One question stands out in President Cyril Ramaphosa’s growth and recovery plan: is it credible?
To be credible it must target the right things and it must be implementable. Will the plan do these things?
As the government likes to include the kitchen sink in all its strategic, social compacted plans, prioritisation and focus is critical. While earlier versions of the plan, circulated in a PowerPoint format, came across as a long list of things to do, in his speech Ramaphosa did provide much-needed focus.
He characterised the four main elements of the plan to be an employment stimulus; infrastructure delivery; establishing energy security; and building the productive base of the economy. Included in the last element are the structural microeconomic reforms particularly to the network industries, which could lower costs, widen access to economic opportunities and create better efficiencies.
Macroeconomic policy, though integral to recovery and growth, do not form a part of the recovery plan. This has been left to finance minister Tito Mboweni to deal with in the medium-term budget statement and to the SA Reserve Bank.
The R100bn employment stimulus is the boldest part of the plan. The aim is to create 800,000 part-time job opportunities over the next five months. In addition to building on successful public employment programmes, such as road-building and municipal cleaning, new innovations have been added. School teaching assistants, early childhood educare workers and other employment opportunities for youth have been added to the mix.
With hunger and unemployment spiking due to the lockdown and Covid-19 special grants coming to an end soon, more social support is morally and politically imperative. The big question though will be whether the champions of the programme, located in the presidency, will be able to hang on to the R100bn, which is spread over this and the next two years. This depends on the horse-trading over the budget, not so much in the immediate future as a commitment of R13.8bn has been made, but in the next two years as the fiscal framework tightens.
Implementation will be a challenge as the time-frames to achieve this year’s targets are tight. Decentralising the programme to departments, cities and provinces will be the way to do it and it is encouraging that the presidency has incorporated these institutions in planning and conceptualisation.
In the other three focus areas implementation is more difficult. Infrastructure investment, energy security and reversing deindustrialisation have been part of the policy to-do list for the past decade. There is, though, little to show.
Why has implementation failed? The absence of the political will to carry out reform, especially within the ANC and the top of government, has been the most binding constraint. In this environment, a fragmented and disunited cabinet in which ministers and departments went their own way in their own fiefdoms, often for nefarious reasons, flourished and was an obstacle to getting things done.
To this is added the problem of the weak and incapable state, hollowed out by corruption and cadre deployment, with too many of the wrong people in critical jobs, and as the asset base was run down by years of corruption and neglect.
The political will for change is now meaningfully strengthened. While the radical economic transformation bandwagon tweets from the margins, when it comes to policy and power in government, they are a spent force. The unity, competence and coherence of the cabinet is less assured. Because the government is big and complex, it must be driven from the centre. Too many cabinet ministers are fixed on advancing their own careers rather than falling in with the line of march.
It is these cabinet ministers who are responsible for driving structural reform in energy, transport and telecommunications as well as industrial policy. Without their complete buy-in the goal of industrialisation will be impossible to achieve.
Mineral resources & energy minister Gwede Mantashe is a case in point. While Ramaphosa frequently promises to accelerate energy generation capacity — something he did again in his speech — it continues to move at a slow pace. The energy security dimension of the recovery plan is no different from what Mantashe has already announced. The “acceleration” Ramaphosa says will now take place does not ring true in this context.
Mantashe’s vision for the future is coloured by gas expansion, something which requires huge infrastructure spending and will take time to complete, rather than the direction in which the rest of the world is heading to harness the power of green technology.
The presidential economic advisory panel, whose report on the recovery went to Ramaphosa last week, advised a much faster and greener energy transition. It warned that SA will be excluded and left behind on the innovation and the cost curve and will risk being stuck with stranded assets.
Key to implementation of the plan in general will be the structures established by Ramaphosa in the presidency. A project management unit, headed by economist Rudi Dicks, has been set up to “unblock problems” and has done valuable work on visa regulations and port incapacity. Together with the unit that finance minister Mboweni has called “Vulindlela”, they will monitor the implementation of plan by line departments. To “unblock” problems they will have the muscle of the president behind them.
The presidency also now has an infrastructure and investment office led by Kgosientsho Ramokgopa, which has to an extent succeeded in doing things differently. The new element is that private sector expertise has been used to scope and prepare a pipeline of projects and infrastructure investment is squarely focused on leveraging the private sector.
Through a new structure called Infrastructure SA, which is located in the department of public works & infrastructure, resources and capacity from the Treasury, the presidency as well as engineering and finance skills will be brought together.
It is envisaged that the R100bn seed money to the Development Bank of Southern Africa (DBSA) Infrastructure Fund, provided by the government, will leverage R10 for every rand, which is how the plan arrives at the claim that it will result in a R1-trillion infrastructure spend.
While the good intentions cannot be doubted, SA has failed too many times on big and infrastructure plans. Now, there is proliferation of departments, offices, intergovernmental committees as well as the involvement of implementing agents such as the DBSA. The risk is that this complicates the process and slows down infrastructure delivery rather than speeds it up.
In conclusion, elements of implementation are on a slightly better wicket than when Ramaphosa first stepped into the presidency two years ago. But to pull off this plan, the president needs to fix his cabinet, build its unity and commitment and pay more attention to the performance of his directors-general, who head government departments.
He is slowly re-establishing his office as one with a co-ordinating function. There is a long way to go though and valuable time has been lost.
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