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The week began on a rather low note.
Ratings agency Moody’s, the only one of the Big Three that has been willing to cut President Cyril Ramaphosa’s administration some slack, cut its outlook for South Africa’s economic growth from the 1.5% it predicted in September to a paltry 0.7%, which is more in line with other institutions.
Last month, the World Bank projected growth of 0.9%, the International Monetary Fund came in at 0.8% and the SA Reserve Bank put it at 1.2%.
The only silver lining in the statement from Moody’s was that the economy’s performance was “well below the country’s potential” – words that would be comforting for a school pupil’s parents, but not for a nation’s economy.
The Moody’s statement is fundamental as it comes on the eve of Finance Minister Tito Mboweni’s budget speech and just weeks before the agency is due to decide on South Africa’s rating.
In November, the agency moved the country from stable to negative, a notch above “junk” status.
In doing so, it put the country on notice and signalled impatience with the pace of reform that was hoped for when Ramaphosa replaced the man with the unspecified “medical condition” in February 2018.
When it issued that determination, Moody’s spoke of a “continued deterioration in South Africa’s trend in growth and public debt burden”, and stated that there was “material risk that government will not succeed in arresting the deterioration of its finances through a revival in economic growth and fiscal consolidation measures”.
It sympathetically noted that the “resistance to reforms from key stakeholders limit government’s room to adopt and implement structural reforms”.
Breathing a sigh of relief, Treasury described the reprieve as a “narrow window” for us to get our story straight.
Mboweni went all Churchillian and told his “fellow South Africans ... to roll up our sleeves and do what we have to do. It is now or never. We need all hands on deck. Government, labour, business and civil society – we need each other more than ever before.”
On Wednesday, Mboweni will once more exhort his fellow citizens to put their shoulders to the wheel and pull out all the stops to turn the country’s economy around.
He will probably speak about initiatives already under way in this regard, and report how his message was received and acted upon by society’s role players.
Truth be told, there will be very little success to report on.
As much as he will try to be upbeat and record the positive steps that have been taken, these have been paltry and of little medium-term impact.
Probably the best he can do is talk up the belated movement in the energy sector, most notably the tentative steps towards easing the suffocating stranglehold of Eskom.
Read: Mondli Makhanya: We can survive the crash of SAA but we dare not crash SA
Judging by Ramaphosa’s state of the nation address, the big thinking is yet to happen.
The governing party is still stuck in a parallel universe, waiting for a space ship to pick it up and bring it to the real world.
So, as long as the party remains there, there is very little prospect that the crisis we face will be recognised, and therefore there is little chance of acting decisively.
A key example of this is the reaction of the ANC and its allies to the business rescue practitioners’ efforts to get the ailing SAA back on an even keel.
The airline, which has been gobbling up public money and will soon have depleted the R3.5 billion that the Development Bank of SA was bullied into granting it, is like an expensive drug habit for the ANC.
Against all logic and available evidence, the party is adamant that the airline can be restored to the jewel it once was, and should therefore be retained as a strategic asset of the state.
“It is the position of the alliance and we have not shifted from the position that we will do all in our power to retain SAA as a state-owned enterprise,” ANC secretary-general Ace Magashule said after the ANC and its union and communist allies met just over a week ago.
He insisted that, even though SAA was under business rescue, “the main shareholder is still government, and government does have a say”.
It would one day “return to its former glory”.
The party’s treasurer-general, Paul Mashatile, went even further and put the business rescue practitioners in their place, saying that government remained the sole shareholder and “if you run a company [of which] I am a shareholder, the day I don’t like what you do, I will come in. It’s that simple.”
Mashatile added that “the business rescue practitioners do not own SAA; we do. The day they do something we think is not in line with what we want, we will intervene because we appointed them.”
This is just one example of the failure to grasp the reality of what we are facing.
There is low hanging fruit in a reform process, but, instead of acting rationally, those in charge of our country are determined to take the silliest and most expensive route.
So when Mboweni delivers his budget this week, he will do his best to balance gloom with hope and promise.
But his party will drag us right back into the morass as it sticks to ideological party positions adopted at a mass rally of 5 000 delegates in a large tent near a football stadium.
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