Odds stacked against Cyril’s stimulus offer
On September 21, President Cyril Ramaphosa announced a stimulus package to resuscitate South Africa’s ailing economy. Its major components are infrastructure spending to drive growth, regulatory reform including visa regulations to attract scarce skills and increase tourism, expanding mobile broadband spectrum to reduce prices and position South Africa as a key player in the fourth industrial revolution and reformulating the mining charter. These silver bullets appear seductively pragmatic and reasonable and have been peddled as “low-hanging fruit”.
But this is less of a stimulus package and more of a “recovery and reprioritisation” initiative.
A stimulus package would include a combination of subsidies and industrial incentives, the declaration of specialised economic and export processing zones, significant tax reforms with tax breaks for special manufacturing and industrial activities and low- and middle-income earners coupled to moderate tax increases for the very wealthy and corporates, introducing a policy of import substitution while stabilising currency volatility and rand value to protect export earnings, the reimposition of moderated foreign exchange controls as well as financial sector reform, and some welfare extensions through grants (potentially a basic income grant).
What was announced is therefore not a stimulus package.
It cannot be called a recovery and stabilisation package because doing so would be a tacit admission that stabilisation is required — destabilisation was wrought by the preceding ANC administration, of which Ramaphosa was a part.
There is very little that is new in this menu of offerings. Remember former president Thabo Mbeki’s joint initiative for priority skills acquisition and accelerated and shared growth initiative for South Africa package, followed by Ebrahim Patel’s 2010 New Growth Path, the 2012 National Development Plan (NDP) and former president Jacob Zuma’s 2015 Nine Point Plan? The government appears excellent at generating schemes to purportedly expand the economy and create jobs, but these schemes perpetually fail and new ones are created as rapidly as the old ones fail.
The issue that needs confronting is: Why do they fail?
An important part of the explanation is the governance failure of adaptive autonomy. The term “adaptive autonomy” comes from information technology and computing, and means that the dynamic of code, hardware, software and design interact with and adapt to each other and the environment to achieve a specific purpose.
Transferred to the domain of public governance, adaptive autonomy means that politics, policy, budgets, public and private institutions and people, though they have their specific modes of functioning, need to be calibrated, regulated and aligned towards addressing societal challenges. Although there is a connected interdependence between them, each needs to follow its own logic.
The point of intersection between each sector’s logic is the optimal zone for societal advancement. The organic unity of the individual elements that have their own operational and development modes combine to form a functional and coherent yet complex unit. Adaptive autonomy in the context of democratic political and public governance requires bureaucratic power, development policy and democratic praxis to interact and align with appropriate policy and public service practice to be able to execute solutions for society’s challenges.
South Africa is famous for the trite but meaningless phrase “great policy, poor implementation”. The reality, though, is that, if policy is unimplemented or unimplementable, then that policy is incompatible with the ensemble of infrastructure (hardware) required to execute it. This may be because either one or other part of the system is misaligned and nonadaptive, or lagging behind in its development and autonomy. These variables undermine overall system functionality.
South Africa is bedevilled by a flawed political-administrative interface. Chapter 13 of the NDP identifies this as a major challenge to policy-making and implementation. Predictably, recommendations made by the NDP to remedy this have been ignored. In effect, poor politics misaligned to societal goals trumps policy management and administrative process, which leads to unresponsive budgets and a lack of the requisite technical competencies for effective public sector performance.
Part of the flawed interface is a direct consequence of South Africa’s transition to democracy. The fundamental restructuring of the public service and the realignment of its values consistent with democratic governance necessitated political dominance at the time of the transition.
So, although the public service has been transformed, the legacy of politics and politicians dictating to public service managers and administrators has continued inappropriately in the context of the post-transition developmental state. Frequently, public servants have also behaved corruptly on their own or on the instructions of their political principals.
There is therefore a continued mismatch between the conduct of politicians and the general system requirements for effective administration, which has led to continuing dysfunction. This is exacerbated by an army of public servants who are unenthusiastic and immune from effective supervision. This extends to political principals who wilfully approach oversight and accountability functions as joy rides and tours rather than corrective and redemptive action.
This political-administrative interface is skewed and compromised at all tiers by meddling politicians who blur the line between political mandate and oversight, and cross over into overt interference. When public servants as agents of their political principals interpret the political mandates of their principals as their own, the problem is compounded.
This leads to obsequious compliance, especially in instances when the legitimate political mandate is distorted by unscrupulous politicians, culminating in either goal displacement, maladministration or malfeasance. In other words, what politicians and public servants do and what gets done are not necessarily what society needs or wants.
A flawed cadre deployment policy by all governing parties at all levels, coupled with weak institutions caused by poorly understood regulatory frameworks, a lack of regulatory enforcement and the debilitating complexity of regulation disempowers and undermines appointed officials from establishing their professional autonomy and performing optimally.
This institutional instability and societal decline is not solely the result of a compromised political and public sector. The private sector has contributed to this malaise with its myopic short-term profit motive. Its inability to moderate shareholder value and excessive executive pay with societal needs has hindered its adaptation to the requirements of a stable and integrated society.
There are creative ways in which the private sector can demonstrate adaptability and retain its autonomy: by engaging in social enterprise, developing mutually beneficial niche markets and avoiding collusive and corrupt business practices while retaining profitability and balancing it with sustainability.
Ramaphosa’s stimulus package must be located within this environment. It faces the challenge of public servants demonstrating fidelity to their actual jobs, prudence from otherwise meddlesome politicians and a private sector that comes to the party.
It also needs a capable state and proper government, which require the retention, recruitment and return of technocratic expertise for the execution of policies and programmes. This pursuit depends on a stable governing party, and not one whose internal fractiousness infects the societal sphere and all aspects of public governance.
Ramaphosa’s stimulus is reactive rather than adaptive. It is ostensibly led by an economic development department with a less-than-enviable track record of achievement. A sudden turnaround in the 10 months before the next election appears a dim prospect despite the pious declarations that this time things will be different.
This stabilisation or stimulus package is consequently clichéd, a papering over of the cracks. It is not necessarily policy. It lacks the preconditions of consensus, commitment, coherence and capability as anchors for policy execution.
Ivor Sarakinsky is the academic director of the Wits school of governance. Ebrahim Fakir is a part-time lecturer at the school and director of programmes at the Auwal Socio-Economic Research Institute