South Africa’s macroeconomic policies have not worked, yet President Cyril Ramaphosa was mute on viable alternatives at the State of the Nation address. (Jairus Mmutle/GCIS)
In last week’s State of the Nation address, President Cyril Ramaphosa allowed himself to utter a few words that exposed the naivety of the politician and his office. The offending words were: “We all know that government does not create jobs. Business creates jobs.” Of course, these comments were consistent with the ANC’s economic strategy, but the politician should have recognised that there has always been a deliberate distinction between ANC economic policy and ANC rhetoric.
In January 1986, Anton Rupert addressed a fiery personal letter to then-president PW Botha, chastising him for the government’s failure to renounce apartheid policy. Rupert argues in the letter that the government’s continuous steadfastness on apartheid is pushing South Africa down a road of “both poverty and black control”.
Rupert explained how unemployment was the most common cause of black unhappiness, and how apartheid as a policy was a source of humiliation for Afrikaners, particularly members of the business sector, who had been forced to carry their heads in shame in international business meetings. Outside of South Africa, youngsters were learning that apartheid was analogous to Nazi Germany, which enraged Rupert.
In many respects, Rupert’s letter to Botha expressed the viewpoint of South Africa’s white economic elite: their fears of “black control”, their desire that the internationally unpopular apartheid regime be abandoned so that South Africa may “get back to business”. Business was not just lobbying for the end of apartheid, the government at the time had been slow to privatise. This was due in part to the economic environment, but also to the fact that, apart from the private sector, there were no political demands to privatise.
And when Botha failed to cross the Rubicon, the business sector lobbied harder for measures promoting international commerce. The new ANC administration would ultimately bear the brunt of that pressure.
For Valentine’s Day, Ramaphosa gifted the nation with a slight walk-back from his initial statement. Lamenting a discourse that asks “us” to choose between a developmental state and a vibrant private sector, the president’s retort is that this is a false dichotomy, since after all, the ANC’s 1992 Ready to Govern document “directs both growth and transformation through levers like competition policy, broad-based black economic empowerment provisions and employment equity laws, and by linking the award of various licences to universal service and empowerment obligations”.
However, if one wants to understand why the fury towards the president is misguided, the Ready to Govern report is not the most honest place to begin. Early ANC publications, such as African Claims, were influenced by the dominant worldwide concept on citizen rights, political rights, and civil liberties, which was influenced by the US’ Declaration of Independence and the UK’s Employment White Paper of 1944, as well as other sources.
As a consequence of these early papers, principles based mostly on Keynesian economics became further entrenched in ANC policy as time progressed. The Freedom Charter also called for the provision of universal social services by the government and the management of the nation’s productive resources by the federal government. Even though the first draft of the Reconstruction and Development Programme (RDP) drew on the social democratic roots of ANC policy thinking, by this point the ANC had begun to rapidly diverge from the ideas of a social democratic welfare state in favour of the dominant neoliberal policies promoted by the World Bank and the International Monetary Fund (IMF).
Gear (the Growth, Employment, and Redistribution strategy) represented a radical change away towards what is now ANC policy. Gear from 1996 was aligned with IMF thinking but not with the basics of the RDP text. There was a greater focus on fiscal restraint, and basic RDP components such as redistribution were eliminated as targets. Most importantly, the function of the state was shifted from revolutionary leadership to coordination. Economic transformation and restorative justice were no longer prioritised.
Unlike the RDP, which was produced collaboratively by the democratic movement’s social partners, the ANC’s changes to the RDP and subsequent Gear programme were not designed in collaboration with social partners. There were even accusations that the ANC leadership was not forthright about critical assumptions in the economic models used to generate policies during this ideological shift, and as a consequence, these models were not subjected to the rigour of social partners.
Union federation Cosatu and the South African Communist Party took exception to the contents of the Gear policy and the process of consultation. These tensions led to Nelson Mandela telling the alliance partners that, “We are convinced that this is the strategy that eventually will put our economy on a sound basis, which will make it internationally competitive. We have no hesitation about that and I want you to know that Gear is the fundamental policy of this organisation and we are not going to change it.”
This was 1996, and the ANC of the Freedom Charter was gone. The ANC had abandoned the social democratic principles which underpinned the political struggle.
None of these decisions are Ramaphosa’s. The president did not make the ANC what it is today, the party’s ideological position is as old as South African democracy. Ramaphosa did not convince the ANC to abandon principles of universality in the provisioning of public goods, only to rethink that decision when heavy investments in public goods were not yielding the social returns promised by international donors and funders.
Some have a problem with Ramaphosa’s statement because it does not honour the code of ANC presidential communication which is to avoid sending strong business-centric messages on political platforms, particularly the State of the Nation address. But the main problem with the statement is that it is exactly the type of statement that signals the growing ideological conflict within ANC policy. It used to be that the ANC president would attend Cosatu gatherings and chastise alliance partners for publicly disagreeing with the party, but today such an act would not fly.
After a quarter-decade of democratic governance, the South African state continues to encounter obstacles in altering society, including unemployment, inequality and poverty. The post-apartheid environment was difficult. South Africa’s economic growth had been declining since the late 1970s, and it had fallen below the pace of population increase by the mid-1980s. Population growth rates are now at 1.3%, with a pre-pandemic 2019 growth rate slightly around zero.
Compare that to two Africa giants who have both surpassed South Africa in the list of biggest economies in Africa. Nigeria, the largest, has a population growth rate of 2.5% while its 2019 growth rate was 2.2%. Egypt, Africa’s second largest economy and likely to be largest in the next few years, has a population growth rate of 1.9% and grew at a staggering 5.56% in 2019.
Government’s macroeconomic policies have not worked. The country is losing its economic position in the continent and losing its political position in the world. Talk of a capable (and large) state is meant to signal a move towards state-led Keynesian policies without committing to them.
Pipped: Egypt may claim top spot as Africa’s largest economy soon, growing by 5.56% in 2019. (KHALED DESOUKI/AFP via Getty Images)
When Francis Fukuyama visited South Africa in 2019, many attendees of his events were keen to hear his views on large states. Much to their disappointment, Fukuyama’s response was much more nuanced. The size of the state doesn’t matter, he offered, it’s the capability of the state that matters.
A state needs to be able to implement coherent policies. Aiming towards building a capable developmental state is not a policy position, it’s a lever for implementation. Government still needs a coherent ideological position to which policies must align.
There’s an argument that in the democratic transition, the ANC could not act freely as if there were no restrictions. It had to carefully navigate the divide between its left-wing political roots and a global context that favoured globalisation and contained states.
That moment has also passed. Neoliberalism is no longer in vogue. Yet, the ANC’s policies have not adjusted to fully reflect a change in thinking. Given how quickly the ANC changed tack in the early 1990s, it is surprising to see it stuck in an ideological quagmire, too scared to commit either way.
Perhaps the president’s great contribution to his party would be to pose that question to it. What does the ANC of 2022 stand for? What does it believe? What does it believe needs to be done to transform the lives of the vast majority of South Africans? If the ideological position of the ANC has shifted in the last two decades, what is it now?
To quote Fukuyama, “If you want economic growth, you have to pay attention to politics.” If the president wants to make an impact, he must start with obtaining a clearer mandate from his own party, so that when he communicates policy, it is not his fellow party members who contradict him.