EDITORIAL: Trust is crucial to President Cyril Ramaphosa’s plan
A senior business leader recently likened the SA economy to a car that hasn’t been serviced in a few years but that you keep driving in the blind hope of not getting stranded by the side of the road.
At some point, however, your luck will run out.
After years of not servicing the economy, SA finally ran out of luck in the first half of 2018, with GDP numbers out earlier in September confirming that the economy is in recession for the second time in a decade.
In 2009, we had the global financial crisis to blame; in 2018, SA’s poor economic performance comes against a backdrop of strong global growth and is entirely self-inflicted.
President Cyril Ramaphosa deserves credit for acknowledging that we are stranded. But the "stimulus" package he announced on Friday equates to little more than an oil change, a new air filter, a few spark plugs and perhaps a new tyre or two. If we’re lucky, it will get us to the mall, but it’s not nearly enough to get us safely back onto the highway. Promised fixes to the visa rules and mining regulations, and releasing scarce radio spectrum to help bring down the cost of internet, for example, are years overdue. Ramaphosa promised immediate action — with that he means processes will get under way. Don’t expect new visa rules in time for operators to cash in on a big December.
On the upside for Ramaphosa, the entire country is ready to help with the engine overhaul
Similarly, not much can happen at speed in terms of addressing the uncompetitive levels of SA’s administered prices of, for example, electricity. Other areas — clamping down on illegal imports, filling critical nursing vacancies, building proper toilets at schools, offering trade protection to domestic sectors within the World Trade Organisation boundaries — are bread-and-butter government business. His big-ticket items — the R400bn infrastructure plan and R50bn to help black farmers, township and rural economies — highlights one of the key challenges he faces. SA’s problem hasn’t been so much in finding the money, but effective implementation and spending control.
Look no further than Eskom and the construction of Medupi and Kusile, two uber-expensive power plants that are still not completed and that we will pay for decades to come, when we might not even need them.
We simply need to do better. Counting in SA’s favour is that Ramaphosa is racing against time. Three events that are key for his presidency are scheduled for the next two months: the jobs summit; finance minister Nhlanhla Nene’s medium-term budget framework statement in October, which should fill in many of the details left out in the president’s speech on Friday; and the investment summit, where he’ll hope to make major inroads into his target of luring $100bn in the next five years.
Then it will be December, and the country will be largely in shutdown mode until late January. By the time we’re back from holiday, election campaigns will be in full swing. What Ramaphosa doesn’t get done by November will be difficult to get done, and this will count against him on the campaign trail.
Although he’ll argue that his plans have nothing to do with the 2019 elections, it’s highly unlikely he failed to notice the latest polling, published by the Institute for Race Relations, showing the ANC’s support dropping to 52%, from 62% four years ago.
On the upside for Ramaphosa, after five years of negative GDP per capita growth and rising unemployment, the entire country — the private sector, civil society, taxpayers, the jobless, those parts of the ruling party who’d like to stay in power in 2019 — is ready to help with the engine overhaul.
That the package is modest in monetary terms is not necessarily a bad thing. That there is a degree of realism and recognition of fiscal constraints, unlike Jacob Zuma’s plan for free higher education for example, which came uncosted and forced public servants to scramble to find the funds, means this is a credible plan that other players can get behind. And that level of trust will be crucial if we are going to get this car back on the highway.