Unlike previous State of the Nation addresses, the president has presented real solutions to the current crisis, writes Vukani Mde.
Johannesburg - The economy and economic policy have taken centre stage as the ruling ANC attempts to arrest a slide in support that threatens to loosen its electoral grip on South Africa over the coming years.
It has become clear to the party, as it is to most observers, that South Africa’s economy has failed over the past 20 years to follow a more inclusive path, leaving millions of black South Africans mired in poverty despite state-led social support programmes aimed at alleviating the effects of persistent unemployment and poverty.
In addition, the inequalities inherited from apartheid have stubbornly remained and even increased by some measures, during 20 years of democracy.
It is now a South African cliché to remark on the “patience” of South Africans, meaning those previously subjugated by apartheid, as they wait for the quality of their lives to be changed by a government that has a delicate balance in trying to satisfy their aspirations while carefully managing an economy beset by structural limitations.
But the signs are already there that the limits of this legendary patience are close to being exhausted. While community-based protests are at least a decade-long phenomenon, their frequency and intensity has increased over the first five years of President Jacob Zuma’s government.
Their causes are complex and often vary from incident to incident, but bubbling under the surface in every one of them is growing frustration, even bitterness, over the slow pace of economic development.
Added to this is a worsening labour relations picture as organised workers increasingly refuse to listen to the mantra of wage restraint as income inequalities soar.
On the electoral front, the changing mood has led to at least two clear behavioural phenomena that, if unchecked, will spell disaster for the ANC sooner than later. The first is a declining level of participation in the electoral process. By the last count, only half of people who qualify cast a vote on May 7, and the ANC had the active consent of only 33 percent of adult South Africans.
Some 17 million adult South Africans chose not to participate in the process, either by not going to the polls (7 million) or not bothering to register in the first place (10 million). The overwhelming majority of these “abstaining” citizens come from South Africa’s economically marginalised black townships and rural areas; in other words, the place from which the ANC still draws the bulk of its support.
The second phenomenon to be observed is the growing willingness of ANC voters to switch support to new parties that share the ruling party’s history and political traditions but have broken away from it.
The Congress of the People could win more than 7 percent of the vote in 2009, less than a year after the party’s formation, because it could dip into the ANC’s existing electoral pool. The same was true of the Economic Freedom Fighters this year, who polled 6 percent despite many voters’ real unease with Julius Malema.
What is the ANC to do? The suggested blueprint has taken at least a couple of years to emerge, if not in the party’s actions then at least in the rhetoric of its policy documents and public statements. It wants a “radical” rewrite of the post-1994 economic deal, or so it says.
“As we enter the second phase of our transition from apartheid to a national democratic society, we have to embark on radical socio-economic transformation to push back the triple challenges (inequality, poverty and unemployment). Change will not come about without some far-reaching interventions. The economy takes centre stage in this programme,” Zuma said in his state of the nation address this week.
But the party still wants to balance this increased and more thoroughgoing structural transformation of the economy with higher levels of economic growth (at least 5 percent per annum by 2019).
“It remains our strong belief that the most effective weapon in the campaign against poverty is the creation of decent work, and that creating work requires faster economic growth. To achieve this, we will embark on various measures and interventions to jump-start the economy.”
Zuma’s speech may not inspire poetry, as many pundits have pointed out. But it was significant for the insight it gave into the ruling ANC’s thinking on the economy over the next term of government. In parts bold and in others downright cowardly, the speech, and the “measures” Zuma outlined in it, were the very embodiment of the ANC’s internal contradictions.
The ANC has identified three main causal factors for weak economic performance. The first is the global economic environment, whether that refers to the pace of the recovery in Europe and the US, the slowdown in China, or the emergence of alternative markets on the African continent. The second factor is domestic political conditions, meaning everything from frayed labour relations to social instability resulting from inequality, poverty and unemployment. The third is South Africa`’s energy shortages. The last two of these constraining factors are within the ambit of the government to influence, and towards this end Zuma laid out essentially a 10-point plan encompassing everything from energy investments, steps to bolster food security and tabling a new way of doing things in urban planning and local government. The most significant and interesting proposals were:
A renewed focus on income inequality. The social partners, Zuma said, will need to carry out renewed deliberation on the problem of wage inequality. This measure is obviously meant to defuse the social instability referred to earlier, and is particularly important in the face of a platinum mining strike that is now the longest in the country’s history.
