President Cyril Ramaphosa’s announcement this week outlined some features of the measures aimed at getting South Africa on the road to recovery after the toll taken by the Covid-19 pandemic and lockdown intended to deal with it. While, understandably, most public reaction to it focused on the pledge to commit some R500 billion to a “social relief and economic support package’, his comments alluded to something potentially far more profound.
We are never, he said, going to be the same, and reconstruction endeavours will produce a ‘new economy’.
‘We will,’ he said, ‘forge a compact for radical economic transformation that advances the economic position of women, youth and people with disabilities, and that makes our cities, towns, villages and rural areas vibrant centres of economic activity. Our new economy must be founded on fairness, empowerment, justice and equality. It must use every resource, every capability and every innovation we have in the service of the people of this country.’
It is difficult to know quite what to make of this. On one level, it’s not far removed from the standard boilerplate that the government of this country (and for that matter, politicians here and the world over) puts out to market a vision – something that all too often substitutes for reality.
Yet South Africa is at an extraordinary conjunction of circumstances, and changes in the country’s economic structure (and certainly in its prospects) may well be forced on it. This in turn raises the question as to how the country will respond.
What, then, does the president’s reference to ‘radical economic transformation’ signify? For some time, this idea has hovered around the country’s policy environment. It has been the position both of the government, and of those within the ruling alliance that seek to replace it.
Arguably its signature element has been the push for Expropriation without Compensation (EWC).
Left-leaning ideologues
This touches a number of impulses. For left-leaning ideologues, it represents a blow against property rights and capitalism. For those with deep ambitions and shallow probity, it promises rich pickings. For others, it offers the mirage of resetting and expediting land reform – though the prospect of success here flies in the face of the weight of evidence to the contrary.
Indeed, EWC has done no small amount of damage to South Africa over the past two years. It has become a foremost concern for businesses, understandably, since little is as dissuasive to investment and business activity more broadly as the degradation of property protections.
The proposed amendment to the constitution, threatening on its own terms, rightly provokes fears about the country’s constitutional order – if a clause of the Bill of Rights can be gutted to serve a political agenda, what precedent may be established?
For the farming economy, it was preceded and has been accompanied by stigmatisation, a sinister narrative of farmers as land thieves, abusers of workers and so on.
And it is worth noting that Moody’s referred unambiguously to EWC in its announcement that South Africa’s credit rating was to be downgraded. As the country looks set to ramp up its debt, this is a matter of no small importance.
So, if this is ‘radical economic transformation’, it offers nothing besides more of the same; only in a far more compromised environment. The damage it will do to a post-Covid-19 economy will be debilitating.
Yet this need not be inevitable. The president remarked that ‘our new economy must open new horizons and offer new opportunities’. This is what the country and its people have long wanted.
Honest, pragmatic and competent
It requires honest, pragmatic and competent governance, a policy environment that encourages and rewards investment, and a labour market that incentivises employment. Obvious, intuitive choices each one, though roundly rejected by those who trumpet the ‘radical economic transformation’ agenda most aggressively.
The Covid-9 crisis has shown just how valuable a high-functioning commercial farming economy is. This should be nurtured and expanded. New farmers need to be assisted to participate in it to the full. They need title to their properties, capital, infrastructure and the maintenance of the rule of law – not the ideological fantasies embodied in EWC.
As the country – particularly the president – looks to the future, the choice as to whether to proceed with EWC or to pursue a course that will deliver the prosperity that South Africa craves, is squarely within its purview. It is a choice that will inevitably need to be made.
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