ANC policy: More continuity than change

A state that can struggle to distribute drivers’ licences, or to maintain roads and water systems is hardly an ideal candidate to reconfigure society, and judiciously manage the property rights of its citizens, writes Terence Corrigan.

The ANC’s January 8 statement – combined with its manifesto launch for the coming election – constitutes an opening of sorts of South Africa’s political year, providing some insight into the ruling party’s intentions for the foreseeable future.

But for those hoping to see the rays of the "new dawn" promised last year, it would have been disappointing.

South Africa clearly has its very profound difficulties. With an unemployment rate of over 27% on the strict definition (and close to 40% on the expanded definition), millions of South Africans are frozen out of even minimal opportunities for socio-economic advancement. Their prospects are long-term frustration.

READ: The people cannot eat manifestos

President Cyril Ramaphosa’s invocation of the need for economic inclusion was correct and well-taken. So was his recognition that without investment, domestic and foreign, this will not be possible.

But the January 8 statement offered scant reason for optimism.

It promised to aggressively target investment, working with its "social partners" to bring in R1.2tn over five years. It pledged to reduce the costs of doing business in South Africa and to make funding available to small enterprises. New economic frontiers would be opened up.

But whatever assurance these measures might engender is undercut by the statement’s contradictory commitments. Chief among these was the restatement of the ANC’s intention to implement a policy of expropriation without compensation. There is little that concerns investors more acutely than lack of certainty around the security of their investments. The mere debate around expropriation without compensation has inflicted damage on South Africa, and the active implementation of the policy stands, at a bare minimum, to induce a period of intense policy uncertainty.

Such an environment is unlikely to be conducive for investment.

Meanwhile, the ANC’s election manifesto recommends a change in the mandate of the Reserve Bank (secretary general Ace Magashule reiterated that it would be nationalised). On mining, a state company "will be strengthened to play a significant role in the industry". A regime of prescribed assets is to be introduced. Many South Africans – not just investors by any stretch of the imagination – will be watching the latter with trepidation. The prospect of people’s savings and pension funds being required to prop up the country’s cash-hungry state-owned enterprises is a matter of deep concern.   

Indeed, the statement and manifesto both lean heavily on the ability of the state to drive its agenda.

"We are building a developmental state that puts people first and has dedicated public servants who work diligently to improve the lives of the people," Ramaphosa said. While acknowledging the sub-optimal state of South African governance, it fails to go much beyond standard platitudes about dealing with corruption and broad promises of making government work together.

This may be sincerely intentioned, but a capable (let alone "developmental") state is unlikely unless the ANC and the government are willing to make a fundamental break with the root causes of some of the current pathologies, such as the politicisation of the civil service.

This has been a glaring problem at local government level, and has been recognised by government itself. The following extract from an official report in local government in 2009 is illustrative: "Assessments revealed that party political factionalism and polarisation of interests over the last few years, and the subsequent creation of new political alliances and elites, have indeed contributed to the progressive deterioration of municipal functionality. Evidence has been collected to dramatically illustrate how the political/administrative interface has resulted in factionalism on a scale that, in some areas, it is akin to a battle over access to state resources rather than any ideological or policy differences. The lack of values, principles or ethics in these cases indicates that there are officials and public representatives for whom public service is not a concern, but accruing wealth at the expense of poor communities is their priority."

A state that can struggle to distribute drivers’ licences, or to maintain roads and water systems is hardly an ideal candidate to reconfigure society, and judiciously manage the property rights of its citizens.

Together, this suggests more continuity than change: a continuity manifesting itself in both the problems and the policy responses.

As Dr Mark Mobius, then of Franklin Templeton Investments, said some years ago: "They’ve got to make South Africa a much more attractive place for investment… I’m not only talking about foreign investment. I’m talking about local investment."

And this is especially concerning considering that in 2018, the JSE experienced a net outflow of some R123bn. The ANC’s weekend announcements indicate that the ‘new dawn’ has not yet broken.

- Terence Corrigan is a project manager at the Institute of Race Relations (IRR). Readers are invited to take a stand with the IRR by sending an SMS to 32823 (SMSes cost R1, Ts and Cs apply).

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