One disturbing aspect of the ANC’s 2024 election manifesto is that it contains no fresh thinking about how to lift economic growth out of its long stagnation. Even more disturbing is that it barely mentions economic growth at all. There is certainly no indication that it is a priority for the governing party or for government or indeed for a country whose growth rate has averaged just 0.8% over the past decade, just half the population growth rate.
There is scant evidence that the party sees much higher rates of economic growth as critical for SA to create employment on the scale needed to tackle unemployment. And there is no sign at all that it seeks to create the kind of enabling environment that would encourage the private sector to invest and create those jobs at scale.
Instead, the manifesto relies on a largely state-led notion of the way forward for SA’s ailing economy, and on largely old-fashioned notions of industrialisation. And it repeats some old calls for measures which can only deter private investment and undermine efforts to turn around the economy.
At least it does take SA’s unemployment crisis seriously, making it priority number one to “put SA to work”. But its solution relies essentially on the state creating “work opportunities” using taxpayers’ money, or trying to sweet talk the private sector into creating jobs as some kind of “national effort”.
Using a range of public employment programmes to create 2.5- million temporary jobs, as the manifesto suggests, is the proverbial drop in the ocean of unemployment — pure politics rather than plausible economics. And while SA should and could do much more to make it possible for small businesses to thrive and create jobs, the manifesto doesn’t offer convincing recipes to do so — nor does it offer any for larger businesses.
Then there is the jargonish cross-cutting industrial strategy the ANC suggests, with saving the steel industry top of the list. Even its notion of the “industries of the future” and how to create an environment for them is limited. And it is extremely vague on how, as it puts it, monetary, fiscal and trade policy plus the transformation of the financial sector might be “aligned” to meet basic needs and support job creation and industrialisation.
It’s hard to imagine that the manifesto can make tackling the high cost of living a priority without mentioning inflation or SA’s policy of inflation targeting and its success in curbing inflation over the decades since the ANC became the government. And predictably, perhaps, the ANC avoids the subject of administered prices — those set or regulated by the government or public sector such as fuel or electricity — which have consistently risen faster than average, driving up the cost of living.
On the upside, the ANC does see infrastructure investment and the energy transition as important. On the downside, the manifesto contains a few one-liners that can only discourage fund managers, bankers and other private investors who can bring real money to bear to invest in the infrastructure SA so urgently needs. The ANC will “engage and direct financial institutions to invest a portion of their funds in industrialisation, infrastructure development and the economy, through prescribed assets”, the manifesto tells us.
Prescribed assets are hardly a new idea: the idea has come up repeatedly over the past two decades or more. That the ANC is still pushing the idea reflects a cash-strapped government growing ever more desperate for resources, without the will or capacity to just make it easy and profitable for the private sector to invest. Private sector institutional investors have long been keen, even desperate, to invest in infrastructure. Bankers would love to arrange the deals that would enable them to do so.
But the government needs to create the bankable projects that are required, and to put in place the regulatory environment that will make those projects fly. It has failed to do so. And if private sector institutional investors are forced to invest in “prescribed assets” with sub-par returns, it is the pensioners and savers whose money those institutional investors look after who will suffer. Such strategies will simply cause SA’s economic resources to be allocated in ways that will not promote sustainable economic growth or create sustainable jobs.
It should hardly need to be said that the “expansionary fiscal policy” that the manifesto calls for won’t do that either. Fortunately, the government is not pursuing an expansionary fiscal policy but is trying instead to run the public finances more prudently. Fortunately at this stage it isn’t implementing prescribed assets either. Indeed, what’s striking about the manifesto from the governing party is how far it is from the stance the ANC-led government is actually taking. That has to put question marks over how serious the party is about any of its election promises.
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