You are currently viewing our desktop site, do you want to visit our Mobile web app instead?
 Registered users can save articles to their personal articles list. Login here or sign up here

Why the economic plan will remain in the discussion corridors

Instead of becoming a workable blueprint.

I am by nature an optimist.

That being said, the continuing weakness in the economy and a political leadership that is shaky has dented my optimism.

It may be true that a president inherits the economy of their predecessor, however, I cannot believe that the country will become stable under the constant battering of any plan aimed at addressing the struggling economy.

The current economic plan by Finance Minister Tito Mboweni, for example, met with opposition the minute it was announced. The plan was received with some reservation even from within his own party, yet the ANC has made it clear that it will adopt some of its proposals.

There has not been any indication from President Cyril Ramaphosa whether his office supports Mboweni’s plan.

But don’t hold your breath – three things stand in the path of the economic recovery strategy outlined in the plan:

  • Firstly, the ANC broad-church approach of collective consensus means that unless the plan finds great support internally, it will remain a discussion topic instead of actionable plan.
  • Secondly, and based on the party’s latest national executive committee statement, further discussions regarding the plan are still going to be held with its alliance and social partners.
  • Thirdly, the party’s track record of poor economic policy formulation and implementation is a reason for concern.

What does this tell us? Nothing we didn’t know before.

The real risk will always be a political leadership that converts a struggling economy into a real crisis.

Moreover, the lack of trust between key stakeholders (business, government and labour) has made any plans towards economic recovery a politically contested battle. You’d understand why the sense of pessimism is rising, not just in the business sphere but in ordinary citizens.

What this tells us is that in case of the economy getting worse, the South African government will be the driver of chaos more than the hand that steadies the ship.

This realisation can have even the most optimistic person wondering if we will ever get out of the trap we find ourselves in.

South Africa runs the risk of failing to self-correct at a time when the global economy is stammering.

Now is the time to fix the simple breakdowns, such as a policy that hinders investments. The long-term goal is to fix the persistent entrenched challenges that can deal a death blow to the country’s future.

Statistics SA has illustrated the warning signs coming from the labour market – on the one hand the formal sector declined in Q2, while youth graduate unemployment has risen. This means potential new entrants to the labour market are outside the economy and cannot find a way in.

Divided

A ruling party that is divided on which parts of Mboweni’s economic recovery plan to adopt could lead to further paralysis. And there is a distinct possibility that this is currently happening, considering the debates coming from the ANC itself as well as other political parties.

This couldn’t have come at a worse period for our economy and our societal wellbeing.

However, I choose to see a window of opportunity for the finance minister, provided he has the backing of the president.

By positioning the economic recovery plan as a commitment by government that it will use it as a tool to ensure that the economy stabilises and functions well, the actions of the finance minister will not come across as one-man show gone rogue.

However, it is important that the plan’s actions or measures be relevant to the conditions of most South Africans. An example would be to give consideration to ensuring that the 58% graduate unemployment crisis is addressed by the private sector spearheading job-creation through investment. This means government would have to remove the barriers to private investment.

Everyday solutions

Any action to be taken to spur economic recovery must reflect the solutions that can improve the everyday life of citizens, such as how does the state provide better healthcare without bankrupting itself.

A word of caution is always necessary. While plans geared towards fixing the economy in the short term are essential, linking them to the long-term goals of the country is necessary if government is to avoid any negative consequences.

The central logic of any plan must be to fix the economy in such a way that when it works it benefits the poor, unemployed and women more than any other demographic.

While South Africa is part of the global economy, it would be careless for any government plan to reimagine itself around global markets or the trends of emerging economies when many South African’s lives are defined by struggles arising from poor economic decisions taken by government leaders.

A concern is that a loss of optimism and confidence in the country’s leadership will catch on and soon turn to loss of confidence in the economy. Some might say it’s already happening.

Can South Africa get out this trap? Are you optimistic we can?

Personally, my optimism wanes day after day. 

Get access to Moneyweb's financial intelligence and support quality journalism for only
R63/month or R630/year.
Sign up here, cancel at any time.

AUTHOR PROFILE

COMMENTS   22

To comment, you must be registered and logged in.

LOGIN HERE

Don't have an account?
Sign up for FREE

So sad that no action is taken by the ANC government. Ramaphosa has disappointed many South Africans…

What’s even worse is that people will still vote for the ANC at the next election…

Remember he sat NEXT to Zuma and voted “confidence” in his ability!!!

Without the necessary structural reforms the plan becomes quite meaningless. If there is a ever receding economy there will be no economy to fix things for the poor and marginalized. You cannot transform off the back of failing entities.

