SA’s economy after the Covid-19 – an iron fist in the ANC’s velvet glove

5 Jun 2020

When ANC Treasurer-General Paul Mashatile talked of a new reconstruction and development programme while touting South Africa’s post-Covid-19 economy abroad, it was about the fuzzy feel-good of governing party plans. No mention was made of using state power to ‘guide’ the private sector in this new economy.

By the time ANC Treasurer-General Paul Mashatile addressed the London-based think tank Chatham House on 29 May, the governing party had agreed to an expanded role by the Presidency in matters economic – and in its economic reconstruction, documentation was looking at leveraging state “capacity, inherent authority and capabilities in leading society for the recovery” after the Covid-19 lockdown.

“The new economy must be more inclusive, sustainable… In building a post-Covid economy, it’s back to the RDP (reconstruction and development programme),” said Mashatile in the webinar. And he talked of a planned $20.5-billion infrastructure spend on networked industries like rail and ports, broadband, and basic services like water and sanitation and housing.

The ANC treasurer’s outline dovetailed with an announcement from the Presidency that on 23 June President Cyril Ramaphosa would hold the Sustainable Infrastructure Development Symposium of South Africa (SIDSSA) – and unveil “an infrastructure pipeline from six priority sectors”.

As a so-called market sounding exercise, two pitch sessions would take place ahead of this symposium, including one on 29 May when Mashatile addressed Chatham House also to say, “South Africa is open for business. For us the focus is now on implementations… It is no longer business as usual.”

It’s a seamless coordination of party and state, and staying on message. This has not often happened.

And, importantly, this coordinated effort is also underscored by agreement between the ANC and its alliance partners, the labour federation Cosatu and the South African Communist Party (SACP). After some two months of discussion, the alliance agreement was concluded at the end of May 2020, and formally announced, if not released, by the ANC on Thursday 4 June.

That Alliance Framework Document, seen by Daily Maverick, also talks of reconstruction and development, but links this up with inclusive growth into the wordy “post-Covid-19 Reconstruction, Development and Inclusive Growth Path”.

Like the ANC economic reconstruction documentation, the alliance document also puts the state at the centre to “guide” what’s dubbed a people’s economy.

“Such a developmental state must more than ever guide national economic development and broader social transformation, and mobilise domestic resources and foreign direct investment, as well as other social partners to achieve this goal.”

The ANC in its 22 May take headed “Economic Reconstruction”, presented by the governing party’s economic transformation honcho Enoch Godongwana, puts it like this:

“…[B]eing in power should enable us to guide the development process (not necessarily own every aspect of it or even finance it). The impact of Covid-19 has shown the critical role of the State. How does the State then leverage its capacity, inherent authority and capabilities in leading society for the recovery…”

In this context, social compacting, which is a cornerstone of President Cyril Ramaphosa’s administration, plays an important role nationally to “overall lift and create a new, inclusive economy”.

“Short-term tactical compromises will be required in order to achieve longer-term strategic goals and objectives,” according to Godongwana’s document that elsewhere highlights “social compacting to ensure buy-in and compromises by all”. It adds how at sectoral level social compacting meant, “We should seek input from the key participants in those sectors and then guide and support their work.”

ANC Economic Reconstruction Presentation

There’s that guiding notion again, as the Alliance Framework Document also talks of “pursuing a series of detailed social compacts and investment plans”, as in response to the Covid-19 pandemic the tripartite alliance must “seek to lead South Africa in a new programme of reconstruction, development and a radically transformative, inclusive growth path…”

The ANC’s “Economic Reconstruction” document wants to build on government’s visible lead in the Covid-19 pandemic. And the best place to locate this post-Covid-19 recovery drive would be the Presidency.

“It is thus proposed that there should be a properly capacitated economic coordination function in the Presidency, to be staffed by a professional secretariat… Its role will include making key recommendations to further evolve the implementation as well as identify new catalytic interventions.”

This is closely aligned with the 2017 Nasrec ANC conference resolution on a super-presidency:

“The Presidency is the strategic centre of governance. The strategic centre must be the central driver of the developmental state and the following core resource based administrative functions must form part of the centre of government to support the strategic centre: state macro-policy and planning; budget and resource allocation and prioritisation; co-operative governance; public services; and performance management.”

Steps were taken as far back as early 2018 when Ramaphosa announced a reconfiguration of government after becoming president in February 2018.

Aside from establishing policy capacity in the Presidency, another step would be the November 2019 appointment of former Tshwane mayor and Gauteng economic development MEC Kgosientso Ramokgopa to head the Presidency’s investment and infrastructure office.

