Particular moments in history are imbued with special importance. These are what we might describe as turning points, crossroads or watersheds. Occurring as these do in times of stress and tumult, their full significance may only become apparent with the benefit of hindsight. Or the sound, fury and immediate upheaval may create a perception of meaning out of any proportion to reality.
South African at the present stands at such a junction.
For over a decade, South Africa’s economic performance had been disappointing; as the years passed and the population grew faster than the economy, and as joblessness ticked up, the promise of socio-economic mobility faded for millions. The notion that something needed to be done was common cause, and since the COVID-19 pandemic hit, conventional wisdom has been that decisions on this can no longer be avoided.
Blade Nzimande, SA Communist Party Secretary General, put this into a memorable rhetorical formulation by stating that ‘We can’t go back to the Crisis before the Crisis’.
But then, in January – before the virus was much more than a foreign news item – finance minister Tito Mboweni made the impassioned point in one of his out-of-hours Twitter interventions, ‘If you cannot effect deep structural economic reforms, then game over! Stay as you are and you are down graded to Junck (sic) Status!! The consequences are dire. Your choice.’
It’s a safe bet that calls for change by Nzimande and Mboweni have rather different directions in mind.
One possibility – of which Dr Nzimande would approve – is to ‘advance’ out of the crisis. Push above all for greater state control and intrusion; what one might call ‘radical economic transformation’ (RET). The other – call it the Mboweni trajectory – is to ‘reform’, to consciously adjust policies and explore new options.
With Covid-19 devastating the economy (a projected fall in GDP in excess of 10%), there was a widespread initial assumption that the latter option would prevail. This made logical sense, and fitted well with the sense of President Cyril Ramaphosa as a reformer whose definitive moment had come. Said one analyst in a contribution to Business Day, in reference to the RET narrative, and particular encroachment on property rights: ‘The coronavirus pandemic has finally provided the opportunity for Ramaphosa to further weaken this discourse, or even to completely abandon it, however subtly this may occur. Already “equal” redistribution is replacing “radical” redistribution. The competent Oom Cyril is well aware that expropriation has no substance when an economy is collapsing and propertied taxpayers and farmers become gold.’
Unique window of opportunity
Following this logic, the pandemic would mediate market-friendly policy changes out of necessity, implemented with conviction through a unique window of opportunity. This would be South Africa’s turning point.
The evidence of the past few weeks tells a different story. Not only has South Africa’s credit rating been downgraded – as Mr Mboweni warned – but in almost every way, both rhetoric and action has tended away from reform, certainly if this is understood as enhancing South Africa’s investment attractiveness and economic prospects.
Perhaps the most visible manifestation of this was the insistence on using racial criteria for distributing disaster relief. The news that in these circumstances, South African Airways would in fact be retained as a state-owned asset – with the attendant consequences for the fiscus – is another. The shutdown of the economy, even where it posed limited risk, as in the case of e-commerce, bespeaks an indifference to the predictable, real-world consequences.
All indications in recent weeks are that this is the direction that will be pursued. The ANC’s draft economic reconstruction plan is a fundamentally statist vision – with the uncomfortable suggestion that fiscal gaps will be plugged by pension funds and private savings.
And expropriation without compensation remains policy for land reform.
There is, unfortunately, no turning point here. The pandemic has merely provided a pit-stop in an ongoing policy drive. The destructive direction of policy, part of the reason that South Africa entered the pandemic in a recession, will be continued. Perhaps even accelerated. Certainly, parts of the ANC and its leftist partners have been unambiguous and apologetic that ‘disciplining’ private business must be a priority.
There is, from the side of the ANC and the government, no indication of any productive economic reform in the offing. But nor has there been, hopes aside, for years.
‘Old ideology and dogma’
South Africa had best be ready for this. Perhaps, though, some good news is to be found in a recent statement by Business Unity South Africa. Remarkably, it recognises the role of ‘old ideology and dogma’ in the ANC’s proposals, and seems under no illusions as to the damage they will do. These are strong sentiments for a business community that has preferred to eschew political confrontation and to pursue compromise and conciliation.
It also notes: ‘We will need to persuade society that there is a fundamental and rational basis for any such moves, consistent with an inclusive, mixed, and sustainable economic growth trajectory.’ Intriguing indeed. Does this recognise that business needs to make its case to the public, to shoulder some responsibility to shift the country’s direction, even if this puts it in conflict with government? This might very well be a moment to be remembered.
If ever South Africa needed a turning point, it is now. With none to be expected from government, it will fall to others to make it happen. Otherwise, history might record this time as merely another step in South Africa’s decline.
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