‘For a country such as ours, which was already facing an unemployment crisis and weak economic growth, difficult decisions and difficult days lie ahead.’ So wrote President Cyril Ramaphosa, communicating his thoughts about future holds for South Africa’s economy and for those who depend on it.
South Africa would, he added, need to be ‘realistic’ in assessing its future. This is a correct and mature response. All indications are that 2020 will see South Africa’s economy decimated – literally, since decimation means the destruction of one tenth, which may well be the scale of GDP shrinkage. Unemployment will escalate, with some predictions that it could reach 50%.
The president is right that businesspeople – those who have survived the ruin of what may well have been the work of a lifetime – will face difficult decisions. Retrenching employees is hardly something that is done cheerfully (the president would know, as he was in the news towards the end of 2019 for having cut jobs at his Badplaas farm in the wake of a livestock disease).
But hovering over these numerous individual decisions are larger ones. Businesses function within the context created by factors outside their control. Some of these are perhaps beyond the control of anyone within their societies – economic or political crises in export markets, natural disasters and so on – but many are.
As the president points to the tough decisions that await, South Africa will keenly be looking to the decisions that he and his administration will make.
These will be about a great deal more than immediate public health challenges. The crisis brought by Covid-19 and the lockdown of the economy represent merely another burden on an already stressed and lethargic economy. Economic growth has never really picked up after the global financial crisis; and under President Ramaphosa, it has been dismal – 0.8% in 2018 and 0.2% in 2019.
Key to these pre-existing problems were decisions made by the government and the African National Congress. Part of this was its tolerance of venality in government – the avarice and corruption that has acquired the monikers of ‘looting’ and ‘state capture’.
But equally importantly, if not more so, have been the push of policy. The most obvious example has been the steady ratcheting up of pressure on property rights. Multiple attempted encroachments marked the Zuma years, including a proposal to nationalise all farmland. Under President Ramaphosa, no policy item has been pursued with as much energy as the drive for expropriation without compensation (EWC). Not only has this done much to dissuade potential investors (Business leadership CEO Busi Mavuso accurately and crisply said that ‘nobody makes investments in assets they can’t trust will still be theirs in future’) but it has produced the first serious threat to the country’s Bill of Rights. In the latter, a dreadful precedent has been set.
Less remarked on, but equally serious has been the extension of racial policy. Proposals for state-imposed racial employment requirements (the state intending to be ‘very harsh’ on employers) during an unemployment crisis, and the recent distribution of Covid-19 relief according to Broad-Based Black Economic Empowerment (B-BBEE) status during a crisis that threatened the economy as a whole, demonstrate just how much of an ideological fixation this is.
On neither of these is debate evidently to be entertained. BEE, says President Ramaphosa, is ‘here to stay’. The decisions have thus been taken, and the attendant damage is predictable.
Meanwhile, the president has said that the post-Covid-19 recovery (if there will be such a thing) will hinge on the state. But there is little to suggest that the state in South Africa is remotely capable of managing such a rehabilitation and development programme. President Ramaphosa himself has previously written of the imperative of creating a ‘capable state’, so this is something of which he is clearly aware.
Yet on one of the central issues, the deliberate politicisation of the state through the practice of ‘cadre deployment’, there is also to be no change. In other words, a decision to stick with a damaging format.
Minister of Cooperative Governance and Traditional Affairs Nkosazana Dlamini-Zuma helpfully told a recent party meeting that governance at local level needed to improve: ‘We need a new attitude on how we deploy our members to the local sphere of government. Cadre deployment is good but it must be done properly. All those deployed must possess the required skills and capacity to do the job.’
South Africa has heard this before. Yet that cadre deployment is counter-constitutional and damaging, and remain so even if skills were plentiful. In reality, it has wrought untold damage on governance. It cannot be ‘done better’. What South Africa needs is a capable, ethical and professional civil service. Yet, the choice has been against this.
This year, the economy stands to decline by 7%, although even that might be optimistic. President Ramaphosa is correct that decisions will be decisive in the coming months. Indeed, they have been decisive in years past. Whether these were ‘difficult’ is hard to say – but they have followed a fairly consistent pattern and have not served the country well.
Written by Terence Corrigan, a project manager at the Institute of Race Relations. Readers are invited to join the IRR by sending an SMS to 32823 (SMSes cost R1, Ts and Cs apply).