AYABONGA CAWE: Why Ramaphosa has to deal with today’s crisis without forgetting about SA’s tomorrow

Some call them “parole hearings” or “family meetings” that every so often bring us together to hear the answer to the question “what next?” in this unfolding drama. Last week we had two such meetings within two days of each other, one to outline the economic plan and the “sequencing” of policy measures to mitigate the unprecedented economic effect of Covid-19, and a second to share, in the immediacy of the moment, how the economy would be reopened in a phased-in, “risk-adjusted” process.

The reference to these announcements as family meetings rather than being a remark from the timeline of a witty upstart comes from an earlier and much-publicised period of crisis in the US and the world. It draws from the Roosevelt “fireside chats” that covered everything from the Great Depression to the banking crisis and the Allied war effort during World War 2. President Cyril Ramaphosa communicated the same self-assured, determined and informed approach to containing a virus that is said to have emerged from a Wuhan wet market.

It has left many meat markets closed in China, where it first wrought havoc, and left African villagers perplexed as police turned over meat-filled cauldrons and scattered half-fermented sorghum brew, “enforcing” social distancing measures. Even the sanctity of funeral rites stands at the feet of the tyranny of an airborne omnipresence and viral organism; invisible but fatally present.

“There are times when rules and precedents cannot be broken; others, when they cannot be adhered to with safety, timber merchant and banker,” Thomas Joplin said, referring to the role of the Bank of England in the 1825 stock market crash. He could have been referring to the many villagers who congregated at a funeral even after they had been told to practise social distancing. They could not fathom a time when the social rules and precedents that govern public behaviour no longer applied. Where neighbour could no longer interact with neighbour; pastor with congregant; teacher with pupil; mourner with the dead. Welcome to the new normal.

The president’s announcement of a set of emergency relief measures in the second phase of the response to this crisis was not a stimulus package in the traditional sense. Which is not to suggest that stimulus might not be part of the design of the sixth administration’s response. Some have suggested that R500bn is not enough. Maybe not. But that is not the main concern; the real issue is neither the quantum of the relief nor its adequacy in the immediate. Rather it is about the countercyclical potential of what has been announced. Its ability to present a countervailing economic force to the immediate necessity of disrupted production, lost jobs and empty streets.

It is the ability, a colleague suggested last week, for the R500bn to improve the long-run growth potential of the SA economy, rather than quarter-on-quarter movements in output. Only this kind of long-run injection of vitality will justify the unspeakable economic and personal sacrifices South Africans have taken on. Restrictions of movement hurt. But they buy us health and, more importantly, time. The latter we certainly do not have. The filter through which the economic proposals to decisionmakers from a wide cross-section of society have to be run consists of a number of considerations; can it be funded and is it administratively possible in the near term? Moreover, in the SA context, what distributional questions does it raise?

Administrative possibility, clarity on funding and distributional issues are crucial to policy design, though not necessarily to its success. We have seen this in the challenges faced by the Unemployment Insurance Fund (UIF), the online forms that jam up for SMEs applying for aid and food parcels at the centre of gluttonous local political contests that never reach the mouths and tummies they are destined for. It might be a new economy, but it is still politics, with its dreary tasks of process, negotiation and ultimately (in)action.

The countercyclical value of the interventions proposed (or even of those that will emerge in the subsequent phases of this crisis) will be determined by their potential for additionality and co-ordination of multiple economic interests. By this, as South Korean economist Kwon-Hyung Lee suggests, we are not referring to interest group politics but rather the interface between the economic structure and complex patterns of competition and co-operation between economic actors in a specific context.

In SA, at a local level the connected nature of these economic interests linking those with access to the public supply chain process and their agents in the real economy produce suboptimal outcomes in execution; even in contexts of considered and coherent policy planning and design. In this context of crisis, we ought to consider how the measures announced by agriculture minister Thoko Didiza (to support small-scale farmers) can ensure the food security of vulnerable households through local food vouchers that give access to the produce of small-scale farmers, to those targeted by the social transfers announced by the president. Effectively giving market access to those in need of demand-side support and intentionally recognising that such relief measures without such conditionalities underwrite the profits and dividends of large food processors and supermarkets. This is what the new economy ought to change.

In other cases we plan and budget, as the officials in Maluti-a-Phofung municipality did in 2017/2018 with R61.4m dedicated to water services and only R8m actually spent. And then act perplexed when the community rises up in anger when a young Mosa Mbhele drowns in a local river collecting water. This crisis teaches us that our failures and lack of urgency and intent at a local level are a matter of life and death for our people.

The issue is not about money, nor is it about “accommodating” the dominant role played in the economy by the state at this moment, as many pundits have suggested. Both are important to consider. Rather, the real issue relates to how money and state capacity interact to build the long-term potential of our economy. If we fail to do this due to chronic capacity challenges and narrow sectional interests, the weekly fireside chats or family meetings will be remembered by the people as spectacular rhetorical accompaniment in an SA liner heading for an iceberg.

• Cawe (@aycawe), a development economist, is MD of Xesibe Holdings and hosts MetroFMTalk on Metro FM.