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South Africa: ANC economics guru calls for patience

By Xolisa Phillip, in Johannesburg
Posted on Monday, 23 September 2019 11:51

Problems like power utility Eskom's will not be solved overnight, says Enoch Godongwane. REUTERS/Siphiwe Sibeko

Two key challenges face South Africa in its bid to get back on a growth trajectory, according to Enoch Godongwana, chair of the African National Congress (ANC) sub-committee on economic transformation.

They are implementation and rebuilding its battered institutions, says the ruling party’s economics guru.

  • Policy direction is the least of South Africa’s worries because the country has no shortage of policies.
  • To illustrate this, Godongwana points to finance minister Tito Mboweni’s recently published economic paper: “Truthfully, the paper did not break new ground because we have had the National Development Plan (NDP).”

The NDP is a comprehensive economic blueprint document that was conceptualised and published in 2013, during the Jacob Zuma administration. It was supervised by former finance minister Trevor Manuel, at that time minister in the presidency. The plan’s aims are to eliminate poverty and reduce inequality by 2030.

Boxing in Mboweni’s corner

The ANC is deliberating on Mboweni’s paper.

In the main, the party is in agreement with the proposals contained in the document. However, some aspects of it are dated, specifically the allocation of spectrum “because much work has been done in that regard”, Godongwana says.

“We are engaging on all six points [in Mboweni’s paper]. We may disagree on the timing. We are at a stage now where the Independent Communications Authority of South Africa (Icasa) has issued a tender for international advisers on the auction of spectrum. There will be modifications to the paper in terms of that,” he says.

  • Icasa regulates South Africa’s multibillion-rand telecoms sector. It is the entity that issues operating licences to companies, including the stock exchange-listed MTN and Vodacom. Icasa is also responsible for setting data tariffs for network operators.
  • Network operators have long called for the release of spectrum to roll out next-generation cell services. They have often cited the policy gridlock around the release of spectrum as the main factor for South Africa’s uncompetitive data costs.

Implementation and accountability

But Godongwana’s job means not just that ANC policies get sufficient airplay in government, but also that they are implemented. Therein lies the rub for him.

  • “Can we hold [ministers] to account?” he asks, because that is one of the key challenges facing the ANC. “There is an ongoing discussion within the ANC about implementation [because that is where we have failed],” says Godongwana.

Code red or red herring?

Critics from the liberal end of the spectrum contend that President Cyril Ramaphosa’s cabinet is dominated by senior officials of the South African Communist Party (SACP), which is skewing decision-making towards state-driven solutions.

  • But if you have a closer look at the economic cluster, only two ministers have strong ties to the SACP: Gwede Mantashe and Thulas Nxesi, counters Godongwana.
  • Mantashe is responsible for mineral resources and energy, while Nxesi oversees the expanded labour ministry.

Ministers are ANC deployees and derive their mandate from the governing party, he says.

SOE headache

What of the future direction of state-owned entities (SOEs), which encompass the likes of Eskom? The power utility accounts for upwards of 90% of South Africa’s power supply.

Eskom generates, distributes and transmits electricity. Its failures are also the main reason the government’s debt has been rising. It accounts for most of South Africa’s contingent liabilities.

  • Eskom has also been caught up in a succession of scandals around state capture, which has manifested in a significantly weakened fiscal position and capacity.
  • This has led to calls of a rethink the structure of the entity, with some suggesting it should be broken up into generation, distribution and transmission units as a way to mitigate its troubles.

Since 1992, the ANC has consistently said, “whether we go the route of privatisation or nationalisation [on SOEs], we will be guided by the balance of evidence.

“That means those who are in government must advise the ANC, on the basis of evidence, [about] what works,” according to Godongwana.

Gutted capacity

The project of rebuilding state capacity and institutions is a massive undertaking. “That works against the high expectations people have of the current administration,” says Godongwana. The devastation to state institutions and some government departments over the past decade or so, which has rendered them dysfunctional, is often overlooked.

“A big part of the challenges we are grappling with is the lack of institutional capacity. That is also the case at Eskom,” he explains.

Results require time and patience

He concedes that there are indeed many commissions of inquiry and investigations. Results have not been forthcoming in the form of arrests and prosecutions.

But don’t blame Ramaphosa for that, says Godongwana.

He reminds South Africans: “The president cannot give an executive order for the arrests of implicated parties. The day the president wakes and does that, is the day South Africa’s democracy would be pronounced dead.”

Do look out for a big announcement on the future direction of Eskom in October, however, Godongwana hints.

Bottom Line: Reviving South Africa’s economy is not an overnight affair.

 

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