The immediate future of the SA economy is what will determine whether we remain a stable democracy or go on the skids, says Max du Preez.
It’s the economy, stupid. This famous phrase was coined by strategist James Carville during Bill Clinton’s presidential campaign against George W Bush in 1992. Carville put it on a poster in the Clinton campaign office to remind staff what the campaign should be focused on. Clinton won.
I wish someone would put up a sign with those words in the Union Buildings, Parliament and Luthuli House – and, to make sure, at Nkandla. All the occupants of these buildings should know that the immediate future of the South African economy is what will determine whether the country remains a stable democracy or goes on the skids.
Rhetoric, promises, threats or mobilising cheering commandos on prickly issues to divert attention simply don’t matter any longer. The time for posturing and ideological bickering is over.
South Africa is hovering on the edge of a recession at a time that demands for better pay, more jobs, better lives, better services and a more equal society have reached a crescendo. We needed our gross domestic product growth to be in the region of 6 percent or higher to be able to deal with this. Instead, growth of less than 2 percent this year and less than 3 percent next year is predicted.
The more than 70 000 platinum workers who had been on strike since January 23 have lost R10 billion in wages, and the owners of the mines have lost more than R22bn in revenue. To our fairly fragile economy that is a blow to the stomach.
The Association of Mineworkers and Construction Union (Amcu) held out for more than four months and got close to what they initially demanded. This is likely to serve as inspiration to other unions, like the National Union of Metalworkers of SA (Numsa), to become more militant in their demands.
We are likely to see more strikes before the end of the year.
And last week, the prestigious rating agency Standard & Poor’s downgraded South Africa’s credit rating, with Fitch Ratings revising its outlook on the country from stable to negative. The other big rating agency, Moody’s, is also expected to downgrade its rating of South Africa in the coming months.
This is seriously bad news for potential investors and a further blow to our growth potential. It will make it harder and more expensive for the country to borrow money overseas – and we need that money to finance massive infrastructure projects, our best existing plan for job creation and poverty alleviation.
Confidence and trust in the economy are what are needed most now, internally as well as externally.
A firm and credible government decision to be more austere and to contain the growth of debt would be a good start.
But most importantly, the government should show the world and the private sector that it has a clear idea and a workable plan to deal with weak growth, labour instability, unemployment and low skills levels.
Yes, of course there is such a plan, appropriately called the National Development Plan (NDP).
And yes, it is actually the official blueprint of the government and the governing party, and has been for some time.
But it has become like a ghost – we hear a lot about it, but we see nothing.
Which brings me to my point: the problem lies in Luthuli House, and it’s a political problem. A leadership problem.
Immediately after the ANC accepted the NDP at its congress in Mangaung in December 2012, the SACP and Cosatu protested that they found substantial sections of the plan unacceptable.
It was a “neo-liberal” plan; it was “anti-worker” and “anti-poor”; it was a “DA cut and paste”.
Eighteen months later, these differences in the Tripartite Alliance have not been resolved and there is no visible evidence that any part of the plan is ready for implementation. What’s the use of an economic blueprint if it’s gathering dust on a shelf?
President Jacob Zuma is an African nationalist and a traditionalist. I have never seen any evidence that he has his own clear views on economic policy.
The innovators in the cabinet, the social democrats, are mostly from the progressive faction. But the cabinet is heavily loaded with senior communists, because Zuma needs them for his own political survival. The result is deadlock. If the NDP needs to be renegotiated, it needs to be done very soon. More mixed signals will further undermine confidence in our economy. Implementation should start now.
The other poster Carville put up in the Clinton campaign office read: “Change vs more of the same”.
We need that to go up in our corridors of power too. More of the same double talk, policy confusion and wasting of opportunities and resources can only take us down a slippery slope to instability.