South African President Jacob Zuma and his resoundingly reelected party, the African National Congress, have made three things urgently clear. Restored economic growth is their first priority. To achieve it, they have committed to a practical, market-friendly long-term strategy, the National Development Plan (NDP). The people they deploy to implement the plan must deliver, or else.
The NDP, as one of South Africa’s sharpest financial journalists, Stuart Theobold of Business Day, wrote last year, is “the first major initiative in South African policy making driven by evidence. It was developed through research: a first “diagnostic” stage, identifying what is wrong in South Africa today and why; then a comprehensive plan to fix those things based on our best theories of what will work”.
Both the diagnostic and the plan were products of a commission of 26 experts, most from outside government, named by President Zuma near the start of his first term in 2010. Cyril Ramaphosa, a pivotal figure in South Africa’s transition from apartheid to inclusive democracy, co-chaired the advisory body with Trevor Manuel, previously South Africa’s globally respected finance minister.
In a searingly honest piece of national self-appraisal, the commission identified nine “primary challenges”: too few people were working; public education was in a shambles; infrastructure was inadequate, misplaced and crumbling; the residues of apartheid-era urban planning were an obstacle to employment growth; the economy was too resource-intensive; the public health system was dysfunctional; public services were often poor; corruption levels were high; and South Africa remained a divided society.
Having identified what needed fixing, the commissioners set about drafting a wide-ranging set of to-do’s to eliminate poverty, reduce unemployment from today’s 25 per cent to 6 per cent by 2030, and accelerate annual growth to a level — 5.4 per cent on average — calculated to meet their ambitious goals. After broad consultation, the plan and its 119 action items were launched in August 2012 and embraced as a policy blueprint by the ANC.
Mr Ramaphosa, then in the private sector building a business empire, is today Mr Zuma’s deputy. It is an open secret that he was Nelson Mandela’s preferred successor in 1999. A formidable anti-apartheid protagonist as leader of the National Union of Mineworkers in the 1980’s, he was the ANC’s chief negotiator in South Africa’s negotiated revolution in the early 90’s. His political skills are of a very high order.
President Zuma and the ANC have now, as ANC spokesman Zizi Kodwa and the Treasury put it in separate but identically worded statements last Friday, given Mr Ramaphosa “overall oversight of the implementation and enforcement of the NDP across government.” The statements were in response to Standard and Poor’s’ decision to join a competitor, Fitch, in notching down their ratings of South Africa’s still investment grade sovereign debt.
The government’s intended message to markets was plain: the South African economy is in safe, effective hands, not only at the macroeconomic level, where Reserve Bank Governor Gill Marcus and Finance Minister Nhlanhla Nene can be trusted to keep things on an even monetary and fiscal keel, but, with Mr Ramaphosa at the controls, in the microeconomic engine room as well.
To work, the NDP still needs broad buy-in from across society. Only in Utopia could a plan of this scope achieve instant unqualified assent from all quarters. Unsurprisingly, proponents of an alternative, hard left road map, the so-called National Democratic Revolution (NDR), look upon the NDP with deep suspicion. The plan lists as “critical action” number one not wholesale nationalization and expropriation but “a social compact to reduce poverty and inequality, and raise employment and investment”. The trick will be to ensure that no one exercises a derailing veto.
If anyone in South African politics has the proven chops to pull that off, it is Mr Ramaphosa. Forge a compact is what he is being sent to do. Mr Zuma, in his state-of-the-nation address on Tuesday, said his deputy would “convene the social partners dialogue within the ambit of NEDLAC”. That’s short for the National Economic Development and Labour Council, a uniquely South African forum established in 1994 to help government, labour, business and grassroots achieve consensus on solutions to the young democracy’s many problems.
Mr Ramaphosa’s arrival is likely to breath new life into a body whose effectiveness was starting to be questioned. His mandate is to fix what Mr Zuma called “the untenable labour relations environment” which, government and ratings agencies agree, has been holding the economy well back from its potential. In parallel, the president himself will take charge of seeing that the October 2012 Framework Agreement for a Sustainable Mining Industry is implemented. That accord was brokered by Mr Ramaphosa’s predecessor, Kgalema Motlanthe, following the death at police hands of 34 strikers at Lonmin’s Marikana platinum mine earlier two months earlier. It addresses the systemic conditions underlying both the tragedy and the subsequent work stoppages which have sent the South African economy to the edge of recession.
Business likes the NDP and is key to its success. “We are determined to work with the private sector to remove obstacles to investment”, the president said in his national address. Boosting private investment is another “critical action” called for in the plan, particularly in labor-intensive industries and in sectors vital to South African competitiveness.
Those sectors include energy. Tight electricity supplies are specifically cited by the ratings agencies as throttling growth. The NDP sees 40 GW of new capacity coming on stream between now and 2030. Mr Zuma wants this fast-tracked. Nuclear and and shale gas fracked from beneath the desolate Karoo look likely to be a significant part of the mix, along with renewables exploiting South Africa’s abundant sun and wind. On Wednesday, Mr Zuma’s new mineral resources minister, Ngoako Ramathlodi, told the Financial Times he was putting a hold on legislation that might deter investment in shale gas and offshore hydrocarbons.
The ANC and Treasury responses to Standard and Poor’s had Mr Ramaphosa not simply overseeing the NPD’s implementation but “enforcing” it. This is tough language, reflecting the impatience of the ruling party’s national executive with the status quo. The ratings agencies thought the NDP was wonderful, Mr Ramaphosa told a business breakfast on Wednesday, but they questioned whether words would translate into action. So ministers were being required to sign performance agreements with the president setting out how they proposed to implement their aspects of the plan. “This time around, the president is deadly serious to see to it that there is clear performance from the men and women he has appointed as his Cabinet…Watch this space.”
Worth watching too will be how the the government cracks down on fraud, waste, abuse and croneyism at both the national and local levels. In line with the NDP, Mr Zuma said a single Treasury office would now be responsible for signing off on government procurement and public officials would be barred from doing business with the state. Earlier, top ANC officials, including Mr Zuma and Mr Ramaphosa, were reported to have met with provincial leaders and told them to clean up their act.
The appointment of politically connected but unqualified ANC cadres to important municipal posts has been identified as a source of non-delivery and rising discontent in many communities. Closing a high-level ANC policy conclave following the election, Mr Ramaphosa said “it was again agreed that appointments to key positions in the municipalities must be based on competence and that the tendency to interfere in the appointment processes by political structures in some areas should be eliminated.”
So begins what the ANC is calling the “fifth administration”. It begins with a sense of urgency. Closely examined, the May 7 election election results, as decisive as they look, are telling the party it needs to do better. Likewise, the economy’s anemic growth, the labour woes contributing to it and the possibility of further debt downgrades. So too the recalibrating of Nigeria’s GDP, a warning that South Africa cannot always count on being the continent’s vanguard economy. These are challenges to which the ANC, and South Africa, can rise. In the words of the American poet Wendell Berry, the impeded stream is the one that sings.