ISAAH MHLANGA: Policy directive is what matters now for SA

SA’s general elections have come and gone, and we now await results that continue to trickle in. From the tally at the time of writing, it appeared that the governing ANC would win a majority and its presidential candidate, Cyril Ramaphosa, will receive a mandate to establish the sixth administration since the advent of democracy in 1994.

What is not yet known is the margin of the victory, which matters for the next contest — policy choices.

There is a broad agreement among analysts that a majority win of close to 60% of the national vote will give Ramaphosa a strong mandate to implement pro-growth and employment reforms. Now that the intense period of contestation between political parties, and the love affair between political parties and the electorate is behind us, differences must be set aside and South Africans must rally behind a common SA-first attitude.

For the majority, who remain on the margins of the economy, this must mean the creation of decent jobs that will enable them to lead dignified lives.

Employment growth is to a large extent an outcome of economic growth, and to a lesser extent of the willingness of those charged with leading the economy, including political leaders and business leaders, to do what is required of them. Debate on these pages tended to focus on macroeconomic policy — fiscal policy and monetary policy — which in my view is broadly fine except for our high current spending and debt levels on the fiscal side.

The implementation of what the economy needs to grow is almost everywhere a micro-economic issue. As the Bank of England chief economist Andy Haldane argued last Tuesday, all economics is local, so the focus in SA needs to switch to micro-economic reforms that can address bottlenecks at sectoral levels and at the municipal level.

Consumer confidence will only improve if citizens can experience their economic well-being improving in their homes, in their towns, and in their cities, not when things are well next door. Likewise, business confidence will improve if their assessment of the policy environment assures them that the conditions on the ground will enable their businesses to grow.

—  It is common knowledge that confidence is the cheapest form of stimulus.

It is common knowledge that confidence is the cheapest form of stimulus. So what are the broad requirements to enable both consumer and business confidence to rise, corporate activity to improve and jobs and the well-being of South Africans to improve?

First, the overarching requirement is good leadership — both public and private sector — and an effective government, and governance in the case of the private sector. On the public sector side, it is a pre-requisite to professionalise the public service to ensure service delivery, particularly at local government level. That is, after all, where the majority of citizens interface with and experience a working government.

Professionalising the public sector will result in better co-ordination and implementation of policies across departments. The department of monitoring & evaluation should be given an additional mandate to co-ordinate all economic policies to ensure different departments do not implement conflicting policies.

Second, the investment drive that was started by Ramaphosa must continue, supplemented by the encouragement of a savings culture by the government and households. It is important that corporate SA first invest in the local economy before we can expect foreign firms to bring their funds. This message has been consistent from foreign investors; they want to participate in SA’s growth, not to kick-start it.

Third, forget prescribed assets for pension funds and present a clear case of investable projects complemented by the establishment of proper instruments to enable the private sector to invest. If the government has to prescribe investments like medicine, it means something is sick, and in this case whichever assets they prescribe will be sick. As a country, we can’t put the citizens’ hard-earned pension savings at risk.

Fourth, maintain macro-economic stability, which implies safeguarding the independence of the central bank and its mandate. In this case, ideology must be outweighed by pragmatism in so far as the ownership of the central bank is concerned.

Lastly, and perhaps most importantly, transformation must not be treated as a compliance issue. For the sustainability of the economy, transformation is a business imperative.

• Mhlanga is executive chief economist at Alexander Forbes.