SHAWN HAGEDORN: Voters want jobs and not meagre grants

Have constitutional protections and economic fundamentals begun to outmatch the ANC’s loyalty-buying patronage network? Perhaps, but success requires a realistic pursuit of high volume job creation.

The press routinely feature stories about people, most famously the Guptas, getting richer at taxpayers’ expense. Yet our bloated, ineffective bureaucracy is equally costly and more crucial to the ANC’s electoral reliance on patronage. 

Until now, despite requiring parliamentary approval the public service wage bill had been immune to serious political scrutiny. That our finance minister is now seriously confronting its budgetary impact clearly signals that the ANC’s patronage model is wobbling. 

During its first decade in power the ANC transitioned from a liberation movement to a democratic political party. During Jacob Zuma’s presidential reign the organisation morphed into the patronage network it is today.

As the electoral value of the ANC’s liberation credentials faded, the party sought to secure loyalty from a majority of voters through patronage. If all the country’s beneficiaries of BEE and grants, along with public servants, feel beholden to the ANC, it should be able to maintain its electoral dominance. 

However, having already indicated to pollsters that job creation was their top priority, when voters went to the polls last May they wounded the ANC’s faith in buying voter support. Voters confirmed that they want jobs, not meagre grants, and now the ANC’s ability to fund the wages of its overstaffed and poorly performing public service wage bill is under threat. Meanwhile, the ANC’s pro-patronage policies, particularly BEE and localisation, have entrenched the world’s most severe youth unemployment crisis.

ANC leaders represent themselves domestically and internationally as champions of social justice ideals, while too frequently rubbing the faces of Western leaders in their nations’ colonial misdeeds. Such parading of ideals to justify the party’s anti-Westernism always risked provoking a backlash. Now, a lot has suddenly changed. Vladimir Putin’s Middle East allies have stumbled or been replaced, while US President Donald Trump disrespects Ukraine President Volodymyr Zelensky and indecisive European leadership.

That is, the lingering idealism of an earlier era has been purged by a large imperial war in Europe and Trump’s transactional pragmatism. Other countries are reacting sensibly by playing to their strengths. 

The ANC lacks the knowledge base to do that as it has so routinely subordinated national interests to advance patronage. As a consequence, it is now vastly easier for ANC leaders to continue to bet the party’s future on its patronage-heavy election strategy than to try to swiftly and adroitly pivot its economic and international relations policies. 

If the party were prepared to develop SA’s potential, it would leverage its hosting of the Group of 20 (G20) to integrate deeply into many of the promising niches that are emerging in global supply chains. That would require following up civil service cuts with pursuit of high volume private sector job creation. As our domestic economy is at least a third too small to support meaningful job growth, we must focus on growing exports.

The ANC prefers to grow commodity exports as the party can then make aggressive demands of mining companies. Yet even if the ANC played its hand deftly, mining exports can’t possibly trigger adequate job growth.

The ANC’s dream scenario begins with huge commodity exporting such that the country need not compete internationally. It should then be possible to make nearly everyone dependent on the ANC either for a job or for grants. The world economy was briefly supportive of such scenarios half a century ago. But today’s global growth is driven by services and increasingly by fast-paced digital innovations. There are no signs that the government of national unity can persuade the ANC to abolish its devotion to growth-destroying policies such as BEE. 

The obvious compromise is to exempt all value-added exporters from BEE and other anti-growth regulations. This should be done while engaging with G20 participants to explore trade-versus-aid options. More specifically, SA should explore how our huge surplus of unemployed young adults could add value within global supply chains.

• Hagedorn (@shawnhagedorn) is an independent strategy adviser.