Whichever way you look at it, President Cyril Ramaphosa’s track record in managing the economy has been deeply disappointing, to put it mildly. After almost four years as president he has nothing to show.
SA’s voters seem to agree — 2.7-million fewer people cast their votes for Ramaphosa and the ANC in the recent municipal poll than in 2016 when Jacob Zuma was president. In 2016 many ANC voters stayed at home, and the optimists in the party said things could not get worse, that Ramaphosa would turn things around. But it did get worse.
One economist told me last week that the only way to make sense of finance minister Enoch Godongwana’s maiden medium-term budget policy statement (MTBPS) is that the ANC hates votes. It does not want to be in power anymore. It has had enough. According to the Treasury’s own forecasts GDP in 2021 will be lower than it was in 2019. The government’s economic recovery & reconstruction plan will not deliver GDP growth. This is not my opinion. This is the National Treasury’s economic forecast.
In 2022 and 2023 there will be an annual average GDP growth rate of 1.7%, barely enough to keep up with expected population growth. Few jobs will therefore be created over the next 31 months or so until the next election, when there could be 13.5-million unemployed people. The unemployment rate for black Africans will be well above 50%. And Godongwana will still be refusing to provide Eskom with money for maintenance.
Eskom CEO Andre de Ruyter will be implementing six hours of load-shedding every day, even election day. Yet the ANC will be expecting people to vote for it in the 2024 election. At that point the only way to stay in power will be to share it with the DA. After the election, Ramaphosa will appoint his deputy, John Steenhuisen, to head a panel to revive state-owned enterprises (SOEs) and privatise Eskom and Transnet.
At every opportunity ANC leaders talk about infrastructure spending and structural reforms — the business sector’s favourite political slogan — as the only way to revive the economy. In 2020 SA had an investment ratio of 13.7% of GDP. The annual shortfall to reach the National Development Plan’s investment target of 30% of GDP is R900bn. But let us not forget that a public sector investment strike is the main reason for the collapse of total investment. Since 2013 public investment by the general government and the SOEs has declined 35.5%. Investment by SOEs alone has collapsed by 54.7%
Let us also not forget that Ramaphosa first announced a R400bn infrastructure fund in September 2018. In February 2019 the Treasury reduced the size of the fund to R100bn. Since then every year it made an allocation to the fund that was later cancelled. In the 2021 budget R4bn was allocated to the fund. In the recent MTBPS the allocation was cancelled.
As a result, after three years the fund has no money. So, ANC leaders, please stop talking about infrastructure until you explain how you will reverse the public sector investment strike and make a contribution to your own infrastructure fund.
To business leaders, please stop shouting political slogans about structural reforms without looking at the details. Remember, the Treasury’s own economic modelling in October 2019 said the structural reforms would only create 142,000 jobs within the first three years. Do the numbers about the annual investment that will stem from the structural reforms at Eskom and Transnet. According to my calculation, they will close less than 6% of the country’s annual investment shortfall.
As economist Stephanie Kelton says: “Capitalism runs on sales.” Business can invest if there are customers at the door. It is absurd to believe that creating two customers — at broke Eskom and Transnet — will be enough to turn the economy around.
• Gqubule is founding director at the Centre for Economic Development & Transformation.
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