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The ingredients of a pro-growth cabinet

A cabinet that supports evidence-based policy and decision-making is crucial.

A number of commentators have referred to the result of the May 8 election as a ‘Goldilocks’ outcome. The reason being that the 57.5% of the vote achieved by the ruling ANC is a sufficient decline from the just over 62% in the 2014 election to ensure that complacency does not creep in. Equally important, so the thinking goes, is that ANC support remained high enough to provide President Cyril Ramaphosa with a mandate to reform the ANC and the state, and ultimately pursue growth-enhancing structural reforms.

The first concrete test of the potential for reform will be when Ramaphosa announces his cabinet, most likely in the week of May 27. Speaking at a Goldman Sachs conference last week, Ramaphosa remarked that a ‘redesigned Cabinet’ was required to fix the economy.

A lot has been said about the need to trim the executive, with fewer ministers and deputy ministers expected than during the bloated-cabinet years of former president Jacob Zuma. The pesident has received wide support, including most recently from Cosatu, for his endeavour to put together a ‘clean’ cabinet, one that is devoid of individuals implicated in state capture and other wrongdoing. This should be a given.

Will the ‘captured’ MPs have diluted influence?

Unfortunately, we already know through the ANC parliamentary list that some high-profile ‘state capturers’ will remain as members of parliament (MPs). It remains to be seen what influence these individuals will have at, for example, parliamentary committee meetings.

Assuming we get a trimmed down, anti-corruption cabinet, the question is what contribution this could make to provide a confidence boost and spark a recovery in South Africa’s real GDP growth fortunes.

This would certainly be a positive post-election start for Ramaphosa, in part because it would provide the investment community with concrete evidence that Ramaphosa is exerting greater influence on the ANC. However, while necessary, this is unlikely to be a sufficient condition to ignite confidence and growth.

Simply put, an anti-corruption drive does not necessarily equal growth.

We do not only need our ministers to be squeaky clean, but capable of doing the job at hand.

Bearing in mind the constraints placed on the president in terms of gender equality, appeasing alliance partners, and ensuring unity within the ANC, the following can be seen as a quick checklist whether the new cabinet is likely to be pro-growth.

Requirement No 1: ‘Some knowledge’

First, we need people who understand what they don’t know and are willing to be surrounded by experts in the specific ministerial field. Preferably, the appointed minister should already have some knowledge of the issues in their portfolio. For example, given Tito Mboweni’s financial background and familiarity to foreign investors, it made a lot of sense to appoint him as finance minister last year. Cabinet ministers who support evidence-based policy and decision-making will be crucial.

Requirement No 2: A pro-business attitude

Second, a pro-business attitude could go a long way to improve the relationship between government and the private sector. It cannot only be the president who extends a hand to business. This has to be backed up by his lieutenants in cabinet. In this way, a real and lasting partnership between government and the private sector could be forged. A concrete example is in the area of education. There is a dire need for more schools. Why not encourage the private sector to build more schools with government providing the bulk infrastructure?

The previous cabinet had too many ministers who were openly hostile towards business. This is not to say that corporate excesses should be brushed aside. Rather, it would be helpful if cabinet was not distrustful of the private sector from the get-go. Given SA’s significant socio-economic challenges, we probably require a cabinet mostly made up of social democrats (in the European definition). In other words, people who are inherently supportive of the capitalist system. Social democrats also acknowledge that a capable state has a role to support the most vulnerable in society; those unable to directly share in the spoils of capitalism.

First prize, an entrepreneur or two

First prize would be the inclusion of one or two ministers with at least some background in business. Is it purely coincidence that the best run province in the country, the Western Cape, was for the last decade led by a number of people with an entrepreneurial background? Incoming Western Cape premier Alan Winde also has a business background. So of course does Ramaphosa.

The headlines after the cabinet announcement are bound to focus on whether any of the bad apples of the Zuma era are included.

Just as important will be to analyse the ideological predisposition of the appointed ministers. This will be crucial in gauging broader reform potential for the next five years. 

A cabinet open to reaching out to the business sector and to working together to find solutions for SA’s significant challenges is much more likely to ensure that the ANC’s election slogan of ‘Let’s grow SA together’ becomes a reality.

Hugo Pienaar is chief economist at the Bureau for Economic Research at Stellenbosch University. He writes in his personal capacity.

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One thing about ALL South Africans is our resilience.
However, the Zuma era was perhaps a test too far.
We now collectively hold our breathe and hope that this new broom sweeps clean. Not just for the weary taxpayer but for those that the ANC lost to the EFF and other political parties in the last election.

First thing he should be putting all his energy into is get Ace out, that guy is a wrecking ball and should be in jail.

Agree 100%. Magashule is busy trying to mobilise popular opinion against Ramaphosa. As a pro-Zuma man and up to his neck in alleged corrupt activities, he is desperately trying to stay out of jail as well as have the chance for continued access to the cookie jar. Really, one message needs to go strongly viral now: ‘ZUMA HAS ROBBED THE POOR!’ And that goes for all his henchmen as well. Folks toyi-toying to support the very people who have deprived them of decent education, healthcare, housing and sanitation makes absolutely no sense at all.

Just under 60% of South Africans returned these gangsters (yes I include Cyril) to government. The graph has dropped south for 25 years, it is now literally plummeting south, all the variables to measure our fiscal health are catastrophic and those self-same people are going to fix it? If you were to ask the cabinet, by way of example, what ‘discounted cash flow’, ompound interest’ or ‘depreciation’ were, maybe one or two would know what all 3 were. There’ll be no more Madiba miracles, SA is doomed to 3rd world mediocrity and then chaos

Very sad but true. He won the election fair and square and the voters endorsed corruption, failed SOEs, unemployment, shocking education, poverty and crime.

So as delivery continues to fail the voters will have to accept that they are responsible for this failure-they had choices but chose to look away( and were bribed to vote ANC-poor people with basic grants, middle class with AA and government jobs and rich with BEE tenders)

@ Dougalan – The ANC didn’t steal from the poor. They had nothing under the Nats, they still have nothing under the ANC. At least by voting for the ANC there is no white face telling him/her what they can and cant’ do. The average voter feels better off like this, even with all the stealing. Sure, the money could potentially end up helping them if it wasn’t stolen along the way, but they’ve never seen it before, nor will they, not as long as the clever revolutionary masters in SA politics care more about transformation than sustainability.

Whatever else Ramaphosa may or may not be, surely he can’t be described as an entrepreneur?

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