A critical look at what Ramaphosa needs in his Sona

The National Executive Committee (NEC) of the ruling African National Congress (ANC) concluded its lekgotla two weeks ago and released a 16 page bulletin entitled, “African National Congress NEC lekgotla bulletin – June 2019″, with the theme “A five year programme to translate our contract with the people of South Africa.”

The media briefly covered some of the economic policy shifts proposed in the bulletin such as the “three shift economy” during the press conference that was addressed by ANC Secretary-General Ace Magashule. Most certainly, what is contained in this bulletin has informed the Cabinet lekgotla that was concluded last week Friday. Government’s Five Year Medium Term Strategic Framework (MTSF) 2019-2024 will also be drawn from the bulletin, including President Cyril Ramaphosa’s maiden State of the Nation Address (Sona) to be delivered tomorrow evening.

Disappointingly, the ANC has not been able during its lekgotla to conduct a thoroughgoing analysis of the MTSF as a government delivery model that has been used over the years. Undoubtedly, the MTSF has been a very ineffective instrument to translate the ANC’s electoral mandate into implementable and coherent government programmes. Despite the fact that it has been there as a policy implementation instrument, government departments continued working in silos and some quarrelled over conflicting mandates.

Across government, there has not been a coherent implementation of the National Development Plan (NDP), a blueprint for the national development agenda. The Department of Planning, Monitoring and Evaluation (DPME) has also not been able to monitor implementation of programmes, their failures or successes, and send warning signals whenever things were going terribly wrong at provincial or local government level. For instance, the collapse of service delivery in North West was only brought to the surface by community protests that engulfed Mafikeng and neighbouring communities.

The DPME with such a huge bureaucratic infrastructure at its disposal could not detect service delivery problems in North West and send an early warning signal to the Cabinet. The Cabinet intervened decisively but after the fact. Surely, the president will present the MTSF and might not have time to subject it to the necessary and required intellectual rigour. Government officials should critically reflect on its effectiveness or ineffectiveness, as they will irrevocably roll out government programmes for the next five years.

The president will surely characterise the State that will help him build the South African economy as “developmental”. I must confess, often find the usage of the concept of a “developmental state” within government and ANC circles too romantic, abstract and Utopian, to say the least. First, the ANC must come to terms with the fact that it has never been able to define and build a developmental state. Its definition of a developmental state is ill-conceived and does not take into account the present realities of South Africa society and economy. In defining a developmental state, one has to define its real characteristics, nature, and ideological orientation and more importantly, class biases.

In line with all the above, the economic orientation of the South African state can best be defined as Social Market Economy (a free market economy with a strong bias towards welfarism) and therefore does not qualify to be characterized as developmental. Over the last decade, the South African state developed very strong predatory and kleptocratic features. This is the reality that ANC ideologues and policymakers are finding very difficult to comprehend and come to terms with. Having observed attentively what came out and continues to come out of the Zondo Commission, one cannot help but poignantly conclude that ours is truly a kleptocratic state that has served diligently the economic interests of the predatory political elite and the lumpen bourgeoisie.

Their systematic pillaging of the state-owned enterprises (SOEs) and Angelo Agrizzi’s shocking testimony at the Zondo Commission further strengthen my thesis. In appreciating these harsh intellectual and ideological realities, the ANC must begin to seriously think about a transition from kleptocracy to developmentalism. The romanticization of a developmental state can only aide the misdiagnosis of our social and economic challenges.

The bulletin outlines six apex priorities upon which the five year programme of government will be anchored and are listed as follows: Economic transformation and job creation, investing in people: skills revolution and health, social wage, spatial integration – human settlement and local government, social cohesion – safety and security, a better Africa and the world. If the readers have been following ANC election manifestos and government programmes over the years they will quickly notice that these apex priorities are merely a regurgitation of previous manifestos. However there are new policy shifts that are being proposed, such as the “three shift economy”. This to me is very intriguing but needs further interrogation.

I guess this proposed shift is partially based on the Dubaian Model of the Night Economy. The context is different though – Dubai opted for this route because of climatic conditions. Maybe this shift will help government in future to achieve massification of youth employment and most probably increase productivity in the manufacturing sector and agro-processing. The three shift economy might not have the significant economic impact on the lives of workers as envisioned its proponents.

