We need a New Deal in SA

2016-03-14 14:14

South Africa is facing a national crisis of unprecedented proportions if we do not address unemployment, poverty and inequality with the utmost haste. Failure to do so could result in a populist uprising in this country, which could set us back by decades. Instead of political infighting, we need to stand together and offer the disenfranchised in our country a new deal. Unemployment and quality education must become our top priorities, even if this means we have to make sacrifices. Now is the time to act. We cannot afford to wait any longer.

In the 1990s when the ANC came to power in SA, two main deals were struck. The first was between the ANC alliance and the National Party (NP) to allow for the peaceful transition of power. The second was the less talked about deal between the ANC alliance and the private sector in SA. Although never explicitly laid out, this deal implied that that ANC would step away from some of its core Freedom Charter principles such as that “The People Shall Share in the Country’s Wealth” and “the Land Shall be shared Among Those Who Work it” and the private sector would be supportive of the ANC’s aims to transform the country from its old Apartheid state to one where there was a more equitable distribution of wealth and opportunities.

As a result, the ANC that took power in 1994 was market-friendly, did not call for the nationalisation of mines and banks or the wholesale redistribution of land. Its approach was one of fiscal responsibility that satisfied the private sector, rating agencies and foreign powers. At the same time, it embarked on a number of projects to transform society, including the transformation of the public sector, the roll-out of water and electricity supply, the building of houses, the broadening of education opportunities and the provision of social security grants. The ANC government achieved a great deal of success in these projects, which I highlighted in earlier research.

On the flipside, the private sector (especially big-business) supported the Government’s policies and were active participants in black economic empowerment and employment equity. Also here, meaningful success was achieved, especially over the course of the 2000s.

During the 1990s the supporters of the ANC as well as their partners in the tripartite alliance were willing to accept the deals that it made with the NP and big business because there was an implicit assumption that the new government would adopt such policies that would improve their plight over time. The problem facing the ANC 20 years later is that 1) it has only partly delivered on its implicit promises to it 1990s constituency; and 2) there is currently a large constituency (the millennials) who were not party to the original deal.

Although much has been delivered insofar as access to housing, utilities and education, the main laggard has been employment. The current unemployment rate based on the expanded definition is c.34% and is skewed towards the youth in the country. It is almost impossible to address the issues of poverty and inequality in our country in an economically sustainable way in an environment where unemployment is so rife. These issues can be addressed through redistribution, but the positive impact for the most vulnerable may be short-lived and cannot be achieved without wreaking havoc with the economy and the tax base. Increasingly the ANC constituency and its partners in the tripartite alliance are posing questions to the ruling party about the lack of delivery on the original deal. They are becoming impatient, they are increasingly looking for a new deal and are willing to look further than the ruling party for someone to deliver this deal to them.

The millenials are most impacted by the high unemployment and in addition, they suffer from poor education outcomes and the high cost of tertiary education. These young people were not party to the original deal and due to the lack of delivery on education and employment feel hard done by. They are increasingly demanding a deal of their own. The #fallist movements that are active on campuses all over our country are the tip of this spear. They are tired of being placated by the incumbents and are intent on agitating and supporting alternatives until they are heard. They will remain restless until they are satisfactorily included in a new deal.

Before the break-away of the EFF from the ruling party, the ANC Youth League could act as a lightning rod for the disillusioned youth and the ANC could placate them and their wider constituency using social grants and other Government programmes. This is not the case anymore. The EFF has become the first effective, undiluted voice in SA for the poor, young and unemployed. The EFF’s policies are clear and are borne from the areas of the Freedom Charter that the ANC stepped away from during the 1990s deals. Front and centre is the nationalisation of mines and banks; the redistribution of land; and free education. These policies are not watered down and they speak directly to the disenfranchised in our country. The EFF’s potential constituency is substantial, including the 34% unemployed, the poor, the youth and urban intellectuals.

Young, angry unemployed South Africans do not care about the state of the economy, the health of the tax base, the strength of the rand, the opinions of the private sector, sovereign credit ratings or how SA is viewed by foreign countries. They care about their own (often) miserable lives. Why would they not vote for a party that will take from the rich and give to the poor? Even if it damages the long-term prospects of the country, it will improve their plight in the short-term. This situation is made even more desperate by the fact that for many of the disenfranchised, there does not seem to be a viable alternative. The track record of the incumbents on employment, education outcomes and equality is poor in their opinions and they do not see light at the end of the tunnel. Without hope, why would they not be willing to embrace the alternative?