Coincidentally, that’s the office leading the 23 June symposium, which already has its own website (www.sidssa.org.za) and programme for its ministerial roundtables under the motto, “Partnerships for progress: reimagining funding models for infrastructure, job creation and special inclusivity & transformation”.

As messaging harmony on South Africa’s recovery from a hard Covid-19 lockdown emerged not only among governing ANC top officials, but also the tripartite alliance, the SACP publicly came to the party.

Following its Central Committee meeting, its statement on 1 June outlined how the Covid-19 pandemic had highlighted the necessity of a capable democratic developmental state.

“The NCCC [National Coronavirus Command Council], with its combination of key ministers and specialist advisory panels, appears to have led to some overcoming of silos in government. This may suggest the need to consider establishing a presidentially-led Sustainable Recovery and Development Council to coordinate and lead a state-wide sustainable recovery and development programme…”

Some dissonance is quietly murmuring along. Some of it has to do with the focus on producing documents, rather than practicalities.

... the central focus on infrastructure investment, while government policy for some seven years, leverages something new – an even greater role for the Presidency. Or, if you will, a super-presidency.

One example is prescribed assets, or government’s prescription where at least a portion of workers’ pension funds must be invested. While the ANC document proposes amending the Pension Act to raise the 10% cap for alternative investments, it’s understood Cosatu argues it first had to get to that 10% as currently alternative investments stand at around 2%.

Another example would be ironing out the kinks in the public administration like long-standing issues at the Unemployment Insurance Fund (UIF) that struggled to handle Covid-19 related benefits.

The hard reality is that little is actually new in what’s proposed across the Alliance Framework Document, the SACP Central Committee statement and the ANC’s “Economic Reconstruction” – even if it is neatly packaged afresh. Godongwana, who joined Mashatile in the 29 May Chatham House engagement, as much as acknowledged this when he explained it was about “how can we pull it together with a focus on implementation”.

Election manifesto promises are there, and previous economic dogma, from National Health Insurance (NHI) spending reindustrialisation, to labour-intensive job creation – or a capable state.

Or fizzled-out projects, now revisited.

One of these is the state pharmaceutical company, which stems from an ANC 2007 Polokwane conference resolution, and is now touted again as a long-term intervention.

A state pharmaceutical company, Ketlaphela, already exists.

“The state-owned pharmaceutical company will supply South African manufactured active pharmaceutical ingredients (APIs) and final formulated medical products,” the entity says on its website, www.ketlaphela.co.za.

Ketlaphela was announced in February 2012, then science and technology minister Naledi Pandor announced the R1.6-billion project. The partnership with the Independent Development Corporation and a Swiss pharma firm never flourished into actual manufacturing at the pharma SOE.

The emphasis seems to be on coordinating the messaging of South Africa’s Covid-19 recovery reconstruction and development and inclusive economic growth path.

But the central focus on infrastructure investment, while government policy for some seven years, leverages something new – an even greater role for the Presidency. Or, if you will, a super-presidency.

With a nod to the 1994 reconstruction and development programme, the ANC alliance now is looking to repackage existing policies with coordinated messaging at home and abroad. Just in time for 2021 municipal election campaigning.

Ramaphosa already chairs the Presidential Infrastructure Coordinating Council (PICC) that’s meant to harmonise build expenditure and development across national, provincial and local government.

By 2014 this council was established in legislation in the economic development portfolio headed by Ebrahim Patel, now trade and industry minister.

“The PICC projects under construction, with dust, bricks, cement and workers on site, are worth roughly R1-trillion. They employ about 220,000 workers; building roads, dams, power stations, schools, rail lines, university facilities, hospitals, clinics, fuel pipelines and fibre-optic systems,” said Patel in his 12 May 2015 Budget vote debate speech.

Ramaphosa also chairs what’s described as the “annual flagship event”, SIDSSA, the symposium scheduled for 23 June. And that’s apart from several other executive-level entities, not least the National Coronavirus Command Council that on public record is identified as having made governance decisions during the Covid-19 hard lockdown.

With a weak public administration and a protocol-riddled executive, the command council – it is not established in either law or regulation – seems to have emerged for the ANC and its alliance partners as the answer to stalled governance. That’s even though the costs of governance shortcuts in the Covid-19 hard lockdown have yet to emerge fully.

With a nod to the 1994 reconstruction and development programme, the ANC alliance now is looking to repackage existing policies with coordinated messaging at home and abroad. Just in time for 2021 municipal election campaigning.

But from super-presidency to infrastructure investment, social compacting and state guidance of the private sector, it will take more to tackle South Africa’s worsening poverty, joblessness and inequality. DM

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