AYABONGA CAWE: ANC leaders must address SA’s social decline

Over the next few days the resolutions of the ANC’s 55th national conference will implicitly reveal the governing party’s “theory of the state”. To understand the associated implications for governance and statecraft one must look beyond the drama, antics and pageantry.

Writing in a special conference edition of SACP journal Umsebenzi, Oupa Bodibe suggested that the postapartheid state acts in two ways that can help us better understand its character.

The first is to stabilise and manage, using regulatory, legislative and other measures to enable and encourage the functioning of a capitalist economy. In this instance the state is both a player and a referee in what the governing party sees as a mixed economy.

This involves operating freight trains, transmitting electricity, buying and selling water, issuing licences and regulating and participating in economic activity in a manner that should enhance the wellbeing of the society.

The second, linked to the first, involves the introduction of measures to change the historical features of this society and economy. These include, among other things, welfare provision, redistributive taxation and spending, preference in the allocation of state contracts and tenders, and legislation that influences the balance of power in firms, communities and homes, between bosses and workers, black and white, men and women.

If we accept Bodibe’s formulation there are a few areas in the evolution of the postapartheid state that require engagement by the ANC’s new leadership.

The first is addressing the characteristic features of SA’s deepening social decline. Yes, load-shedding, but also potholes, dysfunctional water treatment plants, police stations in need of private security protection and many other observable signals of the crisis around us.

The second is a clear signal on the medium- to long-term path and design of social policy. Will it include a basic income grant? More indigent-targeted free basic services? A family grant? What linkages will there be between increased social spending and employment through increasing local production? Will it be funded by a wealth tax or greater borrowing?

The third involves the terms of access to public goods for both firms and households. At what price do firms and households access the goods and services provided and priced by the state? These are all an input to production and just “getting on with life” in the social reproductive sphere.

This matters, including for politicians, as a response to the unfolding cost of living and economic crisis, which is to a great degree within the control of the state. This is unlike many other areas where price-setting is done by an imperfectly competitive market — exchange rates, bond yields, unit labour costs.

One sentence has been repeated in all of the recent statements of the SA Reserve Bank’s monetary policy committee: “Electricity and other administered prices continue to present short- and medium-term risks.”

Eskom’s 32% tariff increase might kick in by April this year, subsidised passenger bus fares might rise in July, and cost recovery imperatives might prompt Rand Water and Umgeni Water, which service SA’s key industrial and most populous provinces, Gauteng and KwaZulu-Natal, to increase their tariffs above inflation.

As we heard at the end of 2022, Transnet is considering hiking rail tariffs on certain high-value freight. If these firms use these tariff increases to recover costs regulatory reviews must consider whether these have been appropriately incurred and whether there is a long-term plan to manage such cost escalation.

The ANC resolution to broaden the policy mandate of the central bank beyond inflation targeting presents an opportunity to reconsider one of the key drivers of inflation in SA — the prices set by the state. And to consider what these prices tell us about the nature of our public corporations.

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