Peter Bruce:
TWe survive by doing, literally, the very opposite of ANC economic policy
hursday’s cabinet reshuffle was in some ways interesting. The president subsuming both intelligence services into his own office is quite something. In the 1980s PW Botha dismantled his two services and hired a young Niël Barnard to create something entirely new.
The removal of Stella Ndabeni-Abrahams from the critical post of communications (the South African Post Office, Postbank, broadband, our actual future) for small business was deeply satisfying. That’s where no-one takes you seriously and it doesn’t matter. And Lindiwe Sisulu to tourism, an insult of note. I’m surprised she accepted.
But in truth the reshuffle simply marks the end of one strand of gossip and the beginning of another. Finance minister Tito Mboweni is no more. Would he have preferred to resign?
Who cares? He spent his entire period in office speaking in riddles. He stood for a kind of market liberalism that is at odds with ANC dogma, but that was on paper only. When push came to shove and he was required to throw money at the government’s more egregious mistakes, he always did.
The affable new finance minister, Enoch Godongwana, is an Eastern Cape lad (a vital province for Ramaphosa now that he has all but lost KwaZulu-Natal) and a big Ramaphosa fan. He will do exactly what’s required. The rand dipped quite sharply on news of his appointment on Thursday but by Friday it was back to its more cultivated decline.
If anything, the Godongwana appointment confirms this reshuffle is Ramaphosa doubling down on his economic path, not questioning it. Godongwana codified it word for word last year and has been at the centre of ANC economic policymaking for years. The ANC’s most intractable problem is not corruption. It is poor economic policy and Godongwana peerlessly embodies the difficulty.
Here’s a classic from a document, overseen by
Godongwana last year, called
“Reconstruction, Growth and
Transformation: Building a New,
Inclusive Economy”. For the government, a policy is “inclusive” when you agree with it, and here’s
Godongwana, 26 years in, on the mining industry: “The mining sector can help South Africa to drive a localisation agenda. In this regard, there is a need to more aggressively reorientate the mining sector inwardly, in order to support the local beneficiation of minerals, build the minerals value chains and strengthen broad-based industrialisation. Linked to this is the identification of strategic minerals that will be designated for local beneficiation.”
If that sounds familiar, it is. And it is (still) absolute rubbish. SA is right now standing on its feet solely because it is not following Godongwana’s advice. We are digging our minerals out of the ground and shipping them off overseas as fast as we can as the global economy recovers from Covid.
The taxes on the profits of South African mining companies meeting this huge demand are literally the only reason Ramaphosa has money to extend welfare to the poor in the wake of Covid and the July violence. We survive by doing, literally, the very opposite of ANC economic policy.
Godongwana, though, would have us abandon our precious place in the global value chain and rather compete with the people we currently sell our rocks to. How absolutely thick is that? Ramaphosa apparently buys into this, by the way.
What we have here, as someone says in Cool Hand Luke, is a failure to communicate. We have a very valuable place in the world economy and practically no competition. Our job is to know and understand our place and to exploit it and own it. Instead, the ANC wants to swap it for another place where there is overwhelming competition. What is wrong with these people?
Our worst case is that they’re actually sincere. “Covid,” said Godongwana in his paper last year, “has legitimised a great and more active role of the state in guiding the economy.” Cue applause from the presidency.
They should listen rather to Michael Sachs, former head of the National Treasury’s budget office. “Government,” wrote Sachs last October, “believes growth can be revived through a renewed commitment to public infrastructure. Without action to restore the regulatory, policy and institutional weaknesses that have debilitated the public sector, this approach is unlikely to succeed. Achieving these reforms, on the other hand, will take time and political effort. In the short term then, the inertia blocking a resumption of growth can only be overcome with private investment in the lead.”
Unlike Godongwana, Sachs believes government should get out of the way, at least for a while. Business needs to grow a pair and stand up and do what it has to do, instead of asking “How high?” every time Ramaphosa asks it to jump.