The theme of WEFAfrica 2017 — Achieving inclusive growth through responsive and responsible leadership — would have been an appropriate founding moral code and political philosophy for the incoming democratic government in 1994, as it captures the essence of what needs to be done to reverse the racist practices of the colonialists and the apartheid regime.
However, 23 years into the transition period, serious questions are being raised about the pace of change and the extent of its inclusiveness — as well as a breakdown in governance. Too many people legitimately feel left out of the democratic dividend and are now furiously calling for faster socioeconomic transformation.
The legitimate and loud calls for "radical economic transformation" reflect the shortcomings of our development strategy and trajectory that has left millions of poor and undereducated people out of employment and other opportunities for self-improvement. Many people, including some in the new middle class, have expressed their frustrations with what is perceived as "white monopoly capital" as the biggest constraint to inclusive development. It may be helpful therefore, in the circumstances to interrogate the context we inherited at the dawn of democracy and how we may best handle these increasing and strident calls for a new and radical approach.
The apartheid legacy was profoundly challenging and massive in material terms. The ANC-led democratic state was confronted with:
• reducing racialised unemployment, poverty and inequality,
• the comprehensive and radical transformation of the economy to better reflect the country’s demographic profile,
• the creation of a just and inclusive society in which the consciousness for social justice is the norm,
• an economy that was in junk status and burdened with crippling debt that was accumulated by the apartheid regime,
• legitimate expectations from those who were previously excluded that the new democratic dispensation would bring immediate and better prospects for them, and
• the progressive consolidation and realisation of the democracy and society envisaged in our Constitution
Under these circumstances, the ANC-led government had a moral obligation to respond to these challenges through a comprehensive set of social welfare grants and other benefits, such as rolling out free housing, access to electricity and water, in order to mitigate the crippling effects of poverty and inequality.
However, the ability to sustain this vital commitment had to be underpinned by a healthy and growing financial position of the state. Therefore, implementing fiscal discipline and reducing our national debt, which was limiting expenditure allocations, was indeed top priority.
Building a strong, credible and competent Treasury and South African Revenue Service was a compelling and urgent need. This was not an easy policy and strategy to execute but ultimately we managed to reduce our budget deficit from 4.5% of GDP in 1994 to a surplus of 1.0% in 2008. Government debt also fell from 43% of GDP in 1994 to 27% in 2009.
Notwithstanding these impressive achievements, the contextual reality that confronts us is that more than 23 years after apartheid, far too many South Africans live in poverty. The principal reason for this, and for our enormous inequalities, is that far too few South Africans are employed. This has serious implications for our politics and stability and the populist declarations that are being made by the ANC and its affiliate organisations is a response to this reality, and the fact that electoral loss in 2019 is now a real prospect following its dismal performance in the 2016 local elections. What then should have been done to avoid the current situation?
What follows are some of the critical policy choices we needed to get right.
First, building a capable and efficient state and supporting state institutions at the three levels of government is, and continues to be, a top priority in the context of high and growing inequality, poverty and unemployment. Efficient service delivery is impossible without achieving visible success on this question. There is no doubt that the ANC perfectly understood this compelling necessity; however, in the last 10 years, the biggest focus and energy of the current administration was to build a very successful patrimonial state staffed with incompetent but compliant cadres. And this objective has been achieved successfully.
Second, SA’s economy has been characterised as having very high levels of concentration and vertical integration, and that it is also capital intensive. The large number of very serious anticompetitive behaviour cases in the marketplace attest to this view. There is also a credible view that it marginalises and excludes the small-and medium-sized enterprise sector.
What has been missing is a highly focused strategy and determination to fortify our competition laws and progressively, but aggressively, break the monopolies and oligopolies that still define our economic framework.
Third, policy uncertainty and confusion contributes negatively to creating an investor-and business-friendly environment. The fundamental question we have to deal with is whether the menu of growth policy documents — Reconstruction and Development Programme (1994), Growth, Employment and Redistribution (1996), Accelerated and Shared Growth Initiative SA (2006), the New Growth Path (2010) and the National Development Plan, will indeed deliver the desired outcomes. We have also been introduced to the nine-point plan, which now seems to be overtaken by the radical economic transformation catchphrase
Johannes Fedderke states: "There is not one country in the world that has addressed the problem of poverty without first getting on to a high growth trajectory. Growth is not a sufficient condition for solving the problem of poverty but it is certainly a necessary condition".
How we manage to grow out of this recent quagmire depends on how the new minister of finance, with the support of the President, manages to maintain policy certainty and terrain, and how he rebuilds a credible social pact with the domestic investor community.
Finally, the dysfunctional failure of the education system that happened under our watch is unconscionable and must be fixed without delay. Accountability is at the centre of failure in this area as it is in all other areas.
Lifting the standard of governance and ethical leadership must underpin everything we intend to do to reverse the current trend and eliminate the cancer of corruption that is suffocating the entire state system.
• Motsohi is a strategy consultant at Lenomo Strategic Advisory.
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