March to the political centre – or keeping marching on to mediocrity

ANC president Cyril Ramaphosa has recently unveiled a ten-point plan aimed at stimulating economic growth and job creation, describing South Africa’s levels of poverty, unemployment and the high cost of living as “unacceptable”.

“The discussion was informed by the three strategic priorities of the seventh administration: firstly, to drive inclusive growth and job creation; secondly, to reduce poverty and tackle the high cost of living; and thirdly, to build a capable, ethical and developmental state.”

“In undertaking this work,” said the president, “we are not seeking to start from scratch.”

And herein lies the problem.

Until the ANC realises its own role in the failures and disappointments of the last 30 years, it is doomed to repeat those mistakes. Ramaphosa confirmed this when stating at the unveiling of his ten points, “The NEC reaffirmed our commitment to broad-based black economic empowerment to ensure that we correct the injustices of our past and end the inequality of the present moment.”

But what if the lack of economic empowerment is the fault of thirty years of failed policies that have entrenched inequality?

Whatever the number of points in plans, the ANC seems to lack the imagination, listening skills, and humility to admit its errors and thus chart a new path. It is also fundamentally hamstrung by the political economy it has constructed around itself. There are simply too many beneficiaries of the decades of rent extraction within the ANC elite.

It has come to epitomise the rentier malaise. Across the continent, the political economy operates to extract income from rents, usually from foreign entities, rather than developing through improving productive capacity and competitiveness.

Choices and practices

Essentially, elites shape policy choices and practices in a manner that enriches them before all others. This can take multiple forms. In the case of procurement contracts, maintenance contracts on South African power stations would be an example, or the coal contracts that drive dependency on that system of power and enrich the middlemen, many of whom have close connections with the ruling party.

Another is in terms of import substitution, where high tariffs on foreign goods penalise the poor while ensuring a local elite gains an uncompetitive market share. The same applies to local ownership or, in the case of South Africa, racial ownership stipulations, ensuring a politically protected class.

The list is endless. Consider the engineered failure of railways which drive road transport monopolies to fuel importers benefiting from the collapse of power grids; or rents from the ownership of a resource (such as coal, or elsewhere, oil); or the political engineering around both the volume and the distribution of aid, especially emergency humanitarian assistance, or transit charges and systems of fuel and agriculture subsidies.

This explains exactly why reforms of rail, ports and other key infrastructure will not happen, despite Ramaphosa’s stating of their urgent need.

In South Africa’s case, the rentier system is around government contracting, where there is a clear tax-and-spending-revenue model. It’s a gift that never stops giving, unless you are poor, unemployed or out of favour with the elite.

Problem is clear

The problem is clear. Not only does this system hinder development progress and productive capacity, but it also has a negative impact on the development of open political systems. It’s a governance system that incentivises corruption and, when that is threatened by a change in power, democracy itself. The reservoir of funds is depleted, and the beneficiaries of this system shrink.

The average wealth per person worldwide, as measured in constant US dollar terms between 2014 and 2024, increased by 18.6%: from $9,983 to $11,876. Wealth across East Asia improved by 59.6%, in the US by 19.8%, among the citizens of the European Union by 15.6%, in the Middle East and North Africa by 7.7%, and in Latin America by 4.9%. Only across sub-Saharan Africa was GDP growth negative: at -1.9%, reflecting a failure of economic expansion to keep pace with demographic change.

South Africa’s per capita economy declined by a staggering 7.2% over this period, the sort of number usually associated with countries at war.

As Deputy Finance Minister Ashor Sarupen has summarised, the economy faces three “strains”: low nominal growth of under 1.2%, and “rising borrowing costs, shrinking fiscal space, and a debt-to-GDP ratio above 75%”. A combination of the “energy crisis, logistical bottlenecks, and policy uncertainty have throttled private sector investment and job creation”.

Global irrelevance

It’s a country on a march to mediocrity and increasing global irrelevance.

Few would thus take exception to the ten-point plan, but the devil lies in the detail: the speed of implementation and the convoluted process by which it is implemented. The pace is shaped by who gets the contracts rather than the services they offer. The plan does not deal with the failure around implementation and corruption, which is why the country requires such a plan in the first instance.

As the party stumbles and fumbles its way forward, spreading the love among its nearest and dearest, old identity markers are increasingly being depreciated and deprecated against the rising tide of dissatisfaction, and dismissed by voters.

If the ANC cannot undergo its own Selbstfindungsprozess – a process of finding itself, admitting the error of its ways, and acting decisively to remedy this – then the country will have to find itself.

The only plausible way forward is for voters to migrate to the sensible centre, where accountability and predictability go hand in hand. But this will require expanding the demonstration of the need for a different politics built on local service delivery and the clean management of finances.

Whoever can build a convincing narrative of success and growth based on actual successes will find a ready audience amongst South Africans who are desperate to get the country working again.

Written by Dr Greg Mills and Ray Hartley.

Article originally from Daily Friend.