to the mini-budget and the broader phase 3 of Ramaphosa’s recovery plan. They believe the Reserve Bank can bail SA out, a dangerous proposition.
In the end, our fate will hang on a hook called confidence. It could not now be lower. An income tax cut, the creation of a state-capture tribunal and a procession of politicians, executives and bureaucrats down to the cells would literally change everything in this country, including Ramaphosa’s future. In the end, our biggest challenge isn’t a lack of leadership. It is the complete absence of accountability and the inability, after more than two years, of the “new” National Prosecuting Authority to even begin to do its job.
In the end, our fate will hang on a hook called confidence. It could not now be lower