President Cyril Ramaphosa. File picture: Siphiwe Sibeko/ Reuters.
President Cyril Ramaphosa. File picture: Siphiwe Sibeko/ Reuters.

Cyril Ramaphosa's economic dilemma

By Terence Corrigan Time of article published Aug 27, 2019

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Even by the standards of political idiosyncrasy that South Africa can exhibit, President Cyril Ramaphosa’s remarks to an assembly of the ANC Women’s League demonstrated a tilt to the bizarre. 

“We will,” he declared, “turn our economy around, we will turn it around whether people like it or not.”

One can’t help but think it’s one of those comments that encapsulates rather more than the speaker intended it to. It’s a tacit admission that the country is in deep and serious trouble. 

That at least is clear. As Ramaphosa was pledging an economic turnaround, foreign bondholders were disposing of South African bonds to the tune of some R2 billion a day. The rand languished below 15 to the dollar.

And the downgrading of South Africa’s credit rating to junk by Moody’s seemed pretty much to have become a certainty.

Well, we could do with a turnaround. And just why the president would imagine that the public might not like it, might approach it in the manner of a petulant child being forced to take a cold bath, is hard to fathom.

Something that most of us get to learn as we grow up, even those with the advantages of status and material prosperity is that we don’t always get what we want - whether it’s a new PlayStation, a Maserati, or tragically in the case of millions of South Africans, a modestly-paying job.

And maybe therein lies the problem with the president’s sentiments.

Nothing will turn this around, but large doses of investment. Local investment, foreign investment. Yet we’re seeing just the opposite.

Fixed capital formation in June was down 3.2% year on year. Manufacturing, supposedly our future, is being hit particularly hard.

The tragedy is that despite the still considerable attraction that South Africa might hold to investors, its economy is trapped behind barriers that are in many respects self-constructed.

Last month, Ramaphosa said that to get the economy moving, “we will need to make tough choices on everything from labour legislation and SOEs to policies on the NHI, the national minimum wage and the Reserve Bank”. 

Well, a tough choice does not imply a wise decision, and those in the offing generally yawn towards immediate political expediency.

Tough only in the sense of deferring what might be unpopular within his party. SOEs? Perish the very thought of privatisation.

Eskom may be the largest threat to South Africa as a growing concern, but there is scant sense of how to deal with it. Except another bailout and the whirligig of executives. The Reserve Bank? Nationalise it. Labour legislation? A sacred cow.

Meanwhile, the country’s fetid policy uncertainty swallows up the confidence of investors.

Last week, the president went on to say that one of the big things was to stop bickering. We need to pull in the same direction. Investors would simply love that. “Where there’s unity, there’s growth” - a rhetorical interjection worthy of Hallmark maybe, but at odds with the idea of tough choices. After all, if we can all just get along, the choices are probably uncontentious anyway.

And maybe therein lies the problem. Former finance minister Mcebisi Jonas last week launched his book, After Dawn: Hope after state capture. 

He argued that the president had to choose between “striving for the unity of the ANC” and saving South Africa. 

“That’s the choice he has to make.” That is a tough one. And the direction of policy so far suggests that the choices tend towards retaining some semblance of control over his fractious party and not towards the painful decisions that the country’s future requires.

This makes that turnaround a distant prospect. Whether people, and not least the president himself, like it or not.

* Corrigan is a project manager at the Institute of Race Relations.

* The views expressed here are not necessarily those of Independent Media.

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