There is something of an apocalyptic air in South Africa at the moment. Understand what that means, both in its etymology and popular association. An apocalypse is a moment of unveiling, the revelation of momentous truths, often at a climactic juncture or at the end of things.
The past few months have seen South Africa hit by a catastrophic health crisis, which has driven a socio-economic crisis that has been years in the making.
The scale of what is under way was captured by finance minister Tito Mboweni. South Africa was looking at a deficit of some 14% of GDP, with revenue buckling under the impact of extended lethargy, the current health crisis and the lockdown meant to combat it. Gross government debt would exceed 80% of GDP this year, up some 15 percentage points from the projections made in February. This put South Africa on track to exceed 100% of GDP by 2024/25.
The situation was serious enough before the pandemic hit. Acknowledging this requires no particular insight. But what should not be ignored is that this conjunction of catastrophe has been consciously chosen.
Despite years of warning, the ‘reforms’ that President Cyril Ramaphosa was assumed to be in favour of have not materialised. The state wage bill continues to be unaffordable, the country’s state-owned enterprises continue to consume billions in bailouts. Indeed, as the lockdown was bleeding South Africa’s economy dry and while the aviation industry worldwide was grounded, government committed itself to maintaining a state-owned airline. And the nuclear power build is being resurrected.
In policy terms, government has clung doggedly to its racial fixations, linking state relief for South Africa’s business community to its Broad-based Black Economic Empowerment (B-BBEE) goals. Expropriation without compensation remains its intention, threatening in particular the farming economy. A post-Covid-19 recovery plan drafted by the ruling party points to dipping into pension funds and savings.
More than a few commentators and businesspeople are perplexed at what is unfolding. Surely – ‘surely’ – under these circumstances, where every ounce of entrepreneurship and every possible employment opportunity is critical, this is not viable.
But this is to misunderstand what is afoot. These policies are ideological. They are, for much of our political class, a matter of deep commitment, a sort of holy writ, which might – in terms borrowed from scripture – ‘endure forever’.
This is so, even though the president said recently in parliament that consideration was being given to whether ‘previous policies’ would need to be changed.
Sclerotic SOEs
He went on to suggest that not much is really up for discussion. South Africa’s post-Covid recovery would, he suggested, be led by the state. This is hardly surprising, since state dominance of economic activity has long been the preferred option for the ANC, whether in the form of a mighty East Asian-style developmental state, or a socialist ‘people’s democracy’. Indeed, this is precisely why it has refused to relinquish its sclerotic SOEs, and why it has fought hard to deny ownership to land reform beneficiaries – as in the decade-long battle to keep title deeds out of the hands of Limpopo farmer David Rakgase.
On B-BBEE, the president was unyielding. It was ‘here to stay’. No consideration there, evidently. ‘If we don’t change,’ he said, ‘it is those who have been excluded from the economy who are going to respond, and then all could be lost.’
Note that the ‘change’ he is referring to is really outcome, not policy. Policy to all intents and purposes remains sacrosanct. A sort of holy writ. Yet there is little evidence that current policy is achieving these outcomes.
Economic inclusion is vital, and a major failing of post-1994 South Africa – especially over the past decade. It demands above all two things: employment and entrepreneurship. But this demands an appropriate set of incentives to invest, and to take risks. There is little indication that B-BBEE does this. Rather, there is a good deal of evidence that it has provided at best no benefit to most businesspeople (black or white), and been more of a burden to operate under, as well as providing a handy opportunity for corruption and rent-seeking on the part of the unscrupulous (black and white).
Not only does it dissuade investment and impose hard costs on the economy – and perpetuate exclusion – but it helps to drive an inherently destructive racial politics.
Ramaphosa went on to say that those concerned with the future should come forward with ideas: ‘Apartheid excluded the majority of South Africans… this is what we should do.’
No shortage of ideas
If this was a serious invitation, he would find that there is no shortage of ideas. Even his government’s own Treasury came up with some sensible suggestions last year. The president showed little inclination to support them.
We at the Institute of Race Relations have developed a comprehensive alternative to B-BBEE, Economic Empowerment for the Disadvantaged (EED). EED would incentivise business to invest, to create jobs, to engage in social spending. It would promote innovation, profit-making (yes, this is essential to any sustainable business, irrespective of what the ideologues contend), and environmental protection.
It would target upliftment efforts not at race groups, but at people who suffer real material deprivation. Poverty, in other words, is a suitable proxy for poverty. The prime beneficiaries would, of course, be the country’s black poor, but if poor white people drew benefits too, could there be any objections to this?
Indeed, even as the imperatives of race signification loom large in official thinking, it is interesting to note that its programme of social grants – probably the most successful and important anti-poverty initiative, whatever its shortcomings – are entitlements contingent on socio-economic status.
We are available to discuss this with his administration if the president is interested. Or he could simply engage with one of the many other voices – including within his own party – that have pointed to the failure of B-BBEE policies to produce the outcomes that were expected of them (and which the president still apparently thinks possible).
His colleague Mathews Phosa said of the policy some years ago that ‘our model is dysfunctional’, and that ‘we need to be creative when old order models of negotiation are discarded by the disenfranchised’.
‘Dire need’
‘The simple fact is,’ he added, ‘whether we are white or black, there is a dire need for broader participation in the wealth of this country in a way different from the current model.’
The context in which Dr Phosa was speaking was the aftermath of the Marikana shootings. Like with the current pandemic, this was seen by many at the time as an apocalyptic moment, after which nothing would be the same. This proved incorrect. To rethink policy is difficult when doing so is seen as a form of heresy.
The consequences of policy fundamentalism will be dire indeed. Perhaps some words from scripture sum it up. ‘My people are destroyed for lack of knowledge; because you have rejected knowledge.’ So says the Book of Hosea. The latter is, incidentally, quite a dark contribution, speaking to themes of wilful disloyalty and betrayal, and of the disasters that await as a result. Yet it also communicates a message of redemption, and the possibilities of renewal.
Whether South Africa’s leaders will seek knowledge or cling to dogmatism will be a matter of truly apocalyptic dimensions.
If you like what you have just read, subscribe to the Daily Friend