Over the past few weeks, as the government of national unity (GNU) approached its first 100-day milestone, a couple of fortuitous developments have aided the narrative that the GNU is indeed the best outcome SA could have cobbled from the 2024 general election.
Even before it was formalised, the prospect of the GNU excited various stakeholders, whose anxieties regarding political permutations translate to decision-making. Currency speculators, investors and scenario planners across the system agreed that SA faced a crossroad where an ANC alliance with more radical political partners would have repercussions that most preferred not to contemplate.
On the other hand, an alliance with parties of more moderate political persuasions that would be willing to put their ideological divergences in abeyance to enable the country to form a government led by the ANC would be an exercise in political pragmatism.
Since then the GNU has benefited from the windfalls of good fortune and some of the more painful decisions undertaken in recent years. The Reserve Bank’s resolute focus on keeping interest rates higher for longer until the inflation stabilised within its preferred range has ultimately resulted in the long-awaited lower inflation and interest rates that will help many citizens manage their finances better.
The country’s currency, which is notoriously volatile, has maintained a strengthening trajectory that has helped lower fuel prices and provided more relief to citizens. The load-shedding crisis that haunted us for much of the past decade has largely dissipated, and citizens can once again plan without wondering whether the lights will stay on.
These windfalls of progress can be contrasted with the continuing consequences of all that befell us before this shift. The logistics and energy crises may not be getting worse, but at their peak they hobbled the economy. The lackadaisical approach to public finance management created a public resource crisis that is primarily being felt in the education sector but will eventually be felt throughout the public sector.
Poor vigilance within our financial ecosystem and dire law enforcement capacity resulted in SA’s greylisting by the Financial Action Task Force (FATF). Since the greylisting, entities such as the Public Investment Corporation and large banks have found the terrain in the foreign transactions space more onerous than before. SA’s response to the greylisting was supposed to be a co-ordinated effort involving MPs and regulators, and the occasional presidential reminder for everyone to pull up their socks.
Progress thus far remains mixed, as lawyers, bankers and other conduit organisations that facilitate transactions that occasionally require elevated scrutiny and referrals to regulators remain tentatively committed to the process. As a result, regulators such as the Reserve Bank have issued fines and sanctions to various entities regarding their processes, which form a critical part of the money-moving cog.
Critical risks highlighted by the FATF regarding money-laundering and terrorism financing and all sorts of inexplicable money flows are the type of risks no country should tolerate. The legal sector, where problematic transactions can be given the veneer of legitimacy, appears to be the one sector where there has been little progress.
Rather than playing a proactive role in figuring out how to manage the balance between executing on client requests and instructions and acknowledging the harm caused by rogue clients to society at large, an impasse has developed where the commitment to transparency around beneficial ownership and similarly complicated structures has not been matched by a wholesale revision of current practices.
As a result, SA is running out of time before its next big milestone of February 2025, when we should be getting ourselves off the greylist. If we are unable to do so, the windfalls of pragmatism associated with the GNU may be undermined by the continuing consequences of where we went wrong for so long.
• Sithole (@coruscakhaya) is an accountant, academic and activist.
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