Compacting and consulting while the economy circles the drain

President Cyril Ramaphosa this week hailed the “ambitious social compact” crafted by the social partners at Nedlac as a historic milestone. It could yet prove to be — but that depends on the president himself, and so far the signs aren’t so good. SA did not need yet another economic plan. But the president likes to consult ahead of (or instead of?) making big decisions. He is big on social compacting. If the economic recovery plan that was agreed on at Nedlac this week was what he needed to give him the comfort to implement urgent and long-promised reforms, it could be a big step. But the process hasn’t turned out quite as it should have. First is the content. Business, government, the ANC and labour had each released their own sets of proposals on how to get SA’s economy out of the crisis. When Ramaphosa attended an August 13 meeting with the social partners — business, government, labour and community — he requested a single document.

The intention, certainly as business saw it, was that the partners would agree on a set of measures that could be implemented immediately. Though there was some divergence between the partners’ various plans, there was also much convergence. The idea was to distil that into a crisp 10-item Action Plan that could be jointly implemented

— and for which the partners, especially the government, would be held accountable at Nedlac.

They succeeded in part. The draft agreement is just 13 pages, defining three priority focus areas — aggressive infrastructure investment, “strategic localisation” and export promotion, and an enabling supportive policy environment. It lists a limited number of short-term actions to accelerate economic recovery, to get SA’s electricity and transport systems to work and kick-start digital, as well as to support tourism, enable mining investment, fix the skilled visa regime, simplify the regulatory regime and implement a mass public employment programme. It sets targets and timelines: including

January 2021 to open the new window for independent power projects and December 2020 to release high-speed spectrum, as well as a 50% cut in the time to get a mining licence.

But as always with these things, the special interests had their say and the plan veers into fuzziness and platitudes. It’s not hard to guess who might have included an entire page — more than the space devoted to any other item — on the localisation and import replacement and “designation” of local procurement much beloved of trade, industry & competition minister Ebrahim Patel.

Business and labour have often managed to find consensus, but the government’s lack of capacity and general defensiveness have often been problematic. One suspects some of that in this process.

The measures detailed in the Nedlac plan are not necessarily quick fixes. What investors, business and households urgently seek, however, are clear signs that the government is willing to take urgent action to kick-start a recovery. If Ramaphosa goes with the Nedlac plan, and we see the communications minister and regulator release spectrum on deadline and the energy minister and regulator sign new renewable energy rules on deadline, those would be exactly the confidence boosters needed.

But will he go with it? This is the second issue. Other social partners may be compacting but Ramaphosa, it seems, is not. The government, business, labour and community agreed at Nedlac on the plan, as requested. What should then have happened is that the president should have announced it forthwith, so the partners could go straight ahead and implement. Instead, he is treating it as just another input to another plan that the cabinet will come up with on some as yet unnamed date in coming weeks. It is disappointing, at best.

The president should have announced the agreed-upon plan forthwith