The governing party may need to put land distribution and other contentious issues on the back burner until the economy starts growing again, writes Jason Musyoka
Two years ago, like many other analysts, I warned that the country was heading for a spectacular crash.
The governing party had come apart at the seams so badly that a prediction of the party’s future did not require intelligent analysis.
Both the party and the state seem to be on the mend.
There is reasonable stability now and the nation’s anxiety has been largely contained.
Messy as the background politics in the governing party might be, a sense of unity is visible, even if remotely.
The state machinery is less riddled with the comedy of errors seen under the Zuma administration and, albeit slowly, the National Prosecuting Authority is gaining momentum.
It is also increasingly evident that the line between the party and the state – between Luthuli House and the Union Buildings – is a lot clearer than it was during the past decade.
So, there has been a certain amount of progress regarding governance at party and state level. But what about the economy?
During the ANC’s 54th national conference in December 2017, the governing party made some notable resolutions, especially around economic transformation.
The economic transformation section of the party’s report talks of sharing the country’s wealth, building a more equal society and meeting basic needs.
It also acknowledged the low growth trap.
Some of the recommended responses to prevailing economic challenges were the pursuit of expropriation of land without compensation, the drive to full public ownership of the SA Reserve Bank, and a move towards the provision of free higher education for the poor, the working class and the so-called missing middle.
The National Health Insurance system was also adopted as one of the responsive measures.
The RDP had to find more effective and sustainable methods of redistribution. It was only under the second development policy that the theme of growth became central to government policy.
The first development policy in democratic South Africa, the Reconstruction and Development Programme (RDP), bears a striking resemblance to the resolutions that came out of the ANC’s 54th conference.
The RDP sought to respond to the tragic consequences of apartheid by advocating the thorough redistribution of resources.
The focus was more on inequalities than growth, although the economy was growing at an average of 3% a year between 1994 and 1996.
Such an equalising mission was a necessary policy objective because racial segregation was manifestly capitalism thriving on cheap labour, as activist Harold Wolpe argued in the 1980s.
The inequality traps that came with this kind of capitalism required drastic redistributive measures.
Except that, historically, there is no economy in the world whose future lay in redistribution.
The task of any nation state is to build a sustainable economic future for current and future generations.
The RDP had to find more effective and sustainable methods of redistribution.
It was only under the second development policy that the theme of growth became central to government policy.
The 54th conference, it seems to me, committed the same error the RDP did.
It was, of course, right in pointing to the stubborn social and economic challenges facing South Africa today, but wrong regarding the timing.
At the time of the proposed measures, the economy was growing at an annualised rate of 1.3%, before declining to 0.8% in 2018.
Committing a bleeding economy to dramatic redistributive measures is akin to adding more weight to a sinking ship.
Any conversations around drastic measures of redistribution under the current gathering storm of national and global recession is far from strategic.
There are merits to the aforementioned drastic redistribution measures, but they should only be considered under the right growth conditions.
Transitions generated by large-scale interventions have the potential to push the economy off a cliff, especially at the current rate of -1% growth.
It is also increasingly evident that the line between the party and the state – between Luthuli House and the Union Buildings – is a lot clearer than it was during the past decade
Besides, there has not been a sufficient national conversation about the immediate economic impact of the measures proposed during the ANC’s 54th conference.
Perhaps empirical evidence of such impact should be commissioned and then publicly debated.
These proposals are popular, but this is not the mission of successful developmental state models in history, of which, constitutionally at least, South Africa is a developmental state.
In fact, historically, the developmental state models followed by Japan, east Asia and Latin America during the second half of the past century were obsessively focused on industrialisation-led growth.
All of these countries were reasonably successful in modernising their economies.
Until growth conditions are at least more than 3%, South Africa needs to make policy decisions towards growth rather than focus on the excessive obsession with redistribution, unpopular as such growth measures will most likely be.
The current administration has an opportunity to build a legacy around economic recovery.
I do not foresee such recovery as a matter of popular vote.
- Musyoka is an associate researcher at the University of Pretoria’s Centre for the Advancement of Scholarship