Good news from Atterbury and Toyota.
Remember when Cyril took over from Zuma’s Kleptocracy.
There was lots of disastrous news every day.

We have a long way to go and I thank Mr Ramaphosa and the hardworking Civil servants and business’s that are making it happen.

Clear that you do not deal with officials at vital govt departments like Masters Office or court officials on a regular basis. They have zero interest to do any work except on cellphones and in the mean time private biz who pays the tax are being paralyzed. They cannot even do the basics.

You grow your own or is it just very good stuff you’re buying?

Tito wants to, CR wants to but the Zupta faction don’t.

I wonder what defines the faction with the most say in this Cabal of Criminal Cadres running the Corruptheid State? Possibly it’s a game of smoke and mirrors – ‘good cop, bad cop’ stuff we see on TV. The “good” guys are there to create the optimism required for the Moody types and politicians of other countries. As long as those politicians and potential ‘investors’ nod and smile when shaking hands at meetings and conferences all is fine. The looting in the background continues unabated.

Paining, I think as the can of worms opens we will be very surprised as to who gets caught when the tide goes out.

Ramaphosa implemented the positive alteration to the labour law that forces unions to act according to a transparent voting process of their members before they can go on a protected strike. This is a kick in the groin of the unions.

Ramaphosa pushed the “lowest cost option” of the IRP through the ANC NEC last week. This option will focus on the delivery of new green energy and moves away from coal and nuclear. This unexpected policy shift is truly groundbreaking. Ramaphosa even forced Magashule to present these positive results after the NEC meeting, even though it is the exact opposite of what Magashule wanted and promised to his faction. This was done to show who is in charge I believe.

Mboweni’s economic plan was accepted at the NEC last weekend. This positive plan is not only Mboweni’s plan any longer, but it is also the ANC’s plan now.

We have a major turnaround at SARS. Some of the most senior politicians will soon face the courts on charges of tax fraud. There are stacks of evidence.

We have to give credit where credit is due. These events are groundbreaking and a fresh break with the terrible past. We have been waiting impatiently for the President to make his move. This is it. This is what we have been waiting for. These events are very significant. These positive changes prove that Ramaphosa is now in charge of the ANC. This signals the New Dawn.

Now, we await the execution of the new plans.

I soooooo sincerely hope that you are right and we as South Africans can finally start moving forward.

Yes I hear what you say but I have one eyebrow raised.

Reason.

AREP (African Rainbow Energy and Power). It seems there has been a lot of effort spent in gearing up properly for the green energy “revolution”.

Remember the meetings and pledges from Saudi sometime ago. Go back and have a look who was in the entourage representing “Business”. Obviously to help out with the .B.E. (you know what I mean).

No politician will face anything. The NPA is still captured and dysfunctional. They say they lack capacity. Hahahaaaa. You want to tell me they could not take a single high profile person to court yet? Its not as though they don’t have a single prosecutor.

They do nothing to show who is in charge. They do things to try and con the public and ratings agencies etc. They have a totally socialist agenda and that will never change.

Take from the have’s and give to the have not’s.

The NEC accepted nothing. Read between the lines. They know our man’s reputation is in tatters and he is no longer in a position to be used as Mr. Confidence.

Unfortunately there is no credit due.

I would so like to agree with Sensei’s comment but unfortunately my gut-feel is as you describe. I would love us to be wrong but I suspect we will be disappointed – again.

My opinion never is the consensus opinion. Never popular or populist. Simply because the majority is always wrong. I do not attempt to predict the future. I simply state what I see, and what I see is fundamental break with the past. The events over the next 6 months may prove me wrong or may prove me right. Let’s see. I am a fierce and passionate critic of the ANC, but when the facts change, objective opinions must also change.

agree ….but not with seniors in courts….it will be the juniors that will face the music

And … “Why the economic plan will remain in the discussion corridors?”

Because the ANC simply does not have anyone with the capacity to carry out any radical new policies efficiently which is why the economy is stagnating. Does nobody get this? We have a bloated disinterested civil service and a parliament more interested in talk than action.

Sigh …

You omitted one adjective – “… bloated, disinterested and largely incompetent ….. “. A short and most accurate assessment.

“….the continuing weakness in the economy and a political leadership that is shaky has dented my optimism.”

Yip ….summarizes most sane, wise minds in South Africa

It’s high time Cyril developed some testicular fortitude and started implementing. A number of his cadres should be serving jail time by now!!!

Load All 22 Comments
End of comments.

LATEST CURRENCIES  

USD / ZAR
GBP / ZAR
EUR / ZAR

Podcasts

SHOP NEWSLETTERS TRENDING CPD HUB

Follow us:

Search Articles:Advanced Search
Click a Company: