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It is widely believed in the business and investment community that while President Cyril Ramaphosa is treading softly on economic reform right now, after the election, when he is returned with a large majority, he will have the space to make the changes the economy needs.
As is often the case in life, this is a situation where people are believing what they want to believe. However, it has little grounding in reality, which will likely turn out to be quite different.
After the election has passed, the next ANC hurdle will already be looming over Ramaphosa. The ANC’s national general council (NGC) — its mid-term gathering between conferences — is usually held in July, two-and-a-half years through the ANC term of office. It is due in 2020 and, while it will probably be delayed by a few months, it will need to be held before the year ends.
No voting takes place and no policy resolutions are passed at the NGC. Its function is to provide an opportunity for assessment of the ANC conference resolutions and for the membership to check that the leadership is on track with their implementation. Although smaller than the national conference, it has the same composition, with branch delegates represented on a proportional basis.
It was at the NGC in July 2005 that the fightback against Thabo Mbeki — then president of the ANC and the country — was launched by the Jacob Zuma faction. Mbeki had just sacked Zuma as deputy president of the country (on Mbeki’s version, Zuma voluntarily stepped down) and the NGC marked the point at which the wheel began to turn against Mbeki.
Since their shock defeat at Nasrec, the Zuma faction has been speaking of retaliation at the next NGC. The immediate plan following Nasrec was to stage a rebellion big enough to warrant calling it early. That has not happened, but the forum will be a rallying point for the fightback.
As this is the forum where policy implementation is assessed, Ramaphosa will come under pressure. Demonstrable progress will be demanded on the land question and expropriation, the nationalisation of the SA Reserve Bank and the National Health Insurance scheme.
With the pressure of the NGC coming so soon after the election, Ramaphosa will be less rather than more able to implement the hoped-for reforms.
Even without the pressure of the NGC, the reform programme would be tightly circumscribed in any event. The negotiation of mining regulation, the acceleration of the policy steps to release broadband spectrum for auction, and changes to governance at state-owned companies are meaningful and important progress. So will be the change to the leadership of the National Prosecuting Authority and the SA Revenue Service, which should be completed by then.
But other big-ticket reforms are going to be difficult. Turning the state-owned companies into sustainable entities is going to be hard. There is huge contestation over retrenchments in each one. The economic environment — a technical recession, rising rates of unemployment — make job cuts very unpalatable. Some privatisation, say at SAA, might be possible, but anything else is going to be resisted.
A rebalancing of public finances also looks nigh on impossible. The medium-term budget policy statement showed that the Treasury and the cabinet are willing to go only so far and no further. While the Treasury held the line on the expenditure ceiling, higher-than-expected debt costs, due mainly to rand depreciation, meant more fiscal slippage. Sticking to the plan for debt consolidation would have meant very deep expenditure cuts. No-one was up for doing that.
There is huge resistance to public sector wage bill restructuring. Retrenchments will not take place and attempts to change the annual increment system will also be resisted.
It is becoming clearer that Eskom will need financial support. If the government takes Eskom’s debt onto its own balance sheet, debt consolidation will be pushed out even further. Taking on Eskom’s guaranteed debt will add about four percentage points to government’s debt-to-GDP burden, which is already expected to peak at 59.6% in 2023/24.
Alternatively, if the government provides a cash bailout, spending will be under even greater pressure, and we know already that there is little appetite for such deep cuts.
Labour market reform is also politically impossible. At the jobs summit, labour showed how unwilling it is to compromise, almost walking out when business would not agree to a moratorium on retrenchment. Cosatu is under its own political pressure and has the upstart Saftu federation to contend with in competition for members.
It is a difficult configuration of political forces, none of which is likely to provide Ramaphosa with a whole lot more space to work with.
Correction: December 10 2018
This article has been updated from an earlier version which incorrectly stated that the ANC's NGC will be held in 2019. The NGC will take place in 2020.
• Paton is writer at large.
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