Source: News 24

Carol Paton | Ramaphosa may have new energy, but he’s set himself up to fail. Here’s why

President Cyril Ramaphosa during his  State of the Nation Address.

President Cyril Ramaphosa during his State of the Nation Address.

Supplied by GCIS

President Cyril Ramaphosa has been feeling the pressure to deliver as four years in the hot seat has passed, but a failure to fix the state will ultimately derail him, writes Carol Paton.

President Cyril Ramaphosa is at last feeling the heat. Exhortations from business and society at large to seize the moment – for the past four years – have had no impact, as Ramaphosa and his key acolytes and advisors played the long game, consulting, waiting, consulting some more. 

Now a true horror story is upon them. Unemployment, on the broad definition, is at 44%. The IMF projects that economic growth for the medium-term will hardly be higher than population growth, which means people will continue to get poorer. Economic growth will also be lower than the interest rate government pays to fund the deficit. That means the debt burden will continue to grow and unless major cuts are made to spending, could overwhelm the country.

Even more urgently, ANC electoral support has fallen below 50% and the true extent of the weakness of the state and his ability to steer it, has been laid bare by the nightmare that manifested during the eight days of July. 

Ramaphosa’s response to all of this in the State of the Nation Address was to assure us that he is on the job and that the micro-economic structural reforms the economy needs are at last moving forward. There were most certainly some good and meaningful announcements. And the assertion of the private sector as the engine of employment – whether you like or not, Ramaphosa told hecklers – was a critical moment.

Under Ramaphosa, the reform of the electricity supply industry is gaining unstoppable momentum. Amendments to the Electricity Regulation Act that make provision for the licensing of the independent transmission operator were published. The Act also sets out rules for private players to buy and sell electricity, placing the end of the Eskom monopoly in sight. 

The broadband spectrum auction – the first in 17 years – will proceed next month. Private participation in rail and ports is on the way. The critical skills list to enable skilled in-migration has been published and one of SA’s best directors-general, Mvuso Msimang, has been asked to look at the visa regime. 

The plan to install an anti-red tape tsar in Ramaphosa’s own office is a great one, since even those departments whose mandate it is to facilitate and promote investments are red tape enthusiasts and like to make investment harder rather than easier. 

But, unfortunately, despite this progress, Ramaphosa’s prospects of success are lower than the prospects of failure.

If the measure of success is to get the economy growing at a rate that improves the lot of SA’s people – let’s say 3% – then the prospects of failure are large indeed. 

The first reason is that the reforms will simply take too long to put in place. In its latest annual review of SA, the IMF said that a swift reform process could lift growth to 2.9% over the medium term. But this being unlikely, it forecast an average of 1.4% for the medium term after 2022.

The second reason why Ramaphosa will fail is because he is not really committed to fixing the state. That government is failing on so many levels – from electricity supply to building toilets at schools and managing critical water resources and infrastructure – is common cause. That municipalities are dysfunctional, bankrupt, corrupt and inept is also common cause. So is it that the rule of law, in a growing number of situations and places, is increasingly tenuous and can’t be enforced.

More than anything else, to invest, business needs these basic things to work

But for government to work, Ramaphosa must do two things: clean out the layers of unproductive and politically hostile civil servants that are weighing it down; and put an end to cadre deployment.

It is common practice that new heads of department in government find a swathe of uncooperative and ill-equipped staff already entrenched. Rather than rationalise the organisational structure, these people – many of whom are politically hostile to Ramaphosa – are quietly ignored and others employed around them to do the work. The result has been a large accumulation of unproductive management from whom little is expected. 

It is also common cause, having watched the deterioration of the state-owned companies and government departments under the Jacob Zuma administration, that the ANC’s deployment policy has wreaked havoc on the capacity of all public institutions.

It is worth noting that ANC deployment committees exist at all levels of government. This is one of the principal reasons why municipalities are broken: regional executive ANC deployment committees decide on all key municipal appointments, and nothing moves forward at council level without their pronouncement. 

But we know that Ramaphosa is wedded to the policy and the practice and – no matter the heartfelt urging by Acting Judge President Raymond Zondo when he appeared before him at the Zondo Commission to abandon it – wants to keep it in place. 

The third reason he will fail is that he is not prepared to fix his Cabinet. Too many Cabinet ministers operate on their own set of priorities and interests. It was telling that amendments to the Electricity Regulation Act, announced in the speech, were signed by Mineral Resources and Energy Minister Gwede Mantashe on the day of the speech itself, indicating that Ramaphosa had to engage in another round of arm-twisting to get it done. 

Ramaphosa, I am sure, has reasons why he believes he can’t act on these critically important things. We are told all the time of the immense “political constraints” he faces and why he can’t move faster, as ANC unity must be preserved and he cannot afford to provoke a rebellion. 

Those constraints may well be as real and tight as he believes them to be. But the consequence of that is that the economy will not escape its low-growth trap as long as Ramaphosa is in power. The state will not deliver on its side of the social contract, business will not invest and the economy will not grow.