Viva policy uncertainty! ANC resolves to remain irresolute when it comes to economic policy

Comrades, amandla! The ANC has once again resolved to be irresolute on economic policy. Onward to the pot-holed road back to the future. Viva policy uncertainty, viva!

That pretty much sums up the economic policy thrust of the ANC’s “hybrid” bash in the Free State, the proposals a mixed and often contradictory bag that includes stale measures that keep cropping up, only to be kicked into the long grass of indecision.

Precisely all of the economic and development resolutions that had been adopted or “resolved” remained unclear on Sunday — there was still no document outlining them as we went to press — underscoring the ANC’s dysfunction. 

One source told Business Maverick that there was a fight between the technical team and some members of the National Executive Committee (NEC) who wanted “to introduce some madness on various fronts and twist the final resolutions”. 

Great way to craft and clarify policy!

It also underlines the fact that some of these “resolutions” are a long way from being resolved.

Most ANC constitutional changes were not even passed as fatigue overtook delegates in the early hours of Sunday morning. The dop served up at the gala dinner probably didn’t help. 

Still, a number of policies appear to have emerged against the backdrop of the shoddy, litter-strewn roads of the Free State where the ANC’s transparent policy failures stand in stark contrast to the promises it always makes. 

“Nationalisation” of the South African Reserve Bank (SARB) remains on the cards — a pointless exercise that only serves to spook investors who fear that it is a precursor to changing the central bank’s mandate to include things like job creation and economic growth. There was talk of doing just that but Business Maverick understands the mandate was left alone, and its independence remains secure until this topic sprouts like an unwanted weed at the next ANC policy gathering. 

For the record, the SARB’s primary mandate “is to protect the value of the currency in the interest of balanced and sustainable economic growth”. Also for the record, the central bank does not have a printing press that can churn out jobs. And “sustainable economic growth” is already part of its mandate, and its tool is inflation targeting and protecting the value of the currency. 

In the January 8th Statement delivered by Ramaphosa, the central bank was not mentioned at all, which may suggest that it is not a high priority. It is one of those proposals that typically gets lost in the long grass. 

But straying from the prepared remarks, on the land issue Ramaphosa did mention “expropriation without compensation” (EWC) — a fraught issue at the conference in 2017 — but in the context of the Expropriation Bill adopted last year by the National Assembly which must still be ratified in the other house of Parliament. 

It provides for expropriation but adds a caveat to “just and equitable compensation” by allowing for “nil” compensation” — or EWC — in some cases such as abandoned or state land or that held for “speculative purposes”.

Ramaphosa’s pointed reference to EWC signals the watered-down version — EWC-lite, if you will — is high on the ANC radar screen, but it remains ill-defined. What, for example, counts as “speculative purposes”? 

A new redistribution bill is now in the mix, but the ANC for decades has had targets for land redistribution. How will it legislate such targets into reality? Will it include limits on land ownership? Will no one be allowed to own a farm larger than, say, Phala Phala? 

The ANC has also resolved to boost the fortunes of the ailing Land Bank — with an eye to lifting the party’s largely failed legacy on the land reform front — but how? Where will the money come from? The ANC’s track record on SOEs is dismal, to say the least. 

In the January 6 statement, Ramaphosa mentioned increased private sector involvement to stem the decay of infrastructure and basic services that have been a hallmark of ANC “governance”. 

“Partnerships with the private sector in areas of infrastructure finance and technical support will be fostered to help in accelerating the delivery of basic services across the country, especially in rural and poorly resourced municipalities”, the statement reads. 

But this has been said many times before and is already happening. For example, the mining sector, in part to meet its regulatory “social and labour plans”, in part to ensure that the infrastructure around the mines functions, is already repairing roads and building schools and clinics and the like. If you live in a mining community and any of these things actually works, chances are a mining company is behind it. 

On the energy crisis — the biggest constraint on economic growth and investment — there is effectively a rehash of things already in the works. 

“Government should secure additional power in the short term by leveraging surplus capacity from existing generators and procuring additional power on an emergency basis,” the statement says. “We have also resolved to reduce our carbon emissions and that this transition must be just and inclusive and it must assure the welfare of those workers, communities and industries most affected by the transition”.

The resolution to reduce carbon emissions is welcome, and ensuring the welfare of those adversely affected by the energy transition — read coal miners and their kin — is a noble goal. But that potentially leaves the transition hostage to the needs of a relative few, including the emerging coal criminal syndicates, at a time when South African industry urgently needs to decarbonise its value and production chains to remain globally competitive.

There is at least a call for the Eskom board “to recruit world-class professionals to fill the vacancies in executive management”. Skills and expertise do matter. 

There was no mention at all in the speech or the draft policy proposals of the promised mining cadastre to replace the useless Samrad system which has created a backlog of applications for mining and exploration rights – one of the key obstacles to investment in the sector. 

The point here is that this is a critical and urgent policy issue which needs to be addressed. 

The usual calls to cut red tape were made, as well as the need for a “developmental state" which the Department of Trade and Industry has tried to erect by wrapping most measures it touches in red tape. 

“The task of broad-based black economic empowerment should be undertaken with greater intensity and purpose. We must use competition policy, preferential procurement and other instruments to address highly concentrated ownership patterns,” the statement says. 

Again, we’re heard this record before, and the results speak for themselves. How many ANC cadres have enriched themselves via “preferential procurement”? And does that mean that foreign investors will have to give away bigger stakes of their local businesses? Like much else, it’s about as clear as a brandy and coke.  

The SABC reported that the party’s commission on economic transformation had resolved to explore a “wealth tax” as a way to address persistent and glaring economic disparities.

Pravin Gordhan mooted this back in 2017 and while the concept has a number of heavyweight backers — such as Thomas Piketty — in South Africa it would be imposed on an economy where the wealthy already account for the lion’s share of income tax revenue. It’s also not nearly as straightforward as a tax on income, which is why this measure exists almost everywhere.  

Policy uncertainty largely remains the order of the day as the dust settles and the ANC speaks of “renewal”. And an irresolute economic framework doesn’t resolve anything. DM/BM