MICHAEL BONGANI REINDERS: Unity government has already made catalytic changes

Despite recent reports of growing unemployment and major companies leaving SA, such as TotalEnergies withdrawing from its offshore gas discoveries, Rand Merchant Bank has ranked SA as the fourth most attractive investment destination on the continent.

While there is still a long way to go before the new government of national unity (GNU) addresses the myriad issues facing the country, some small changes have already been made that are likely, with time, to put SA and its economy on a positive trajectory for investors.

For example, there is a positive outlook for the energy sector for the first time in over a decade. Addressing the energy crisis — the main cause of poor economic growth over the past few years — will play a major role in driving economic growth and employment opportunities.

The changes in the GNU cabinet regarding the energy sector have been key to the positive reception of the new government. President Cyril Ramaphosa was able to move the department of energy out of the department of mineral resources and away from Gwede Mantashe, who has been a major obstacle to effective energy policy. Kgosientsho Ramokgopa, who was appointed minister of electricity in March 2023, has now also been given control of the wider energy portfolio.

This is a positive development. His track record from the past year shows that he has been able to make a notable difference to the operations of state power utility Eskom by prioritising the improved management of power stations, which has led to power stations running more effectively and the suspension of load-shedding. Since taking over the energy portfolio Ramokgopa has also explicitly stated his plans to increase renewable energy projects and has provided much-needed policy certainty in the energy sector.

All of this will be integral to the sustained functionality of the national grid and increased investment in the sector, especially as government continues to look to increase transmission capacity, which is crucial to the ending of load-shedding. These issues stagnated under Mantashe, but are likely to be properly addressed in the next five years under Ramokgopa.

Consistent and effective governance was seen as the exception rather than the rule during the previous administration, which solely comprised ANC ministers. However, the inclusion of ministers from the DA has already led to improvements in governance, with the new ministers identifying challenges and providing solutions in their departments. While this is unsurprising given the DA’s strong governance record in other levels of government, what is surprising is that this is also having a positive effect on the rest of national government.

Despite some ANC ministers complaining that the DA is making them “look bad”, Ramaphosa has stated that ANC members should strive for excellence and competence, a departure from the complacency and ambivalence he showed towards underperforming ministers during the previous administration. There is now pressure on ANC ministers to perform, as they are being compared with other parties in the cabinet, a comparison that never happened when all ministers hailed from the ANC.

The growing political will to govern, and for ministers to be seen to be delivering on their mandates, is a breath of fresh air SA politics badly needed. Simply getting the basics of governance and service delivery right will enable government to drive economic growth as these small changes have a positive effect on the business environment.

With no load-shedding, the services sector can operate effectively and continue to grow; if Transnet is run effectively, the country can increase its import and exports; if it is easier to export minerals due to the end of load-shedding and more effective ports, mining production can increase.

These knock-on effects are the key to the SA economy getting back on track. This will, in turn, lead to growing investor confidence, which will increase investment in key sectors such as mining, renewable energy and infrastructure. Increased investment will drive job creation, which in turn helps with economic growth.

By addressing the energy crisis, the government is removing one of the biggest obstacles to economic growth. By making relatively small but strategic interventions, the government can make significant progress towards a positive investment environment.

Although the country still faces many issues and the GNU government still needs to prove to investors that it will continue to be run effectively and implement its policies over the long term, by taking small steps to develop good governance the GNU is showing that the country is on the right path to achieving  strong economic growth in the coming years.

• Reinders is an analyst at Control Risks.