Backstabbers limit Ramaphosa

 

 

Elections can be seismic events — look at Britain now. South Africa’s in 2019 could have been pivotal, but with the hindsight of six months, it does not appear to have had much of an effect on the political economy, positive or negative.

The May poll could have propelled the Economic Freedom Fighters towards a kingmaker role, at least in Gauteng — Africa’s fifth biggest economy (if it was a country). But the ANC hung on to power. And at national level, 11% was a disappointment to EFF leader Julius Malema — not the exponential growth that similar ultra-populist/nationalist parties have achieved in other democracies around the world.

That particular political risk has, at least, receded this year.

For the first time in five national and provincial elections since 2009, ANC support went up, arresting the party’s decline. This was because of Ramaphosa’s leadership. As a result, he has never been more powerful and probably never will be. But he has failed to seize the moment. The greater risk now is that his power will begin to wane and his government will get stuck in the weeds because he has not been able to impose his power and address the most politically awkward decisions.

As a result, despite the steady progress that Ramaphosa has made in rebuilding state institutions and restoring a lost normative order in public life, the economy has not yet revived.

But we should not lose sight of the bigger picture. We must remember that exactly two years ago South Africa stood on the edge of different precipice. In December 2017, Zuma was still in power and the ANC had to choose between two candidates to succeed him as ANC president — reform-minded Ramaphosa and Nkosazama Dlamini-Zuma, who headed a “coalition of scoundrels and nationalists”. It was the ultimate fork in the roads. If South Africa, in time, finds that it is well on the road to recovery, the upturn in fortunes will be traced back to the decision to elect Ramaphosa.

Since then, state capture has been halted and institutional rebuilding has commenced in earnest. But, as the details of the extent and depth of the state capture project have emerged, through the Zondo inquiry and elsewhere, it has become apparent that it will take at least as long to recover from the decade of degradation of the Zuma years.

Unjustly, it is Ramaphosa who not only must lead the turnaround strategy for SA Inc, but he must also absorb the costs of Zuma’s profligacy and graft. The fiscal crisis, for example, is largely as a result of the waste and excess of Zuma’s presidency. But it is Ramaphosa who will carry the can politically — both in terms of the delicate negotiations that must take place with public sector unions if the public sector wage bill is to be substantively reduced in time for South Africa to avoid a full downgrade to sub-investment grade (“junk”) status in March 2020, after the budget on February 26, and the bleak economic consequences if that does happen.

Time is very short: in rugby terms, South Africa is in injury time and needs a Joel Stransky to make a miraculous drop-kick between the posts. So, behind-the-scenes negotiations with the unions will have to yield concrete results if there isn’t to be a full-on confrontation in the autumn or even earlier.

In terms of investor sentiment — at least internationally — this is the big ticket item: public sector wages and fiscal consolidation. Until recently, investors wanted action on Eskom, but now that the Eskom roadmap has been published, concerns have switched to the fiscal crisis. The question of whether public sector unions can be at least “handled”, if not stared down, is seen as a litmus test of whether the Ramaphosa administration is tough enough.

Given his social democratic and pro-union instincts, this presents a test of Ramaphosa’s judgment and negotiating skills. It is clear that he has managed to persuade union federation Cosatu that some level of re-structuring — and even privatisation — is necessary, which suggests he knows he must not “waste the crisis”.

In this regard, the SAA strike represented an appetiser for the full meal that awaits with the Eskom unbundling. With SAA, on balance, the government “won”. The unions backed down when they realised that they would not win any concessions and risked losing everything.

The government needs to muster the same level of resolve with Eskom. It will be a much harsher test. The government could afford to see the airline grounded or even close, but no one can afford to do without electricity.

A foreign correspondent asked me why I think it is that most political analysts are positive about Ramaphosa’s performance, but market analysts and international agency observers are far less sanguine.

This is the reason: if an observer had drawn up a political “to do” list when Ramaphosa ousted Zuma in February last year, then there would be far more ticks than crosses against the various items now.

The problem is that all of the positive steps that have been taken are all necessary but not sufficient to ensure economic revival. The South African Revenue Service and the National Prosecuting Authority, to cite the two most important and obvious state institutions, are being rebuilt. But there is lag-time before tax collection increases and the perpetrators of state capture are arrested.

Part of Ramaphosa’s problem is that, whereas the overlapping crises in the state-owned enterprises and in the fiscus require the government to find a way of reducing the public sector wage bill, his party is unable to muster the intellectual will to have a grown-up conversation about the deeper and longer-term strategic questions at stake.

Fifteen or 20 years ago, the ANC would have embarked on a detailed, if convoluted, internal debate about the relationship between the state and the market, about the balance of forces in society and in the economy, and about the wisdom or otherwise of strategic alliances with, for example, “industrial capital”. But now, the debate in the national executive committee of the ANC is not between those who are ideologically better disposed towards capital and private sector participation in the economy, and those who harbour suspicion towards privatisation and unrequited aspirations for the role of the “developmental state”. Instead, it is a contest between those who are smart and realistic enough to know that something has to give now and the state will have to make concessions, and those who resist structural change not because of ideological concern but because they wish to hold on to the rent-seeking opportunities that state-ownership provides.

There should be a debate about government debt. Citing Portugal, some progressive economists argue that cuts in the public sector wage bill or other reductions in government spending will be counter-productive and will lead not only to more austerity but will further constrain growth prospects. Yet there is another progressive position that argues that the problem is that South Africa’s borrowing is for the wrong things: servicing debt and unproductive parts of the economy, such as Eskom, SAA and incompetent or corrupt parts of the public service.

Ramaphosa is denied the opportunity for such deliberation in the ANC, which weakens his and his Cabinet’s hand because the decision is deferred or muddled through without sufficient resolution, which enables his opponents of reform to continue to distract and obstruct.

The lack of serious strategic reflection in the ruling party is a reflection of the balance of forces in the ANC. It may have recovered its electoral prowess and, now, with the collapse of coalition governments at city level, power in Johannesburg and elsewhere. But it has not recovered its senses or capability to lead society.

The weakness of the ANC hampers those who do wish to have such debates and who, because they are in government, must navigate a way forward in terms of policy-making and executive decisions. I am thinking of the trade and industry minister, Ebrahim Patel, and the deputy finance minister, David Masondo.

In Mbeki’s time, Joel Netshitenzhe had the authority to lead such debates — both inside the ANC and from his position as head of the president’s policy unit. Ramaphosa has no such intellectual enforcer and no political henchman to assert his power and impose his will.

The social, economic and fiscal crisis that confronts South Africa requires a high degree of urgency and boldness in decision-making in government. But Ramaphosa’s decision-making has a different “tempo”; he moves at a more incremental, cautious pace. He likes to build consensus first, where he can. And, because of his wretched, divided party, he has to constantly look over his shoulder to make sure that the “fight-backers” are not going to scupper his reforms.

Despite the political gains of the past year, it is this gap that is of greatest concern: that despite all the positives of the Ramaphosa presidency, he may yet fail because he can’t drive his reform agenda fast enough to ward off the deepening fiscal crisis.

Richard Calland is an associate professor in public law at the University of Cape Town and a partner in the political risk consultancy, The Paternoster Group

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Richard Calland
Richard Calland is an associate professor in public law at the University of Cape Town and a founding partner of the Paternoster Group.

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