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Stop fiddling and let’s get moving

29 October 2020 -

Respected public intellectual finds gaping holes in president’s recovery plan

Founder and executive director of the Centre for Development and Enterprise (CDE), Ann Bernstein (BA 1976, BA Hons 1977) offered a group of more than 250 alumni a sobering view of the state of South Africa’s economy on 28 October, a few hours before the Minister of Finance, Tito Mboweni, delivered his medium-term budget.

From one of South Africa’s leading development think tanks, Bernstein has years of experience focusing on inclusive economic growth, jobs, education, skills, land reform, cities and the role of business. Her talk titled “Recovery Strategies – SA and economic recovery: Quo Vadis?” provided  a candid and compelling assessment: “We have an escalating economic, fiscal, jobs and social crises. All of which have been exacerbated by poor decision making and implementation. 

“We have a cabinet where different ministries approach South Africa’s challenges in different ways: The minister of finance wants to cut expenditure, the minster of public enterprises wants to fund SAA, the minister of social development wants a basic income grant for every single adult.

“We have State capacity that is demonstrably weak and riddled with corruption. There’s been no significant progress on the reform agenda. In fact, this government, nearly three years old, has a growing credibility gap.”

“There is insufficient sense of urgency to get moving and get South Africa out of the terrible situation that we’re in. I see a country adrift, desperate for bold leadership, direction and action.”

She shared CDE’s key insights over the past six months. She suggested, in order for South Africa to move forward, there needs to be an acknowledgment of what brought the country to this point. “Real honesty is required about what has gone wrong and why.” She suggested that this acknowledgement could be used as an essential foundation to start building a bridge out of the disaster.

“It’s not just COVID-19 and the lockdown, but it’s 12 years – probably more – of misrule by the government. It’s not just the Guptas and State Capture, but it’s bad policy decisions on almost every front. We have an approach to markets, to investment that has led to economic decline and a junk-status rating.”

She offered a brief summary of the President Cyril Ramaphosa’s recovery plan, released on 15 October, outlining its contradictions and shortcomings. “The plan says we want to cut red tape, but if you read the document there are subordinate goals for every programme, especially set aside procurement processes, which will increase red tape enormously.” She said: “The core proposals rather happily envisage an increase in the costs of doing business in South Africa.”

A key component of the plan was an infrastructure drive, but Bernstein questioned if it made sense. “Is it a growth strategy?” She suggested the plan is not a silver bullet, but “everything is going to depend on building the right infrastructure that supports growth (and pays for itself); at the right price (so the ability to pay for itself is increased); that we have the resources to maintain it. This is not clear in the plan at all.”

She stressed the need for greater urgency. “Let’s move much, much faster. Think of the cost of delay. In February 2019, a special task team gave him [Ramaphosa] a report on what to do about Eskom. At that stage Eskom’s debt was R450 billion. Today, October 2020, that debt is heading for R500 billion. We need to have a better energy plan, but this plan doesn’t announce anything new.”

Another key component is “reforms for growth”. According to Bernstein this is a list of similar proposals, which haven’t materialised over the past four years. One example is e-visas. “Many countries much poorer than South Africa have an excellent e-visa system. In February 2019 we were told this was the highest priority of the president for the year – to establish a world-class e-visa regime. Here we are October 2020 and the plan says ‘efforts will be focused now on putting in place an efficient e-visa programme’.”

Bernstein suggested Ramaphosa’s “wish list” leaves many unanswered big questions: How credible is this? How fast will it happen? Have the battles been joined to make it happen? If the State is broken, how do we fix it?

“I think South Africa has all the great potential to be a great ��һ�Թ��� lion of an economy, but we keep disappointing. We’re now in a deep cycle of decline. We cannot make progress if we continue along the same lines.

“We have to rethink the attitudes, the policies that have brought the country to this sorry state. Tweaking, fiddling on the edges, avoiding the big issues will not do the job as the past three years have shown us.

“It is true that our State is weak, corrupt and ineffective but we do have capacity in South Africa. We have a private sector that is strong, not perfect, that could be even more impressive if it were not restrained and held back by policy makers’ unjustified belief in the merits of a commandist, disciplining developmental State.”

She said the State can and must be fixed. The private sector, in the meantime, needs to be supported and freed, instead of being smothered by regulation. This can be seen in the areas of energy supply and land reform.

“There will be no recovery if government’s ambiguous, anti-business policies persist. The government- business relationship has to change fundamentally. We need a State that seeks to enable business growth, not one that sees itself as responsible for ‘disciplining capital’ or continually expanding the role of the State in the economy when it has no capacity.

“The country needs leadership, not endless processes that never seem to get beyond fiddling or tweaking. I am opposed to the prevailing view that compacting will solve everything. We can use compacting to bring people together, to find a common road, but without leadership and a new vision for South Africa, we’re not going to get anywhere.

“The president has to put the national interest above party unity and electioneering. He has to build the political coalitions necessary for South Africa to start doing things differently. That’s what’s missing.”

“We need much greater seriousness and honesty about where we are today, how bad things are today and a much-more strategic and speedier approach on how we can move forward.”

Find the complete talk  in which Bernstein discusses what she wished the president had said when he released his economic recovery plan.