Daniel Silke: A SONA shackled by its own State | Fin24
 
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Daniel Silke: A SONA shackled by its own State

Feb 14 2020 16:25
Daniel Silke

If one lived in Norway, Denmark, Finland or Canada, the State of the Nation address from President Ramaphosa would’ve perhaps sounded quite impressive.

After all, the context of trusting the state to deliver services, developmental promises and a wish-list of economic growth-related policies requires a track-record of credibility and capability certainly prevalent in the countries mentioned but sorely lacking in the South Africa of now.

And there’s the rub. In presenting his 2020 SONA, the President outlined a host of initiatives on youth employment creation, energy liberalisation, infrastructure spending, education enhancements, the creation of a state bank, a sovereign wealth fund and of course, the National Health Insurance (NHI).

Ultimately, many of these plans requite scrupulous transparency and expert implementation. They require expertise of conception and rigorous oversight. In a country where debt-to-GDP is rising to dangerous levels due to the gross mismanagement of the past decade, there is still precious little proof of the capacity of the State to deliver on Ramaphosa’s wish-list.

At the heart of SONA 2020 was two issues that are not new. Firstly – with the exception of the energy reforms – the President continues to believe in the over-intrusive State. This largely coincides with the prevailing view within the ANC that the Developmental State remains at the heart of economic policy-making for the country.

The SONA largely skirted the core issues of private sector participation in SOE’s and certainly did not make any remote mention of the potential for – even limited forms of – privatisation. Of course, even if he wanted to, the President couldn’t. His hands were always going to be tied by his own party’s divisions and ideological confusion on related issues.

In this way, there were few political risks for President Ramaphosa in SONA 2020. It was largely in keeping with ANC discussions points and framed in a way to antagonise as few within the Alliance as possible.

Unfortunately, investors would’ve welcomed a lesser state rather than one still clinging dearly to its pet projects and ideological outcomes. In this way, the President simply couldn’t really press the ‘reset’ button that so many were clamouring for.

Secondly, the President’s wish list has as a departure point that South Africa has turned the corner from its ‘state-capture-past and is now in a ‘capable-state’ mode.

The President might believe that his new administration is now fully emboldened with accountability and service excellence and can now take on these projects but the reality of a myriad of state inefficiencies tell another story. Just take the school drop-out rate and poor numeracy and literacy levels as an example of big budget spending with big delivery disasters.

However, there is little evidence to suggest that the complexity of the issues at hand can be adequately dealt with by the prevailing political elites and their bureaucratic surrogates currently evident within the state apparatus.

Furthermore, the failure to prosecute (thus far), those implicated in state capture adds to unease with which one would want to once again rely on the existing personalities within the political and bureaucratic complex to drive projects like a sovereign wealth fund, state bank or even NHI.

Until such a time as the real rot has been revered (and even legally arrested) suspicions around the ability of the state to renew itself will persist – and should require a very active citizenry oversight to avoid the graft of the past. Similarly, issues like Expropriation without compensation continue to cast a policy pall on the country unless adequately resolved.

With these fundamental flaws, it wouldn’t matter how impressive or ambitious the President’s address was. And indeed, there is much to praise in the speech. The President seemed more empathetic to plight of ordinary South Africans. There was an urgency to some proposals especially on the core issue of youth employment. There were some timelines involved.

On energy, there were some welcome chinks in the hitherto dominant (and debilitating) ideological narrative of state control in the final acceptance of the integration of independent power producers (IPP) to the grid and, more positively, allowing municipalities to procure their own power from IPP’s.

This is a critically important step to alleviating the pressures on the economy from load-shedding, but it remains remarkable that it took the lights to go out and growth to stagnate before government were prepared to make the concession.

What we saw in SONA 2020 was a masterclass in packaging the prevailing confused ANC economic thinking into a relatively palatable set of proposals which are still likely to fall short in delivering the desired kick-start to a flatlining growth path. The ANC still believes that its state will rescue the country and while it will modify certain aspects of its ideology, it will only do in absolute extremis.  

President Ramaphosa has proven once again that he is an expert messenger. He remains the ANC’s biggest asset despite the protestations and chaos of the first 90 minutes during the EFF’s disruption. The President even managed to restore a sense of decorum and hope on an evening in which his message could’ve so easily been derailed.

Still, a tougher message might be in the offing from Tito Mboweni’s Budget at the end of the month. There the harsh reality of current economic data will be laid to bare. And it’s in the figures that South Africa will really have to judge whether our current trajectory of muddled policy-making is really the best we can do.

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