Budget shows failing ANC ‘forced to accept’ new ideology

It is not surprising Finance Minister Enoch Godongwana sounded like a capitalist during his mini-budget speech, because the ANC has no choice but to embrace the private sector as its economic model has failed dismally.

“The ANC knows its own state-run apparatus has failed and it cannot be trusted ultimately with efficiently and ethically running the core of state functions,” said political analyst Daniel Silke.

“So I think the party has been forced, kicking and screaming, to be much more pragmatic on its broader ideology.

“It knows it has limitations; it has been taught hard lessons of how its own mismanagement has led to the limitations now coming out to the state.

“There is no real attempt to go back to this kind of heavy-handed interventionist state ideology,” Silke said.

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Godongwana, a former general secretary of the National Union of Metalworkers of South Africa, the most militant and Marxist-oriented union in the country, presented his most neo-capitalist mini-budget, making numerous budgetary cuts, including a plan to reduce the bloated civil service.

His fiscal outlook was seen as bleak, with a growth of 1.8% over the next three years that bore no job creation, nor hope of substantial debt reduction.

A thrifty Godongwana opted to ignore calls from his erstwhile fellow trade unionists for a basic income grant and an extension of VAT exemption to more basic food stuffs, and did not entertain more bailouts of state-owned enterprises.

His budget will be the basis for President Cyril Ramaphosa February State of the Nation Address, where he planned to increase private-sector participation in growing the economy.

Silke said the ANC had realised its policies of a state-dominated approach have not worked – hence it now embraced the private sector.

“It’s a light-bulb moment, ultimately, for the ANC. Its own preferred ideological base – state developmental, sort-of state capitalism – its own model has largely failed.

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ANC learns power has to be shared with private sector

“Now it is kicking and screaming in this grey area of perhaps talking about being developmental but, at the same time, really having to embrace the private sector as far as possible.

“Today, the ANC is radarless when it comes to its own economic philosophy. It’s reactive, rather than proactive.

“But, certainly, it has grasped the nettle that the state cannot provide,” Silke said.

At the very least, perhaps the ANC could lead the debate while knowing the hard work was to be done by relinquishing state control and handing it over, in a great sense, to the private sector and not protecting special interest groups, including civil servants.

Most parties, plus trade union federations Congress of South African Trade Unions and South African Federation of Trade Unions, lambasted 1.8% economic growth forecast for the next three years.

They said the figure would “not generate badly needed jobs” in the country.

ActionSA MP Alan Beesley described the budget as a “damp squib”, saying the 1.8% projected growth fell dismally short of the 3% GDP growth rate necessary to create meaningful employment and grow SA’s tax base.

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