29/09/2020 | By Busiswe Mavuso
It’s almost a fortnight since President Cyril Ramaphosa received the economic response plan from social partners at the National Economic Development and Labour Council, which the cabinet is now reviewing as we look to get stuck into the hard work ahead of getting the economy into a stronger position. Much of the work centres on reforms promised at the “new dawn”.
Opening the economy to level 1 restrictions was welcome. It’s time to build on what’s been done. The economic response plan is a blueprint for that.
The uncertainty over our prospects caused by the Covid-19 pandemic has overshadowed the positive changes in recent years. We’ve forgotten how close we were to the cliff edge in what we’ve termed the “wasted nine years”.
One of the biggest changes is that we now have an environment in which we can engage. We are some way off those mad days of the fifth administration, when the sovereign ratings of the country started their gradual decline as growth faltered and the National Treasury became a battleground.
There was so much riding on a change in political leadership.
So when President Cyril Ramaphosa took over the presidency of his party almost three years ago, we breathed a sigh of relief that there would be a man in the Union Buildings who understood what had to be done to change the economic narrative of the country. He ushered in a “new dawn” and promised to tackle the ills crippling the economy, with a specific focus on job creation, economic reform and anti- corruption measures to fight state capture. His first state of the nation address under the Hugh Masekela-themed “Thuma Mina” was an inspired choice.
That was over two years ago and we’ve moved on from “Ramaphoria”, when the rand and markets rallied on the back of the leadership changes and the promises of the new dawn. The euphoria has waned as the Herculean task has become clearer. The train rushing towards the abyss has slowed but we haven’t changed direction yet.
In criticising the rate of progress, we should be cautious of the legacy of the previous administration that placed SA on this dangerous path. We are cognisant of the difficulty in trying to extract the country from that legacy. There’s been progress on reforms, but more can and should be done by policymakers.
True reform allows systems to develop that are self-sustaining and generate multiplier effects. There has been movement in some areas, but we need to increase the pace. The Eskom road map was a policy milestone to lay out in a detailed way how Eskom would be dealt with and unbundled. While the fate of SAA remains unclear, we take some encouragement from the government seemingly willing to take a minority position in any future the airline may have to reduce its sovereign burden.
Regulatory authorities have seemed to not sense the urgency of these reforms, but as we’ve seen with the National Energy Regulator of SA’s most recent moves to incorporate an additional 11,000MW of power into the system in two years, the message seems to be coming across.
The Ramaphosa administration has cut the red tape required to set up and register businesses thanks to the “doing business task force” in the department of trade, industry & competition. But this is not complete, with movement needed on electricity connections, access to credit for small, medium and microenterprises and Transnet port charges.
Another area in which we’ve seen positive signs of the “new dawn” has been the focus on corruption and moving on from the state capture years. The taps have been tightened at state-owned enterprises with stability at board levels, the Zondo commission continues to expose much of the wrongdoing of the past decade and the National Prosecuting Authority continues to build its capacity. In a battle to boost confidence among ordinary South Africans and business, strengthening policing and prosecutorial capacity is in focus.
As business, it’s evident that the sixth administration is more open to engaging on matters relating to the economy, which is a clear shift from the past decade. This open engagement is going to be even more important as we look to resuscitate the economy bludgeoned by the Covid-19 pandemic. Our outlook is set to be more dire with a second wave of infections on the horizon for our biggest trading partners in Europe, which will have a further crippling effect on SA.
This piece was first published in Business Day.
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