It is vital that the disillusioned block in SA is given a new deal to avoid them embracing political alternatives that could be damaging to the future of this country. The time has passed for promises. The time has passed for placating. The time has passed for short-term fixes. The New Deal in 1930s USA involved aggressive steps in job-creation and infrastructural build. It pulled the country out of the Great Depression and created the foundation for a decades-long economic boom and the creation of a vibrant middle class. We do not need to emulate what the USA did in the 1930s, but we should draw inspiration from this.

Unemployment should be the number one priority in SA, followed by education and we should be redirecting our efforts to solve these challenges quickly and effectively. It is unacceptable that we have several portfolios within our cabinet that are responsible for employment, none of which carry the ultimate responsibility or have the necessary power to aggressively change the direction we are moving in. Regardless of which political party is ruling our country, we need a Minister of Employment who is the most senior cabinet member (after the president), who has the power to set policy and redirect budgets and carries the ultimate responsibility for success or failure.

Even though we are in difficult economic times at the moment, we should make a definitive decision to refocus our budget to deal with the challenges of unemployment and education. Even if this leads to economic pain in the short-term, even if it leads to credit downgrades, even if it means we all have to tighten our belts, we cannot afford not to make this investment in the future. We absolutely have to create an inclusive economy and improved education outcomes so that we can look back a decade from now at today being the turning point in the SA story.

If we do not do this, if the business friendly ANC and DA do not join hands to lead us to this future, we are at risk of a populist uprising in SA. We are at risk that populist parties such as the EFF will force redistributive policies down our throats, whether it be at the ballot box or in the streets. Now is the time to give the disenfranchised in SA credible hope. If we expect them to be patient, they have to see a clear path to improved outcomes for them. More of the same will not cut it.

The 2016 municipal elections will offer the first opportunity in more than a decade for the ANC to actively involve opposition parties in the business of governance. There is likely to be no other option when they fail to win majorities in major municipalities. It is time for the ANC to change its direction, it is time to strengthen its leadership and with the buy-in of the DA (and maybe the EFF) to embark on a dramatic and aggressive new deal.

To the ANC I say, stop focusing so much on discrediting the DA and seeing the EFF as a naughty child. Realise that the EFF is a major risk (and rightly so) and that the DA can be an ally in improving governance. However, it remains up to you as the majority party and the party of liberation to refocus our attention on growing employment, creating an inclusive economy and improving education outcomes for all.

To the DA I say, by all means continue the fight against poor governance, but realise that it will become increasingly difficult for you to govern if the serious challenges facing SA are not addressed. Try and be less adversarial towards the ANC because you may have to work together and in the end, your policies are not that different.

To the EFF I say, continue pushing. You are increasingly the voice of the poor majority in SA. You have to ensure that the ruling party implements policies that will improve the plight of the disenfranchised and if they do not, you must defeat them at the ballot box. However, I ask you that if the ruling party is willing to put a new deal on the table, that you will be willing to focus your efforts on the ballot box and avoid being a disruptive influence in the extra-political sphere.

In conclusion, our challenges in SA are monumental and must be faced head-on. We need a new deal and we need co-operation amongst political parties to implement this. If such a deal is done, we will need patience from our citizens, whether it is because they have to tighten their belts or whether they have to wait longer for an improved outcome. And we need a supportive private sector. You have had a good run for the past 20 years, but where we are now is not sustainable. Be willing to sacrifice short-term profit in exchange for a higher price earnings multiple (PE). We need to lift the valuation of SA.

Do you think our country in its current format is sustainable? Are we at risk of a populist uprising? Would you support a new deal if it will drive employment growth and a more inclusive economy? Would you be willing to sacrifice today if it means a much better future? I would love to hear your opinions. Comments are welcome on my website.

In the mean time, keep your talking straight!

#Populism #Unemployment #NewDeal #MinisterOfEmployment

Marius Strydom is the CEO of MLAX Consulting

https://www.facebook.com/straighttalkingstrydom

https://twitter.com/Marius_Man

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