The Republic of No Consequences

2017-08-06 06:06

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Fate of the Nation: 3 Scenarios for South Africa’s Future by Jakkie Cilliers

Jonathan Ball Publishers

288 pages

R240

In 2017, South Africa is approaching the concluding phase of what can only be described as a lost decade.

Although the seeds of these developments were planted during the Mbeki presidency, it is clear that the Zuma administration has compounded their impact, and that of the global recession, on South Africa.

Lack of policy coherence, poor implementation and little or no accountability have become hallmarks of the Republic of No Consequences.

For example, shortly before he was appointed as the fourth finance minister in under two years in March 2017, Malusi Gigaba proudly announced that the Department of Home Affairs (which he previously headed) had not approved a single new business application between January and December of 2016.

Gigaba, something of a dandy, is now responsible for facilitating South Africa’s future economic growth.

A few weeks after his appointment, on 25 May 2017, an in-depth report by nine heavyweight academics, representing institutes at the University of Cape Town, Wits University and Stellenbosch University, placed Gigaba at the centre of a systemic political project responsible for the establishment of a shadow state.

The report followed hard on the heels of the Unburdening Panel Process of the South African Council of Churches, which expressed its alarm at a systemic design to create chaos and instability, “pivoted around the President of the Republic”.

At the same time, Gigaba was assuring investors and business that he was committed to protecting fiscal sustainability, the intention to stabilise government’s debt and tightly control expenditure.

He also reiterated government’s commitment to the procurement of nuclear energy at a pace and scale that the country can afford.

These goals, the pursuit of expansive populist policies and the need for fiscal sustainability, are essentially incompatible.

Incompetence and lack of accountability

There are many examples of incompetence and lack of accountability in government under president Jacob Zuma – as well as the establishment of a parallel state structure where decisions are increasingly made outside of mandated government processes.

For example, after the late-night Cabinet reshuffle in March 2017, Gwede Mantashe said:

“We were given a list that was complete and my own view as the Secretary-General, I felt like this list has been developed somewhere else and it’s given to us to legitimise it.”

Under Zuma, economic policy is seemingly at odds with industrial policy and both are undercut by restrictions on skilled immigrants, to give one of many examples.

Hence, the party speaks left, walks right and constantly trips over itself in its stop-start catalogue of changing policies, reflected in the composition of a Cabinet with overlapping mandates and lack of cohesion.

Ministers regularly contradict one another on the intent behind policies and decisions, and it is unclear which department is responsible for the coordination of which services, such as the stability and design of the electricity grid, or digital policies and standards, or the fight between the home affairs and finance ministries on the responsibility for customs and excise collection with the establishment of a border agency.

Nor is it clear which of the latest multitude of Cabinet committees would oversee state-owned enterprises or social grants.

Rather than long-term planning, the emphasis is on crisis management – a situation only likely to improve once Zuma steps down as president of the ANC and the country, and is replaced by a capable leader and a competent, smaller team.

The lack of coordination has debilitating consequences for domestic and international investor confidence, because at the heart of the executive sits a president unable to provide national leadership and a traditionalist faction that does not project a growth vision for the country.

In his 2015 state of the nation address, Zuma announced his latest economic rescue plan, a nine-point programme for accelerating economic growth and creating jobs.

The plan could, he announced, boost the economy by an additional 0.8 percentage points in the short term and 1 percentage point in the medium to long term.

Eighteen months later, when questioned about progress with this plan in Parliament, the president appeared only able to recall that one of its nine points concerned agriculture.

"Eroding South Africa’s economic growth potential"

In 2016, the economy hardly registered any growth, although prospects for 2017 were slightly better – at least until the March Cabinet reshuffle unsettled the markets, weakened investor confidence and triggered three ratings downgrades.

During the 2017 state of the nation address, Zuma forecast a growth rate of 1.3 percent for the year, only to sink that forecast some weeks later with the reshuffle, which triggered the downgrades. By June, South Africa was in a recession.

By late 2016, public perception of the governance of many state-owned enterprises, such as South African Airways, Denel, Eskom, the South African Broadcasting Corporation and the Passenger Rail Agency of South Africa, was in tatters.

And it was unclear where government policy stood on visas or immigration, how to proceed with the move to digital television, how to reconcile water scarcity with the intention to expand the agricultural sector, the future of renewable energy versus nuclear, and so on.

This policy confusion is also apparent in the Industrial Policy Action Plan of the Department of Trade and Industry, which is at odds with the New Growth Path of the Economic Development department, and neither share the analysis set out in the National Development Plan, even though it was adopted by the National Executive Committee of the ANC, Cabinet and Parliament.

In January 2015, the then newly appointed finance minister, Nhlanhla Nene, delivered what Business Day’s Carol Paton termed “a brutally honest message” to the ANC’s internal planning meeting.

According to Nene, “in part, the government was responsible for eroding South Africa’s economic growth potential … Among reasons offered for the government’s shortcomings were: weak regulatory institutions, poor service delivery, governance problems at state-owned companies, extended periods of regulatory uncertainty and contradictory policies.”

The most important insight to appear from the leaked version of Nene’s briefing was the view that South Africa is unlikely to achieve more than 2 percent growth a year before electricity supply improved – at the time still considered an important cap on economic growth.

It will take several years, if not a decade or longer, for South Africa to recover from the tribal politics and incoherence of the Zuma regime.

In addition, the country will soon be caught in an election cycle that is quite likely to be marred by violent infighting within the ruling party ahead of its December 2017 conference and between rival political parties in the run-up to the national elections in 2019.

Read more on:    jacob zuma  |  malusi gigaba  |  cabinet reshuffle

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