The South African economy is not growing and is characterized by high levels of unemployment and lower wages. The biggest challenge that this new economic shift will face are the inhibiting factors inherent in the South African economy. What is not clear at this stage is the response of Labour and Big Business to this proposed economic shift. A determination will therefore have to be made as to how this will affect the wages of workers and more importantly, where the money will come from. Is government going to halve into three the already suffocated workers? In taking forward this proposed economic shift, government will have to look at the entire value chain in a much more integrated approach. The public transport system remains disintegrated and unsafe. For instance, the Gautrain here in Gauteng stops operating at 20:30. The levels of crime are very high particularly in the townships. Surely, the three shift economy will have to be piloted in certain sectors of the economy, maybe in the manufacturing, hospital industry, services sector, health and education.

Disappointingly, the disarticulation of the resolution of the South African land question is too glaring in the bulletin. There is no plan at all of how this administration will deal with land expropriation without compensation. It will be interesting to see how the president will deal with this question now that the High-Level Panel on Land and Agriculture has presented its report to him last week. The agricultural sector is definitely waiting to hear how the president will define South Africa’s land and agricultural trajectory post-May 2019. We would like to hear where the money would come from for meaningful land and agricultural reforms in this country. Will the President establish a Land Reform Fund to cater for accelerated land and agricultural reforms in South Africa?

The role of state-owned enterprises is not articulated convincingly in the bulletin. Government policy gurus must be reminded of the report that was produced by the Presidential Review Committee (PRC) on State Owned Entities that was chaired by Riah Phiyega. The PRC was appointed in May 2010 and finished its work on 28 May 2013. Accordingly, it had to ascertain the extent in which the State must be an active, effective and decisive owner/shareholder, playing a leadership role in providing strategic direction, creating an enabling environment and being at the forefront of ensuring that SOEs are vibrant and execute their respective mandates effectively.

The PRC recommended as follows:

• Government should rationalise its holdings by focussing on those SOEs that provide public goods and those deemed to be strategic, namely serving national interests, national security and priority sectors. This must be done by:
• Exiting from those sectors where the market failure no longer exists or that can be adequately provided for by the private sector, or the mandate is no longer justifiable;
• Absorbing those entities whose functions can be cost-effectively carried out by Government departments by incorporating them into the line function department programmes;
• Government should develop a consolidated funding model for commercial SOEs and DFIs (development finance institutions);
• National Treasury in terms of its mandate must exclusively marshal and manage all liabilities of SOEs both commercial and non-commercial, because they are in the end State’s contingent liabilities.

There is no evidence suggesting that the fifth administration implemented these recommendations. There is, therefore, a need to dust off the PRC report and the president must just implement its recommendations. It is well and good that the president met with the CEO’s of SOEs and DFIs three weeks ago last week. As he ponders what is to be done with these SOEs and DFIs, he must remember that the Ria Phiyega report is still as relevant today as it was in in 2013. There is absolutely no need to set up another commission of inquiry on the SOEs. The nation will soon be fatigued by these commissions.

Let me conclude by offering President Ramaphosa my unmandated and unsolicited advice. Mr President, consider resuscitating the fifth administration’s Nine-Point Plan and put aside the MTSF, set smart and achievable targets for your Cabinet and government. Set clear economic targets that will assist you to transform South Africa’s enclaved social market economy; revise the ambitious and unrealistic economic growth target of 5% in the NDP in view of the current economic climate.

A struggling economy like ours that cannot achieve a mere 2.5% gross domestic product (GDP) growth per annum will surely not enable you to achieve your economic targets, Mr President. Lastly, reconfigure the Presidency; eliminate the duplication of functions and roles within it. Consider phasing out the NDP Secretariat and NDP Commissioners and DPME. Make the much talked about, soon to be resuscitated erstwhile Policy Unit an apex of policy implementation, monitoring and evaluation and, more importantly, implementation of your party’s electoral mandate.

As they say, Honourable President, charity begins at home.

Zamikhaya Maseti is a political economy analyst and MD of Ngubengcuka Consulting.

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