Picture: BLOOMBERG/WALDO SWIEGERS
Picture: BLOOMBERG/WALDO SWIEGERS

The collapse of SA’s economy over the past few months is catastrophic no matter how you look at it. It is an accumulation of one crisis after another, and the Covid-19 pandemic is the last straw. To recover from this will require less talk and far more action, as President Cyril Ramaphosa emphasised in his discussion with journalists last Wednesday.

One thing that struck me about the president’s replies was his grasp of the complexity of bureaucracy and how it stifles implementation. This despite the plethora of special committees set-up to ameliorate the risks of bureaucratic red-tape. Often the committees themselves get caught up in the whirlwind they are formed to avoid or dismantle.

One of the issues raised by journalists in the meeting was the delays in spectrum allocation. The Independent Communications Authority of SA (Icasa) has now promised to issue an invitation to network operators to bid by the end of September. Instead of December, the allocation is now expected in March 2021.

Reform of the state-owned entities (SOEs) in general and Eskom and SAA in particular has been on the cards for years. If those plans had been honoured, we would have a new and productive SOE architecture and governance systems. This would be beginning to bear fruit in the economy, and we could have avoided the credit ratings downgrades.

The same applies to the corruption in both the public and private sectors. There have been numerous initiatives that only seem to be public relations measures, but no fundamental changes that might see those who are corrupt put in jail.

Ramaphosa promises that things are happening in the background and we will eventually see the results. He mentions, for instance, his commitment to infrastructure with the recent establishment of the Infrastructure Fund, and that “shovel-ready” projects have been identified. But the president's optimism assumes the fundamental barriers that have been the major cause of delays or sabotage of SA’s economic growth plans over the past 26 years have been resolved or are being dealt with. The question is, who is dealing with these barriers to implementation? And what progress has there been thus far?

It is important to understand that barriers to economic restructuring are common in many transitional economies, and are not peculiar to SA. These barriers are also not unique to the ANC, but would challenge any party that is in power.

The main barrier, which the governing party has acknowledged and resolved to change, is the state’s lack of capacity. There are two main elements to capacity — restructuring government by enhancing policies and systems, and intensive quality recruitment and training for public servants. The president mentioned clearly that this is a top priority. The challenge for a government that is under pressure to implement immediate changes in the economy is that it is necessarily a drawn-out process.

To rebuild the capacity of the state may seem easy with the right technocrats in charge, but any technical administrative changes require full political buy-in to implement. From what I have observed political will is the most difficult change to bring about. Politicians are driven by the need to win elections, not implement policies.

The structure of government is linked to political territories where constituent parts of the governing party claim an inheritance from campaigning for the incumbent president during their election. They expect to be rewarded, and put pressure to the president to appoint their candidates as ministers or MECs, or to head up state-owned entities (SOEs).

These political territories go with ideological determinism, which often defies the wishes of the incumbent president or party resolutions. At worst, these political territories may be infiltrated or captured and in turn become intent on capturing the departments or SOEs’ supply chain for nefarious purposes. Sometimes those reasons are justified as being those of the party.

Because of the unpredictability of the occupancy of a political office, and the shortness of the political term in accordance with the electoral calendar, they naturally tend to resist any drastic medium to long-term change that has no immediate benefit to the individual, party or faction. With the ultimate power of political office as “executive authorities” of government in terms of the Public Finance Management Act, they often resist any reforms that may reduce their share of power and its benefits, or go against the ideological disposition of a faction or alliance partner.

Each president must manage at least two elections (national/provincial and local government), and tampering with the structure of government and deployees is highly sensitive and risky. To manoeuvre through this the president needs to be brave and have no interest in being re-elected, but must be driven by conviction and the principle of what will the most appropriate structure of government to change the economic trajectory for generations to come.

This mean the president must be prepared to withstand the backlash from his political constituencies. It is unfortunate that if the logic goes against that of party resolutions, in terms of our political system the president may not get to finish his or her term of office.

This, together with incompetence and incapacity, has been at the core of resistance to restructuring and reform in SA. What can be done? Ramaphosa would seem to have a clear view of these hurdles, and working with parliament and the governing party he may be able to find new ways to overcome these hurdles. One such approach would be to find alternative empowering legislation, normally reserved for presidents to wield power for special emergencies.

The economic catastrophe we find ourselves in today may justify the president going to parliament to seek to use those powers to change or introduce specific legislation for the purpose of fast-tracking the implementation of critical policies. This would be equivalent to a state of disaster for the economy. This may cause discomfort in a constitutional democracy, but with the checks and balances provided by parliament, the suite of interventions by presidential empowering legislation for economic intervention could be scientifically tested to yield the desired results.

The final recovery plan must address the barriers to economic restructuring; otherwise, the shape of our economic recovery will be uncertain.

• Mfeka, a former economic adviser to the presidency, is economic adviser and strategist at SE Advisory.

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