Treasurers’ Conference – Politics and Structural Reform

JP Landman walks us through the various structural reforms underway in South Africa at the moment and illustrates how some of these may look like they are progressing extremely slowly, but that even small progress is hugely encouraging and positive.

The reform agenda

The president yesterday in Parliament in his budget vote speech once again repeated the importance of structural reforms to get the economy going. The only way to put South Africa on a new growth trajectory is to implement the structural reforms that should have happened a long time ago. This includes electricity and energy security. Secondly, we talk spectrum and thirdly, infrastructure. There's a lot of infrastructure that need to be fixed in South Africa, and those are the three things the government is focusing on. There's also a fourth aspect - public employment. The President announced a programme in October last year to employ 800 000 young people at a stipend of R3500 a month for three years. This could make a big difference in the lives of not just 800 000, but also their families. This programme is running well. Of the 800 000 jobs, 300 000 are in education as teachers’ assistants, janitors and as cleaners in schools. 800 000 jobs are not going to move the dial on South Africa's unemployment numbers, but it's a good start. The main thing is to get the economy on a new growth trajectory, and then energy, spectrum and infrastructure are the key levers.

Has President Ramaphosa’s position within the ANC been solidified?

In March this year, we got the ANC's status step aside, ruling. In general, the train of stepping aside is moving forward. More people are being kicked out of meetings or are leaving meetings. If you look at what's happening on the ground is unassailable. Ace is doing him a huge favour with his outrageous behaviour. If Ramaphosa’s health allows it, he will complete two terms, and in eleven years will put South Africa on a very different path. Just look at how far he has come in three years.

Has the Zondo Commission been worth it?

The Zondo Commission has been highly profitable. It’s cost the taxpayer R1 billion with a little bit more to come. McKinsey has so far repaid R1.87 billion directly as a result of the publicity of the Zondo Commission and Deloittes has repaid something like R270 million. The Zondo Commission has already brought much more money back into the public domain than what it is costing the public domain. The Commission was supposed to expose the truth to South Africans. It’s not a prosecutor and is not supposed to charge people. It's supposed to expose what has happened and extent of state capture, and I think they're doing a sterling job on that. The next step is now for the NPA to take that information and proceed with criminal prosecution. Not a week goes by when the Special Investigative Unit (a division of the NPA) doesn't freeze assets somewhere. They have already put billions of Rands back into the fiscus. This is not a criminal process, but civil action and it's working. People who looted are getting their comeuppance. Justice is only served when somebody is in orange overalls. Criminal cases are difficult.

What is being done at a municipal level to improve service delivery?

Local governments in South Africa are a complete mess and there are several reasons for this. Firstly, we’re paying the price of many years of excluding people from education and experience.

Secondly, the structure of local government is very complex and sophisticated and is inherently difficult to run. These problems are severe and there are no shortcuts. You just have to work through it and build capacity over time. Roughly 80% of South Africa's GDP is produced in municipalities, which are mostly functional. In some areas, different forms of local government are coming to the fore. In the Eastern Free State, Eskom has introduced a different model of distributing electricity and collecting money for it. I think that's the way we will work our way through the mess of local government - there's no shortcut.

What can we expect in the next local elections?

I think that ANC will do fairly well and countrywide will get more than 50% of the vote. They may have a reasonable chance of getting Tshwane and perhaps Nelson Mandela Bay. I think the opposition parties in general are going to do worse. I don’t think the DA will get as much as 27%, which they got five years ago. The EFF has not shown any progress on the 11% that they got in 2019 team. If your second and third parties are stuck at plateaus then the ANC should do relatively well. The DA and EFF could get around 10%-15% each with the rest, particularly local government, will go to an assortment of local parties, ratepayers’ associations, local civic groups, etc. I think that's how it will play out. Mr Ramaphosa and the ANC is very popular, and the ANC’s anti-corruption drive is resonating with voters.

What keeps you awake at night?

Firstly, youth unemployment. 50% of black youths are unemployed and that is a massive issue and will have to look further than the labour market to fix that. Secondly, the incapability of the state. The South African state is not a highly efficient machine, and that capability has to improve. One of the critical things I believe must be done, and Mr Ramaphosa has started doing this, is to take away the authority from ministers and political appointees to appoint or dismiss director generals. The average tenure of a director general in South Africa is just more than 2.6 years, which is a ridiculously short time.