Graphic: RUBY-GAY MARTIN
Graphic: RUBY-GAY MARTIN

SA needs the best economic advice it can get given the state of the economy. From this perspective, President Cyril Ramaphosa’s appointment of an 18-member economic advisory council (EAC), as promised in a past state of the nation address, is a positive development. 

The EAC members are of strong intellectual calibre, are drawn from the ranks of academics and practising economists, and include a couple of non-SA experts. It is a credible, balanced, high-powered team that can bring its collective expertise to bear on SA’s pressing challenges of turning the economy around and creating more growth and jobs.

The formal establishment of an EAC should be seen as a confidence-building step at a time when there is widespread concern about SA’s economic prospects and what needs to be done to improve them.

Many countries have used one or other form of organised external economic advice. Among the best known in advanced economies are the council of economic advisers in the US, the German council of economic experts, Canada’s council of economic advisers, and India’s economic advisory council. In SA, economic advisory councils also served presidents Hendrik Verwoerd, John Vorster, PW Botha and FW de Klerk, until the concept was replaced by the National Economic Development and Labour Council (Nedlac) in 1994.

Past, much larger, EACs in SA comprised top officials of government departments, organised business and then-recognised organised labour, and a group of prominent “captains of industry” and economists appointed in their personal capacities. Some of these structures worked better than others, depending on their design, capacity and independence.

There is a wealth of international and domestic experience on how to make such institutions as efficacious as possible. There is nothing automatic about their desired effect on policy-making, and they have varying track records from which lessons can be drawn. There is no need to reinvent any wheels in institutionalising economic advice.

Within the broad mandate of the new EAC, the most important goal is “ensuring greater coherence and consistency in the implementation of economic policy”. There is ample evidence why enhancing policy consistency and policy certainty is a necessity in SA, but simultaneously it underscores the magnitude of the challenge faced by the EAC.

We should also recall that though uncoordinated decisions are bad or costly, so are co-ordinated bad decisions. There is no magic about any plan that transforms the quality of decisions beyond the virtue that co-ordination gives.

There has already been criticism in some quarters that, while the establishment of an EAC is something “nice” to do, it is superfluous in that what the country needs now is implementation, not further diagnosis. This is, however, to misunderstand the basic role and purpose of the EAC.

If there are caveats about the EAC they lie at other levels of concern among those who want it to succeed, and to ensure that co-ordination does not simply lapse instead into more duplication. The EAC is by no means writing on a clean slate. Existing structures such as the national planning commission, Nedlac and the financial and fiscal commission (FFC), to mention just a few, have traversed the economic policy terrain for years. There are also other pressure groups that have access to policymakers and often churn the waters of decision-making.

The EAC starts in a world that is already moving, not one that has to be set in motion. If the EAC is not to become a “fifth wheel” on the policymaking machine in SA, it will — as the presidential statement recognised — have to establish clear protocols for engaging with other critical structures such as Nedlac. In addition, institutions such as Nedlac and the FFC are established by legislation, whereas the EAC is merely an administrative creation. Grafting an effective EAC on to the existing institutional policy-making framework in SA after 25 years of democracy may thus prove a more formidable challenge than is immediately apparent.

Another important test for the EAC arises from the reference in its mandate to “implementation”. What a former World Bank president called the “science of delivery” — the growing knowledge base of how governments can successfully deliver — is new. It requires a particular skills set to apply.

If the EAC is to ensure the disciplines of delivery (or “deliverology”, as it is now increasingly called) are applied, they must also achieve not just sustainability but irreversibility. These are largely micro issues, rather than macro ones, where arguments have to be won and leverage applied.

One big advantage the EAC enjoys is that the president will chair its quarterly meetings. Reforms and their implementation are not important to a government unless they are equally important to the head of the government, personally. There is no substitute for sustained, disciplined political leadership. Chairing the EAC is a key role.

High on the agenda of the EAC’s first meeting needs to be a decision about the level of transparency it can permit. This will require clarity about the status of its meetings and the advice given, including the degree of confidentiality. The extent of its independence will be important for the future credibility and profile of the EAC. And it will be necessary for its reports and findings to be shared with the cabinet, not locked in a bureaucratic silo.

In light of SA’s economic challenges we should therefore endorse the EAC’s existence, warn it to avoid obvious pitfalls, and hold it to making a positive difference to policy outcomes. To succeed, the EAC will need to be relentlessly optimistic about the possibility of changing SA as well as brutally realistic about the difficulty of getting it done.

• Parsons is a professor at the North West University Business School and a former deputy CEO of Business Unity SA