President Cyril Ramaphosa (Delwyn Verasamy)
NEWS ANALYSIS
In his poem Notebook on the Return to the Native Land author and politician Aimé Césaire warns against the dangers of “assuming the sterile attitude of a spectator” in the face of real challenges that require urgent attention.
South Africa’s sixth administration should heed Césaire’s call to not hide behind masks and avoid becoming complacent in the face of the urgent action that is required to change the country’s economic trajectory.
It’s a challenging time for the ANC-led government as it seeks to stir confidence both locally and globally about South Africa’s ability to turn things around.
Recent data that showed the economy has shrunk 3.2% in the first quarter of 2019 leaves much to be desired as President Cyril Ramaphosa seeks to reassure the nation and investors that the tools his government will use to carve a path of progress for the country are the correct ones to use.
The sharp contraction was much higher than the 1.5% that had been predicted by economists. The Reserve Bank singled out the country’s frequent power cuts as the main contributor to South Africa’s economic woes. Data showed that manufacturing was also a large contributor to the decline, decreasing by 8.8% and contributing a negative 1.1% to the shrinking economy.
Siya Biniza, director at think tank Political Economy Southern Africa, says what the country needs are sound political and macroeconomic policies that will reform the withering economy.
“There’s no real path without a government stimulus idea that focuses on infrastructure,” he says. “The question then becomes where is the money going to come from and, secondly, how do we organise so that the money is spent efficiently towards infrastructure and improves the life of the average South African.”
The recent spat between high-level members of the governing ANC about the mandate of the Reserve Bank, and the uncertainty about renewed threats of United States-imposed tariffs on China, saw the rand plunge 5% in early June, reaching a high of R15.10 against the dollar. The fallout from these incidents did little to spark confidence in the country’s economic recovery and policy certainty.
South Africa is emerging from nearly a decade of corruption scandals, overspending, rising government debt and policy uncertainty under the previous administration led by Jacob Zuma.
Political analyst Ralph Mathekga says the road to recovery will take a fair amount of patience, adding that “extraordinary measures” need to be implemented before economic gains are seen.
“We need more robust plans that will deal with issues on an immediate basis. The worst-case scenario will be a sense of business as usual. The best-case scenario [will be if] we see a new sense of urgency on the side of government when it comes to how to deal with the economy,” Mathekga says.
Although it kept the country’s credit rating at investment grade in April, ratings agency Moody’s has cited the weak state of the country’s state-owned enterprises (SOEs) as a possible risk factor in insulating the government’s capacity to “absorb shocks or use fiscus stimulus”.
The reform and management of the country’s SOEs, particularly Eskom and SAA, should be at the top of the government’s agenda. Both enterprises are sinking in combined debt of nearly R500-million and have in recent months seen the resignation of their chief executives, who both cited, among other factors, a lack of political support, as well as political interference.
Political analyst Tinyiko Maluleke says once decisive action is taken against the high unemployment levels, slow economic growth and the struggling SOEs, then the path to recovery will pay off handsomely.
“We need to make South Africa marketable in order to boost confidence. Not just investor confidence in terms of foreign direct investment but also local, internal and regional confidence,” he says.
Césaire wrote: “Life is not a spectacle, a sea of miseries is not a proscenium, a man screaming is not a dancing bear.”
Césaire would want bold action from Ramaphosa.
Thando Maeko is an Adamela Trust business reporter at the Mail & Guardian