The political drama currently playing out in public on the South African stage would have made the 12 Caesars proud.
We have seen two ANC national executive committee (NEC) members argue about a decision taken with regards to the South African Reserve Bank (Sarb). We have witnessed several senior party leaders disagreeing with each other on social media about a key policy position. We have noted that our president was clearly outvoted by his NEC. And then there’s the cliffhanger of what the party means by ‘quantitative easing’.
Curiously or alarmingly, depending on how you look at it, it would appear that President Cyril Ramaphosa is being outmuscled within his own party – and undecided about his own position on matters despite having won both presidencies.
For how long can the president continue to seek consensus and not use his power? If he continues for much longer he will lose that party power. Worse, it will create the impression that those opposing him are growing stronger, thus emboldening them in their challenge of his authority.
The net effect of all of this points to a deep internal crisis within the ANC, and confirms my argument that South Africa’s real crisis is political.
As we have discovered, with the news this week of a 3.2% decline in the economy, the most likely scenario is that the country will continue to regress.
Together, the internal crisis of the ruling party (ergo the country’s political crisis) and the downward spiral of the economy increase the probability of South Africa being downgraded by the rating agencies – especially when considered against the worsening fiscal deficit, constrained growth and absent job creation. Eskom being identified by the International Monetary Fund on Monday (June 3) as a “major downside risk to growth and the fiscus” reinforces the possibility of a downgrade.
Worse still, the plunging economy with its chronic unemployment not only puts off potential investors, it adds to the already-hostile relationship between business and labour. On the one hand it undermines the bargaining power of unions for better wages; on the other hand it gives no room for employers to improve their offers. In fact, it might force companies to retrench workers. The current platinum sector wage negotiations will be a gauge of how bad things are.
Like you, I am waiting to see what the official unemployment rate will be when the next Quarterly Labour Force Survey is released – and whether Ramaphosa will continue to be shocked.
NEC ‘agrees’ to reduce unemployment
The outcomes of the ANC NEC lekgotla on unemployment held on Tuesday (June 4) leave no room for continued shock from the president because the NEC has “agreed” to reduce unemployment from 27.6% to 14% in the next five years and plans to “achieve massive job creation” on the back of Job Summit initiatives.
How government will translate these goals into policy that improves the conditions of the labour market, and whether whatever moves it makes will complement the policies and programmes of the economic cluster and labour departments, remains to be seen.
Despite the mouthwatering inventory of good things promised during electioneering, summits and presidential speeches, the ANC’s internal crisis, produced by dissonance and cliques, has had the opposite effect on the economy and possibly the future of many South Africans.
It has reduced the country to a state of ‘paralysis by politics’. I’ve argued on this platform many times before that when the ruling party is in a crisis the sitting government gets affected and dwarfed by party politics.
Quantitative … difficulty
The Sarb mandate debacle is a perfect example. Uncertainty will surround the matter until a decisive and plausible statement is issued by the highest power in the land (who is that again?).
Finance Minister (and NEC member) Tito Mboweni has made his views clear – “There is no quantitative easing thing here,” he tweeted. Sarb Governor Lesetja Kganyago echoed Mboweni’s comments. We know, however, that neither of their views are above those of the collective NEC … and the party has been equally clear in its pronouncement on the matter, with ANC secretary-general Ace Magashule also speaking out. He says the NEC has agreed to broaden the Sarb’s objectives beyond price stability and have it look at quantitative easing.
These exchanges took place on Tuesday (June 4), and we’re at a stalemate for now. Keep in mind though that time and again the ANC reminds us that no individual is above the organisation or immune to its disciplinary processes.
With all of this in mind, it is likely that the economy will continue to underperform, dragged down by the political crisis and a declining secondary sector prone to feeling the effects of the US-China trade war.
Two crises caught up in a Catch-22
The economic crisis can be corrected by radical structural reforms of the factors that hinder its performance.
The political crisis, however, is complicated because it can only be stopped by the very party causing it – or a decisive president not afraid to use the 50+1% power he has instead of waiting for consensus.
However, we know politicians are not driven by pragmatism or love of country, but by what keeps their political careers alive.
I have tried to look for the light at the end of the tunnel, but presently I can’t see anything. It seems South Africa is not winning its political battles or the war against its economic realities.
As these two phenomena hang ominously over the country’s future one wonders, as with so much else, how we are going to get out of this situation.