The fight for portfolios between DA and ANC is much to do about nothing

South African citizens attend President Cyril Ramaphosa’s inauguration at the Union Buildings on June 19. South Africa is abuzz ahead of the Cabinet appointments. File picture: Itumeleng English Independent Newspapers

South African citizens attend President Cyril Ramaphosa’s inauguration at the Union Buildings on June 19. South Africa is abuzz ahead of the Cabinet appointments. File picture: Itumeleng English Independent Newspapers

Published Jul 1, 2024


WHEN we dig our heads in the sand away from the facts, the song Lie to me by Brook Benton calms our nerves, albeit falsely and only momentarily. Say It is more explicit in terms of the desire for good news. The lyrics read, “Say that you love me, even if you lie baby, that gives me some consolation.”

Social media is awash with what is strategic and important amid the choosing of South Africa’s Cabinet. The political stakes are high and portfolios are being allocated and the bickering is loud.

Which political party gets what and how much, and the monetary value and political clout of that portfolio, is the name of this new monopoly game. Who controls what.

An interesting guide is the size of money to be spent per cluster or by each individual department. For instance, in terms of the schematic below, the general public service takes a lion’s share of the budget. This is followed by education, then social protection, health, economic affairs and then others.

The ANC and DA are currently contesting who becomes the Minister of Trade and Industry, therefore, economic affairs.

According to reports, this portfolio was promised to the DA and then withdrawn. The DA is livid about this. But looking at the size of the budget allocation from the fiscus, there is trivia in economic affairs. It is half what education gets.

So why is the DA huffing and puffing when it is denied crumbs that are even smaller than the social protection portfolio? Herein lie the reality of our poverty of thought, design thinking and systems design. It is constrained by a false macro-economic framework that works on the basis of investment is a function of savings.

Obviously, we are not a nation that saves. With an unemployment rate so high, low wages, high costs of transport, food and accommodation that account for more than 70% of household expenditure, no blood can conceivably come out of such a stone.

So, we are advised by the International Monetary Fund that under such circumstances, one needs to open up one’s economy for foreign investments, borrow from the open market, and the SA Reserve Bank (SARB) should pursue inflation targeting to calm the markets.

This triple economic development strategy of opening up the economy, foreign borrowing and foreign direct investment and inflation targeting is a recipe for the financialisation of the economy and de-industrialisation.

Our development challenge requires at least gross fixed capital formation that sustains a level of a trillion rand a year, which is 25% of our gross domestic product (GDP).

Neither is this money available from savings, nor has it been allocated to the economic cluster, which is a beneficiary of a miserly R224 billion to undertake a trillion miracle. Many investment summits have been convened where announcements of the fund pledges have been made. The annual, or whatever interval the investment “jamboree” is, pledges fail to show in the gross fixed capital formation. The figure for the last 10 years has averaged below 1%.

In its heydays of 2002-2007, the gross fixed capital formation was growing at above 6% per annum and, as a ratio of the GDP, it remained at an average of 25%. The comparative number in the past 10 years is about 15%. So let us not deceive ourselves by notions of our desires, but face facts from those who measure.

The truth is the pledges are just a simple drawdown from inventories at best and, at worst, they just remain pledges that just resemble “Say it”. So, when the DA and the ANC squabble over the dry bone of the economic cluster and fail to focus on the rump of economic policy, it boggles the mind.

If the contesting parties started understanding that what constitutes our economic development is, in the first instance, the role of the Treasury and the SARB as active actors that have leverage to invest, this would be a worthwhile fight. They are more akin to adjudicating tax money like cats dividing cheese to allocate to mice.

They would have to relinquish the burden of employment creation from the Department of Labour, which does not by design of economics possess the required macro-economic instruments to lead an economy – these are the province of the Reserve Bank, Treasury, and trade and industry.

If they understood that we should focus on the pension funds, at R26 trillion, in order to address the development challenge, then that would be worth the fight. If they understood that developed nations borrow from their pension funds to finance their development and do not rely on miserly tax money or open markets, then that would be worth the fight.

It is time we focused on the real enemy to the development of South Africa. It is first an ill-informed macro-economic framework that focuses society on tax revenue as the main economic actor instead of focusing on the Treasury and SARB as the economic agents that should, like Japan, be under the direct institutional arrangements of the ministry of trade and industry for matters of economic development.

The fight for portfolios between the DA and ANC is much to do about nothing and indeed it is about “Lie to me” rather than the challenge of the economy in the service of social development.

Dr Pali Lehohla is a Professor of Practice at the University of Johannesburg, a Research Associate at Oxford University, a board member of Institute for Economic Justice at Wits and a distinguished alumnus of the University of Ghana. He is the former Statistician-General of South Africa