If there is a more uncomfortable spot in the cabinet than the finance portfolio, it doesn’t come easily to mind. Inverting the old cliché about ‘speaking truth to power’, he is a man with power, whose function is often to speak truth. Unfortunately, the power is all too often limited, and the truth ignored.
The past week’s events were proof enough of this.
The problems confronting South Africa are well known: an unsustainable fiscal position, a stagnant economy, an often dysfunctional state, along with debilitating levels of poverty and unemployment. It takes no gifts insight or courage to identify them. They are South Africa’s unavoidable ‘truth’.
For a country in this position, it is remarkable – mind-boggling, in fact – that it has no real economic policy to speak of, at least nothing that remotely addresses its challenges.
This is despite the repeated calls that we have to find a ‘new’ approach, and to ‘do things differently’.
But in his Medium Term Budget Policy Statement (MTBPS), Minister Mboweni remarked that: ‘We have been shuffling about in old and comfortable brown shoes.’ How true! Our economic policy mix is one of confusion and contradiction, more-of-the-same with more disincentives to come.
This is a long-standing condition. Government policy has, for example, stressed the importance of entrepreneurship and small business since the 1990s. Yet onerous labour policy and a heavy regulatory burden have – among other things – conspired to place one obstacle after another in the path of achieving this.
Understand that this represents the deliberate choices made by government, in the face of both warnings of the likely outcome and evidence of the consequences.
Again – in defiance of its go-for-growth rhetoric – government has over the past two years, recklessly pushed an agenda whose principle contribution has been to compound ‘uncertainty’, while suggesting that should it be attained, it will be the certainty of bad policy. This is the assault on property rights, primarily in the guise of expropriation without compensation (EWC).
To their great credit, Minister Mboweni and his department have tried to inject some good sense into the policy environment. The most recent attempt to do so was the Treasury’s document Economic transformation, inclusive growth, and competitiveness. This emerged in late August, with a second iteration having been produced to coincide with the MTBPS.
Overall, it contains much to be admired, not least its endorsement of the need for a strong private sector as an ingredient of successful policy in general, and agriculture in particular.
Rather than presenting farming as an ideological totem, the strategy describes them as what they are: business undertakings. To be successful, they require a suitable conjunction of factors, including adequate financing, market access, infrastructure and so on.
Farmers also require robust property rights. This was a pleasing recognition, expressed clearly – at any rate, within the dry, cautious wording of Treasury officials. In what was clearly a remark on EWC, it said: ‘To mitigate the uncertainty that may be generated by a comprehensive approach to land reform, it must be managed in a manner that is transparent, consultative, and within a broad framework to ensure that factors critical to ongoing investment in agriculture and food security, such as the security of private property rights, are respected throughout the reform process.’
This is a ‘truth’ that needed to be spoken. The ‘debate’ around EWC has already done damage to the country, and it’s hardly a burden than an economy growing at less than 1% a year can afford to carry.
Unfortunately, looking at the second iteration of the strategy, there has been some concerning editing. The paragraph cited above had been removed and in its place it notes the need for a policy that considers ‘increased agricultural output, growth, and food security’ (unlikely with degraded property protections). It then proceeds to outline the recommendations of the Presidential Advisory Panel on Land Reform, which proposes enhancing state power over people’s assets through EWC, among other things.
Other commentators have noted that the document has been watered down in other places. For example, in respect of Eskom, it no longer proposes selling off coal-fired power stations. It is apparent that those in ‘power’ are not especially interested in listening to the document’s message. Indeed, when President Ramaphosa was in the UK, he indicated that he supported Mboweni’s plans (the original version), but seemed cagey about implementing them.
The Economist voiced scepticism: ‘This sounds like classic Ramaphosism. Reform, but only up to a point, and after much consultation. He endorses all of Mr Mboweni’s tough ideas, but with a crucial qualification: “Of course you can’t implement them all in one go.” So how determined is he really? Does he have a sense of urgency—and is he willing to pursue reforms where there will be losers as well as winners?’
And so, the prospects of reform dim. Mboweni said in his speech that ‘we need to do things differently’. The reality is that there is a chronic dislocation between need and actuality.
Power is not listening, and truth suffers. The president shuns tough decisions, or cooperates with those in his party who are determined to keep the country on its current course. EWC is in sight. Mr Mboweni and Treasury have to make the best of a bad situation. Farmers remain under threat. Investors look elsewhere. And South Africa loses.
Terence Corrigan is a project manager at the Institute of Race Relations. Readers are invited to take a stand with the IRR by sending an SMS to 32823 (SMSes cost R1, Ts and Cs apply).