South Africa’s economy has been in a tailspin of virtually no growth with a stubborn joblessness for an extended period of time. If that is not enough the country is also still dealing with the effect of the rating agencies’ downgrades which places the country and the economy in an exposed setting as it relates to investment opportunities.
It is therefore more than natural to assume that a comprehensive plan warrants being devised to breathe life back into a contracting economy that finds itself in what economists refer to as a technical recession. The economic woes are further exacerbated by an increase in debt exposure as the Minister forewarned.
Finance Minister Malusi Gigaba released his 14-point plan as a first step to bring life back into the economy. These items include Fiscal Policy, Financial sector and tax policy, Leverage public procurement, Recapitalization of SOE’s and government guarantees, Broader State Owned Entities, Private Sector Participation, Costing developmental mandates, Energy, SAA, Telecommunications, Postbank Licensing, Minerals and petroleum resources development act, Broad Based Socio Economic Empowerment Charter for the SA mining and minerals industry and Regulation of Land Holdings Bill as the first areas of focus.
Gigaba having recently celebrated his first 100 days as minister of finance has the invidious task and responsibility of finding a coherent means to stimulate growth where growth is depleted. There is of course the school of thought that remonstrates its not the job of the Treasury to develop an economic plan, but that of the economic cluster ministries. Gigaba delivers his plan less than ten days after the ANC’s 5th policy conference, which confirmed an unequivocal position on the non-negotiable implementation of its 2012 adopted policy of radical economic transformation.
His plan then is the fulcrum of behind-the-scenes engagement led by the president and engaged from the Cabinet, economic cluster and the international world of financing from which Gigaba recently returned.
Under usual circumstances economists advance that infrastructure development may stimulate economic growth. It is clear a means is sought to find a key to unlock the economy.
Naturally many for a litany of reasons will critique his plan as mundane and as mere grandstanding politics. The plan seeks to be a coordinated response, which brings together the timelines.
According to Minister Gigaba these interventions are the beginning of a response, which will be unpacked in the Mid-Term Budget Policy Statement (MTBPS) and the 2018 budget.
I welcome the plan with its specific and mostly shorter-term timelines. On average most specified items have a 90 – 180 day turnaround time except for the SAA 5-year turnaround time.
Let me then upfront state that I am not an economist hence my attempt at understanding the plan is to understand the politics around it because that is the atmosphere in which this plan will rise stand or fall.
My first concern is that the plan does not even in adumbrated sense engage the direct impact of each of these 14 elements in their respective spheres. Meaning, we need to know how these elements in their own right unlock aspects of economic growth. In the absence of directly linking the components to their respective direct and indirect impact it runs the risk of being reduced to a standard action plan, which may be reduced to a normal practice in a finance ministry.
My second challenge is it being located in the office of the President, not because it lacks power but in asking what preparatory platform for monitoring and evaluation of the plan has been made to aid the presidency. I have a challenge with this not because I think it’s wrongly located but for the detail of that coordination of the set timelines. It would help to appreciate how the monitoring and its recourse will be actualised in a practical and realistic sense. It then also must engage the means for how those who fail to stick to the timelines will be assessed.
Then there is the fact that the plan appears located in bureaucracy, meaning these things are to happen as an outflow of the normal bureaucratic life of the State. It therefore does not cut to the chase in helping us understand how these bureaucratic processes unlock the opportunity for economic stimulation.
On the SOE six plan frameworks that Treasury in concert with the Public Enterprises ministry hopes to bring to bear, the question becomes how will this be monitored and how will the SOEs be used to help stimulate the economy. given the challenge with them at both operational and state strategic functionary level.
The intention of the State around the involvement of private sector entities in regard to the SOEs functionality has been on and off the table for an elongated period. Gigaba’s plan confirms he is in tandem with other departments and will before the end of this month have a framework for this in place. The challenge is not the to-be-designed framework or its workability, it appears the challenge may be the politics around getting it to move in a coherent direction that places SA at the centre, and what that would mean at a economic, structural and political level? It has until now appeared the State struggles to cross that hurdle. We will have to wait and see how this new framework engages the reality of the politics around it.
Some of the elements raised as the themes may be held up with litigation processes. These among others include the freeing up of broadband width that has been on the table for a while. Equally, the most recent amended and adopted mining charter, that really holds the hope for opportunity of redress, will be subjected to potential drawn out court battles, which will stymie the implementation of it thus delaying the true impact of unlocking the economy with a job creation reality.
It would also be worthwhile to ask, how ministers will be held accountable for the implementation of the outlined plan. Therefore, my concern here ties back to the first one I raised: that being of monitoring the respective ministers directly linked to the respective elements. We need unequivocal commitment and guarantees that implementation, monitoring and evaluation at ministerial level will be not compromised.
A last consideration is the fact that the unfolding volatile political landscape of both inter and intra-ANC at an organisational, alliance, party and government level presents its own set of challenges since we are in the silly season of an elective year coupled with a looming vote of no-confidence that lurks over the head of the Executive. We may only hope that all political interests be put aside and a common selfless agenda informs the minds of all involved to deliver for South Africa in trying times a change in economic outlook.
Hence, overall the plan appears acceptable as a first step; provided execution is not compromised and sustained monitoring and political responsibility for its implementation is duly recognised and made a non-negotiable. We will need to keep an eye on the politics around this plan because if anything may derail it, it may be argued its exactly this aspect.
Clyde N.S. Ramalaine