on whether Cyril Ramaphosa is prepared to act against members of the NEC of the ANC, including those in the so-called ‘Top Six’ such as Ace Magashule, the secretary general, who have been staunch Zuma supporters and have been implicated in shadow-state networks.
Economic policy will be the greatest challenge facing the government. Rebuilding the state will be no less important. The South African state, unlike the states of South-East Asia (the ‘developmental states’), is relatively new, just over a century old. Moreover, for large parts of the 20th century the administrative structure of the country was broken up by the apartheid government. So, by the end of the apartheid era there were 14 separate and parallel administrations, each with its own government and government departments in the Bantustans, together with the racialised administrations of the tricameral system at the national level. For this reason, the ANC’s tendency has been to maximise political control of government administrations. This made sense in the early days of the transition when apartheid-era public servants were thought to be incapable of implementing the government’s Reconstruction and Development Programme (RDP) initiated shortly after the first democratic election of 1994, and, worse, of being a potential source of counter-revolution.
Hence, far-reaching steps were taken to locate key administrative power within the executive arm of government. At the same time, in the name of the ‘new public management’ movement that became popular internationally and in South Africa (via the public management schools) during the 1990s, much of government’s work has been effectively outsourced to private companies, consultants and contractors.
This combination of politicisation of public administrations and of outsourcing has given state capture its particular form – from manipulating government appointments to directing tenders to selected beneficiaries. Moving beyond the logic of state capture, therefore, requires that we rethink some of the design features of government. How do we professionalise administrations, protect public servants and officials from undue political interference, and bring transparency and reason to public procurement?
It is arguable that South Africa has never had a national consensus on economic policy. The closest it came was the original RDP. However, this was replaced by the Growth, Employment and Redistribution (Gear) policy in 1996 – a policy that was imposed by the then minister of finance with minimal consultation. This policy was later upgraded and renamed the Accelerated and Shared Growth Initiative for South Africa (ASGISA), and included a reference to ‘binding constraints’.
In the early 2000s, as the debt-financed consumer boom reached its limits, public-sector funding of national infrastructure emerged as a substitute strategy for growing the economy, underpinning the adoption of ‘developmental state’ discourse from 2002 onwards. It was followed by the New Growth Path, and the National Development Plan (NDP).11 The former was driven mainly by the DTI, but with little funding for its central tenet, which was industrial policy. The latter emphasised the need for ‘flexible labour markets’, an approach vehemently opposed by Cosatu and the SACP.
Despite promises given to the Tripartite Alliance partners by the NDP Commission that the rather weak economic chapter of the NDP would be revisited, this never happened. We now have the ‘radical economic transformation’ and ‘inclusive growth’ frameworks, both of which lack any systematic articulation.
During the Mbeki era economic policy tended to emphasise market-oriented strategies coupled to a BEE approach that linked emerging black business to contracts and deals with white business. As we argue in this book, the real economy was being transformed by three forces that undermined investments in the productive economy, namely, financialisation, the shareholder value movement and BEE.
Financialisation was about stimulating economic growth via consumer spending, funded by the expansion of access to debt, by the growing middle class and by the increasingly desperate working class. Shareholder value was about unbundling the conglomerates and increasing returns to shareholders. This resulted in a greater proportion of wealth accruing to shareholders than to labour during the post-1994 era. And finally, BEE resulted in the transfer of wealth from white to black shareholders and managers. Together, financialisation, shareholder value and BEE undermined what South Africa needed most – an increase in investment in the productive economy.
During the Zuma era the focus shifted to the procurement spend of the SOEs as the primary vehicle for building a black industrial class. This had two consequences. Firstly, it reinforced a questionable assumption that capital-intensive investments in large-scale infrastructure lead to the type of growth and development that is needed. Capital-intensive investments, however, have a poor rand-to-job ratio. Secondly, it prepared the way for state capture as the shadow-state networks came to broker the deal-making process.
It is clear that what is needed during the post-Zuma era is an investment-led, job- and livelihood-creating growth strategy that is focused on the building of an inclusive and sustainable economy. What this means in practice needs to be carefully worked out in the course of 2018 and beyond.
It may well entail fiscal expansion beyond what National Treasury has traditionally been comfortable with, and it may require the Reserve Bank to go beyond a narrow focus on inflation when it comes to setting monetary policy. If high interest payments can be offset by the benefits of accelerated and more inclusive growth, a more equitable economy may well be affordable in the medium term. However, everything will depend on whether it will be possible to clean up state administration, re-establish the SOEs as viable public corporations and discipline the private sector, which is focused on short-term capital gains and mechanisms for accelerated investments outside South Africa.
Notes and references
1Bhorat, H, M Buthelezi, I Chipkin, S Duma, L Mondi, C Peter, M Qobo, M Swilling & H Friedenstein. 2017. Betrayal of the Promise: How South Africa Is Being Stolen. Johannesburg: Public Affairs Research Institute.
2The Right2Know Campaign is a movement that campaigns for freedom of expression and access to information in South Africa. See http://www.r2k.org.za/about/.
3Ministerial Review Commission on Intelligence. 2008. ‘Intelligence in a constitutional democracy’. Available at: cdn.mg.co.za/uploads/final-report-september-2008-615.pdf.
4Black First Land First defines itself as ‘a pan-Africanist and revolutionary socialist political party in South Africa’. See https://blf.org.za/.
5Republic of South Africa. 1996. The Constitution of the Republic of South Africa: Section 217 (1), (2). Pretoria: Republic of South Africa.
6Public Protector South Africa. 2016. State of Capture. Available at: http://cdn.24.co.za/files/Cms/General/d/4666/3f63a8b78d2b495d88f10ed060997f76.pdf.
7Available at: www.iol.co.za/news/special-features/the-zuma-era/nzimande-dismayed-by-looted-40bn-10300509.
8Available at: https://www.news24.com/SouthAfrica/Politics/Political-hyenas-in-feeding-frenzy-20100826.
