Mpumelelo Mkhabela

The impossible task of reviving confidence in the economy

2017-06-15 08:00
Malusi Gigaba. (Siyasanga Mbambani, City Press)

Malusi Gigaba. (Siyasanga Mbambani, City Press)

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South Africa’s private sector companies – the biggest creators of wealth, jobs and state revenues – have very little, if any trust, in the government. 

Labour federations, which represent the luckiest of a dwindling number of the employed, have lost confidence in the government and its leader, Jacob Zuma. 

One of the federations, Cosatu, has banned Zuma from its events. Significantly, Cosatu, an alliance partner of Zuma’s ANC, is dominated by public sector unions. This means government employees no longer have confidence in their boss. 

The relationship between the commercial banks, which oil the engine of a modern economy, and the government, is at best shaky. The damage caused by the Guptas, who put pressure on the banks to provide them with banking services, the delay in signing off an anti-money laundering bill and the downgrades they have endured due to ill-advised government decisions won’t be forgotten.

Ordinary tax-paying citizens, without whose contribution the state would collapse, are increasingly wary of whether their taxes are used correctly.

The most forgiving institutions of God, the churches, have lost their cool, describing the government as morally illegitimate. Some church leaders want an early election.

Court judgements give an impression that, on the whole, the judiciary doesn’t think the executive is competent. Court decisions read like how-to-govern manuals. Like a delinquent, Zuma’s government is not listening. 

Former presidents – FW De Klerk, Thabo Mbeki and Kgalema Motlanthe – recently came out of their retirement to comment about the unfolding tragic state of affairs. They believe the country is headed in the wrong direction. As Mbeki described the situation, borrowing from William Blake’s poem, the rose planted in 1994 is not well: “O Rose thou art sick…” 

The media, which is as skeptical of government’s use of power as it always should, has reached the highest level of skepticism. Contradictions between the state’s constitutional obligations and the deviant conduct of those in charge have become the unavoidable framework for political news coverage. 

In light of all these, it is difficult not to ask: who actually trusts Zuma’s government? Most likely those who are linked to the shadowy state over which he presides and to which taxpayers’ resources are illegally channeled at the expense of the constitutional state on which the majority depends. 

Without the necessary confidence from society, the government becomes dysfunctional. A successful government is one that inspires confidence. Confidence in government ensures that different sectors cooperate either voluntarily or respond positively to credible government policies or changes in leadership. To inspire confidence the government must be legitimate and credible. Legitimacy is derived from elections. Credibility from conduct. Zuma’s government lacks the latter.

The crisis of confidence Zuma’s administration faces is best illustrated by its disastrous management of the economy. Finance Minister Malusi Gigaba and his deputy Sfiso Buthelezi face an impossible task of reviving confidence in the South African economy.

Here is why they will fail:

First, the manner of their appointments diminished trust between business, government and labour. Finance Minister Pravin Gordhan was on an investor show in London when he was called back home to watch midnight-to-early-morning television news of his dismissal. Business and labour, which had been working with the government to project an image of cooperation to foreign investors, felt cheated and dumped. Gigaba is a symbol of the outcome of the betrayal.

Second, Gigaba is associated with state capture – the very thing that, thanks to the #GuptaLeaks, we know is linked to Zuma’s Cabinet reshuffles that caused harm to the economy. Except for those who are direct beneficiaries of the outsourcing of executive authority of the Republic, South Africans who are aware of the dangerous consequences of state capture are livid. 

Third, rating agency Moody’s has highlighted South Africa’s deteriorating institutional strength as one of the reasons it joined Fitch and Standard & Poor’s in downgrading the country’s credit rating, although it placed the sovereign slightly above junk. At the heart of the institutional weakness was the Cabinet reshuffle. The weakened institution referred to is the Treasury. Previously, South Africa escaped a downgrade because of institutional strength – a reference in part to the strength of the treasury, the Public Protector’s office under Thuli Madonsela and the judiciary. 

Unlike Gordhan, Gigaba is the face of institutional weakness at Treasury. Having facilitated state capture in state-owned enterprises while he was public enterprises minister, he is seen as unsuitable to the finance ministry. He has no moral high grown stop the corporate governance collapse he allegedly authored with Gupta associates. In light of the revelations of scandals that took place in state-owned passenger rail firm, Prasa, while Buthelezi was chairman of the board, he too is hobbled by past governance malfeasance.

Fourth, when stakeholders make political judgements, they are bound to draw comparisons between Gordhan and Gigaba on the one, and former deputy minister Mcebisi Jonas and Buthelezi on the other. Buthelezi is associated with improperly benefitting from Prasa tenders while Jonas is famous for rejecting a bribe from the Guptas. This background hardly provides any hope for the generation of confidence in both Gigaba and Buthelezi.

- Mpumelelo Mkhabela is a fellow at the Centre for the Study of Governance Innovation (GovInn) at the University of Pretoria.

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Read more on:    jacob zuma  |  government
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