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President Cyril Ramaphosa believes the state should ideally be more active in the economy. Picture: GCIS
President Cyril Ramaphosa believes the state should ideally be more active in the economy. Picture: GCIS

President Cyril Ramaphosa’s comments that the state should play a more “activist” role in the economy continues the endless conversation about whether SA needs more or less state intervention to achieve its economic aspirations. This has been “debated” since well before the transition to democracy, and is notable for its fickleness.

There is no ideal mix of state and private initiative, though each has a role to play. Prudent state intervention has (arguably) been an asset in Japan, South Korea and Taiwan, to name a few — the so-called “developmental state” that so beguiles the ANC and government. Note, though, that the contexts in which this took place were unique and not easily replicable.

Any lessons for us must start from the premise that state “activism” needs a strong basis in professional ethos and technical expertise. More than this, “activism” in the higher-order sense of supporting champions and encouraging new industries is nonsensical where the state cannot guarantee the foundational elements of an economy: infrastructure, security and so on.

For the most part, SA has ignored the latter and obsessed about the former. So, while businesses struggle with power shortages, badly maintained roads, frail water infrastructure, the constant threat of crime and poor skills, government has saddled them with onerous labour and empowerment requirements and confusing red tape.

Little suggests any of this will change soon. There is a lot of rhetoric about the need to revitalise infrastructure, and some movement on policy reform, but this is matched by ratcheting up the pressure elsewhere — notably pending legislation that would enable imposing racial quotas on firms. There is no indication of any rethink on empowerment legislation.

At present there is not much to be optimistic about in the prospect of the SA state, as now constituted, pushing a more “activist” position.

Terence Corrigan

Institute of Race Relations

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