For its part, the government will “investigate the possibility of a national minimum wage as one of the key mechanisms to reduce income inequality.”
In its reaction, Cosatu did not miss the fact that Zuma has committed the state to investigating “the possibility” of a statutory minimum wage, whereas the pre-election tripartite agreement which found its way into the party’s election manifesto was to investigate “the modalities” of implementing a minimum wage.
It’s unlikely that the change of wording in Zuma’s speech is the result of mere carelessness. Questions will therefore remain about the ANC’s real commitment to the national minimum wage, or for that matter any other far reaching measures to reduce income inequality.
The president also announced he would henceforth lead implementation of the mining industry framework agreement entered into by the industry, labour and government. Among other things, the agreement binds the industry to making certain measurable improvements to the living and working conditions of their workforce, and becoming a positive contributor to the welfare of mining communities, all of which is to be achieved by the end of this year. Given the state of mining towns in South Africa and the levels of bitterness among mining workers, including those not currently striking, this also looks unlikely.
Zuma also promised to take measures to improve engagement and co-operation with the private sector, to improve levels of private investment in the economy.
Growing public sector investment has so far failed in its aim of “crowding in” private sector investment, with Cosatu estimating that South African businesses are sitting on over R1.2 trillion of surplus capital that could be used to expand operations, start new businesses, train and upskill workforces, and create new jobs.
To meet industry halfway, the state has committed to continuing and expanding incentive schemes for labour intensive industries, particularly clothing and textiles, footwear, leather and the auto sector.
The state is also promising a more co-ordinated and determined response to the country’s energy crisis. While paying lip service to the importance of renewable energy sources and diversifying the country’s energy mix to reduce vulnerability, it is clear that most investment will still go to gas, coal and nuclear power. Just about the only big-ticket renewable energy project the state is willing to put its own money behind is the ambitious Grand Inga Hydro Power Project in the DRC which has the potential to provide most of Southern Africa’s electricity needs and accelerate regional integration.
Perhaps the most interesting part of the speech was the promise to unveil a “new deal” for South Africa’s urban spaces by the end of next month.
One of the most significant lingering constraints on the economy is the inherited spatial geography of apartheid, which banished the working class population to barren spaces far removed from the centre of industrial activity and discouraged urban densification and its attendant efficient use of infrastructure and resources.
“Our government`’s Integrated Urban Development Framework will be finalised by 30 July 2014. It will provide a new deal for South African cities and towns. It will set out a policy framework on how the urban system in South Africa can be reorganised so that cities and towns can become inclusive, resource-efficient and good places to live in over the next 20 to 30 years,” Zuma promised.
This is the one area in which successive ANC governments have done the least to effect meaningful change. If anything, the democratic state’s human settlement plans of the past 20 years have entrenched the spatial legacy of apartheid. It will be interesting to see what the state’s new framework proposes.
Other promises included expanding and accelerating transformation initiatives such as BEE and employment equity, expanding the divisive youth employment incentive, and new projects as part of the state’s ongoing trillion rand infrastructure build programme.
Twice this year, when delivering supposedly major policy speeches, Zuma left much to be desired. February’s state of the nation speech and his inauguration last month were long on promise and rhetoric, but very short on detail. But on Tuesday the detail was there for all to assess.
We know what Zuma and the party he leads want to achieve by 2019 and beyond. We know how they propose to get there. We can, and should, disagree about the various proposed measures, but we can no longer accuse them of being vague. Of course the “how to”’ and “by when” will emerge more clearly as budgets are deliberated and allocated and the full picture will probably emerge later this year, when new Finance Minister Nhlanhla Nene delivers his first medium-term budget policy statement.