As the Covid-19 pandemic reasserts itself, as infection spreads, and the death tolls rise, and as the country is pushed back into lockdown – with the restrictions and costs that implies – an anxious country looks for reassurance. What are its leaders doing to steer the country through this crisis, and equally, what do they plan for it when the health threats have receded, and the time comes to reckon with the socio-economic damage?
The annual January 8th Statement by the African National Congress (ANC) is typically watched carefully for an indication of where the country might be headed. In the current environment, there may have been elevated hopes in this regard.
These would have been disappointed. Its tenor and message reflected its predecessors. It invoked past glories, pledged to deal with current challenges, and promised future progress.
Indeed, even in view of the unique and unprecedented circumstances created by the pandemic (all too often compounded by the government’s response to it), it was the lack of new thinking that was remarkable. Far more continuity than change.
Perhaps that is partly because the issues confronting the country have themselves barely changed. Misgovernance, retarded economic growth, unemployment – and with them all growing immiseration – continue to ravage South Africa. The country’s malaise was exacerbated by the pandemic, not created by it.
Sensibly enough, the Statement reiterated the need for economic acceleration: ‘We have to achieve higher levels of economic growth and investment.’ That is a truism and has been South Africa’s key challenge (or rather, its key problem) for decades. The National Development Plan set its sights on yearly GDP growth of some 5.4%. Since the plan was published, the country has never come close. In the years since President Cyril Ramaphosa’s accession to office, the circumstances have become especially dire. In 2018, South Africa managed only 0.8%. In 2019, this fell to 0.2%. In 2020, the economy will contract by something in the order of seven percent, or more.
The Statement airily reiterates a litany of measures taken and under way. There are strategies, conferences, compacts and roll-outs. ‘Progress’ is interminably being made on ‘policy reform’.
South Africa has seen this before.
Also familiar to the country is what the ruling party and the government it heads is failing to do. Modest efforts to encourage investment – a high profile summit here, or the promise of a more congenial policy at some point in the future – are not matched by a supportive business environment. Efficient administration, suitably flexible labour regulations, law and order and so on are ultimately far more important than the appeal of a president or the offer of a hard-to-access subsidy.
President Ramaphosa does in fact seem to recognise this, having said that he wished to elevate South Africa’s Ease of Doing Business ranking. South Africa is not doing enough to achieve this.
Indeed, such prospects as the country has are undermined by the Government’s own choices, deliberately made and consciously promoted.
The January 8th Statement reiterates the ruling party’s commitment to Expropriation without Compensation (EWC). Anyone seeking an indication of where South Africa is headed could do worse than note this. In the coming year, the Statement says, the Constitution will be amended to facilitate EWC.
This has been a major concern for investors since the ANC adopted it as party policy in 2017. As Azar Jammine argued in an interview with the Financial Mail, it was this policy that destroyed South Africa’s prospects of a post-Zuma windfall. That it has been an investment deterrent has been acknowledged within government itself.
The dogged commitment to EWC will be priced in lost opportunities and a failure of South Africa to join a global recovery. The country will lag behind its emerging market peers. At best, EWC will heighten ‘uncertainty’, with a consequent wait-and-see attitude by business. More likely, it will render the country uninvestable – a phrase used by us at the Institute of Race Relations, in reference to both local and international investment. One model produced by Dr Roelof Botha and Prof Ilse Botha projected losses to the economy that could be measured in hundreds of billions of rands.
EWC could well produce a blow to the economy that would ultimately be even more destructive than Covid-19. For it would not be a natural disaster like the pandemic, but a systemic retardation of the economy that would sap its vitality for years.
Indeed, in commentary around the EWC commitment, Bloomberg reporter Paul Vecchiatto wrote: ‘It’s seen by Ramaphosa’s foes within the party as a test of his resolve to push through decisions unpopular with the business community.’ While this understates the extent to which President Ramaphosa is committed to this course of action (he has, after all, invested a great deal in this policy push), this observation is correct in that it is a ‘test’ of sorts. EWC is an ideological measure, a means of establishing state dominance, and of challenging ‘capital’.
That it will come with real-world costs is clear, and this will not have escaped the attention of those in power. But these are, evidently, costs they are willing to pay.
Whether ordinary South Africans are willing to mortgage their futures for ideological satisfaction is far less clear. Growth-focused and employment-creating policies would surely be better received, particularly after the trauma that the country’s people have endured these past months.
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