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It was only a matter of time before the dire state of the economy intersected with the equally dire state of economic policy – and the worst GDP decline in a decade was just that time.
We've been through all of this before – but perhaps not as acutely as now since a decade of cumulative policy and performance failure eventually does take its toll. And, as if on steroids rocketing towards an economic precipice, the long shadows of load shedding from earlier this year added to the statistical misery.
While the misery of the numbers was one thing, the real misery was the way in which ANC factions were unable to hold themselves back.
For ANC secretary general Ace Magashule, it was all about the political control of the South African Reserve Bank (SARB) and a suggestion that its mandate should be broadened to explore quantitative easing to pump cash into the struggling economy.
Of course, declaring unemployment a "national emergency" was intended to sound dramatic. Instead, it offered no sound practical steps to alleviate the plight of over 10 million South Africans who have largely been ignored by government for the past ten years.
But in South African terms, economic hardship comes with political strings attached. Within a few hours, the Magashule view of the world had been severely critiqued by finance minister Tito Mboweni and ANC policy tsar Enoch Godongwana.
With the global financial press splashing headlines like "Battle over South African Central Bank Spooks Rand", it was yet another unedifying and deeply concerning manifestation of competing political factions along with their competing political ideologies.
Battle for SA's future
And it is precisely here that the battle for South Africa's future lies. Like a heavyweight title fight, there are two broad contenders.
In the red corner, we have President Cyril Ramaphosa, Mboweni and a team of economic pragmatists keen to test the boundaries of deep-rooted ANC policies – especially those surrounding the control and structure of state-owned enterprises.
In the blue corner, we have Magashule and a group who at best believe in economic populism and at worst, simply fail to grasp the extreme complexities of both the domestic and global financial arena. This group is much more closely aligned with the views of the EFF than they would care to admit but find the allure of power within the ANC enough to keep them within the party-of-liberation camp.
Whilst some have suggested that the Magashule camp is deliberately trying to sabotage the Ramaphosa administration, it would rather appear that economic populists (for want of a better name) have a deeply ingrained view of the world – and wish to impose it where possible.
It's a view that denies the importance of market forces, aims to remove the influence of all "elite" groups deemed unsavoury, denigrates the importance of foreign investment and regards narrow domestic policy initiatives as key to solving inequality without any acceptance of the global linkages on which the broader financial system is based. This represents a deeply suspicious view of the world that particularly decries the influence of the West and its relational ecosystem like multi-national corporates and – for that matter – global institutions that emanate from the West like the IMF or World Bank.
Those who ascribe to this worldview find it easy to offer "solutions" without thinking about the ramifications. It doesn't really matter if the Rand drops or if foreign investment dries up.
Myopia
This is a myopic belief system that simply excludes the bigger (and often less-than-savoury) aspects of global finance, trade and market activity) purports that by ignoring these linkages, a country can withstand such forces and forge ahead regardless. To some degree, it is also reflective of a crony capitalist orientation where a disdain for the outside allows a domestic eco-system of graft and corruption to flourish.
Clearly, the worse the economic data gets, the more these two camps will find their respective worldviews in conflict with one another. Better economic performance is better at hiding the divisions than when economic extremis bites. And, with the factions now clearly defined – and honed after years of debilitating internal political battles – economic policy is fast becoming a key fissure within the ANC.
Mixed signals
For the new president, Cyril Ramaphosa, this is a boil that has to be lanced. Without a clear and unambiguous message from his senior party officers the mixed signals will not only hurt the currency and unnerve those domestic and foreign investors, but it will confuse the broader ANC caucus and party structures at other levels of government.
This type of raging debate – over the core issue that hampers South Africa's return to economic legitimacy – is set to undermine the country to an even greater extent than the ravages of state capture. After all, further GDP contractions will destabilise almost every aspect of a very fragile base – from rising inequality, joblessness and social upheaval.
As analysts have said before, the survival of Ramaphosa will be based on whether he can turn this economy around. You can do it from a pragmatic centrist orientation combining the best elements of socialism and capitalism into what Nobel laureate Joseph Stiglitz calls "Progressive Capitalism". But, you can't do it on the basis of crude populism and a reversion of worst practice. And, if you're president of a country, you cannot allow an alternative counterweight of economic thinking to hold similar sway.
Within the first week of announcing his Cabinet, we have seen Ramaphosa severely tested on the functioning of both Eskom and SAA – and now reacting to the GDP decline. In none of these areas have we seen any clarity or confidence-building suggestions. The political handcuffs holding the president back are fast becoming a hindrance to his success. But only he has the keys to unlock these – with risks to his own political future in a high-stakes game ahead.
Daniel Silke is a political analyst, author and keynote speaker. Views expressed are his own and not necessarily those of Fin24.
