YACOOB ABBA OMAR: Government should aim to get the basics right
Challenges are daunting and help from labour and the private sector should gratefully be accepted
On February 10 President Cyril Ramaphosa made a call for a social compact to be in place within 100 days — a social compact to create jobs and end hunger and poverty based on the Economic Recovery & Reconstruction Plan (ERRP).
The ERRP had been unveiled by him in parliament in October 2020, to much fanfare after months of research and negotiations between the social partners at Nedlac, especially business and labour. Many had been taken by surprise at this 100-day deadline given the growing and publicly expressed scepticism over the government’s intention, let alone capacity, to implement the ERRP.
In February 2021 Minerals Council SA president Mxolisi Mgojo said “it has been incredibly disappointing that a lack of decisive action has meant that six months after the proposals were tabled we still don’t have a coherent and inclusive plan”.
In September 2021 the Thabo Mbeki Foundation reported it had met with 13 ministers and their officials, saying there were no “time-specific national economic targets which were binding on government”. It highlighted that only passing references were made by them to the ERRP in their parliamentary budget vote submissions between May and July 2021. It proposed the drafting of an Implementation Plan for Economic Reconstruction & Recovery (IP-ERR) with concrete targets aimed at overcoming mistrust among social partners.
Today we find that the Covid-19-ravaged situation the ERRP was meant to have tackled has worsened. Nedlac’s April 2022 Economic & Employment Indicators & Trends report points out that the number of people of working age who are not in employment, education or training increased by 2.8-million during the Covid-19 pandemic to 18.8-million. Almost half of these people are in the 15-34 age group.
Also, real fixed capital stock per capita declined 2.6% between 2017 and 2021, while cargo passing through SA’s ports declined 12% in the year to March. SA is lagging behind some other Southern African Development Community member countries in terms of GDP per capita.
On the slightly brighter side, the disposable income of households recovered strongly, boosted by social benefits and property income, but not due to economic growth. With revenue collection improving due to a number of factors, including a windfall from the improved performance of the commodity sector, and government expenditure somewhat restrained, we have seen lower average monthly borrowing by the central government.
However, neither SA nor the world is out of the woods yet: climate change takes its toll, new waves of the Covid-19 pandemic and the effect of Russia’s invasion of Ukraine means there is uncertainty at every level — from geopolitical realignments to health to food security. The recent flooding in large parts of KwaZulu-Natal has had a huge effect on the lives and livelihoods of millions of people and destroyed vital infrastructure. This came on top of last year’s uprising in July, in which saw hundreds of lives were lost and infrastructure and commercial centres destroyed.
Why can’t Ramaphosa, his cabinet and the dozens of bright and well-meaning advisers swirling around the government focus on getting the basic things right? There is no doubt that the challenges being faced are daunting and could easily overwhelm any administration. Opposition parties and the social partners would do well to admit that as a starting point. At the same time, the government also needs to accept that it simply does not have the modern state machinery required to face such existential challenges, despite all the promises to improve state capacity.
The government should therefore be showing more humility and gratefully accept the extended hands of labour, and especially the private sector, as suggested by the Thabo Mbeki Foundation report. Ramaphosa set the basis when he stated in his February address that “the reality in our country — as in most other countries — is that the private sector creates the most jobs”.
As the July 8 deadline looms for the social compact Ramaphosa has called for, his government must similarly and urgently commit to implementing the ERRP with the rest of society.
• Abba Omar is director of operations at the Mapungubwe Institute.
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