The new GNU must mend govt first

Ann Bernstein says that only then will it be able to start fixing the country

The new government must fix itself before it can fix the country

What can a new government do to get the country back on track after 15 years of stagnation and decline?

Over the past six months, the Centre for Development and Enterprise (CDE) has collaborated with a team of experts, business leaders, former public servants and academics trying to answer what is by far the most important question facing South Africa: what can a new government do to get the country back on track after 15 years of stagnation and decline?

When we started this project, the outcome of the election was difficult to predict. Indeed, it remains uncertain what kind of government will be formed and whether it will be one committed to making the reforms we need for the country to prosper or one whose composition and policies might deepen our political, economic and social crises.

Still, the uncertainty of the election results was one of the reasons for this project: for the first time since 1994 the possibility of a change in government was real, so we needed to ask what such a government would have to do if it were to succeed.

A glib answer to that question is: work hard and don’t steal.

A government committed to the values of hard work and honesty would represent a marked improvement in governance and contribute to improved economic performance. That said, given the extent and depth of the crises South Africa faces, working diligently and honestly is not going to be enough to turn the corner. So what else should a new government do?

We have narrowed it down to five priority areas: fixing the state, freeing up markets to drive growth and development, addressing the fiscal crisis, building a new approach to mass inclusion and strengthening the rule of law.

The necessity for a new approach to governing South Africa couldn’t be clearer. Annual growth has declined more or less continuously since 2009, and now averages at less than 1% a year. We have the deepest unemployment crisis in the world, intensifying poverty and a per capita murder rate that rivals that of war zones. Corruption is deeply entrenched, and the corrupt have little to fear from the law. Indeed, the MK Party is the most obvious winner of this election, despite its leader’s deep association with grand corruption.

The gap between tax revenues and public spending, though narrowing at last, is still unsustainably large, and sovereign debt has grown from less than R650m in 2009 to over R5.5-trillion today. As a percentage of GDP it has yet to stabilise, much less begin to fall.

To begin to fix all of this, the government needs first to fix itself.

Key to fixing the government is making sure that the cabinet and cabinet processes are fit for purpose. President Cyril Ramaphosa’s cabinet has been too large and too full of compromised party loyalists. It has also been badly led, in part because cabinet processes have become much less disciplined. It is no surprise that so many bad decisions are taken if the process of seeking, obtaining and analysing the information needed to make those decisions is erratic.

Strengthening the Presidency so that it can provide much better leadership to the cabinet is an essential precondition to addressing the complex challenges we face.

A better, smaller, more coherent cabinet is essential to dealing with our challenges. But so is ensuring that the people in the most critical posts across the government and the state-owned companies (SOCs) — directors-general, CEOs and so on — are honest and capable.

We are therefore proposing that the incumbents in about 120 “mission critical” posts all reapply for their jobs, and that, where individuals are not the best possible candidates for the job, they be replaced. This should be coupled with reforms to the way a new government handles officials who are credibly accused of corruption or theft so that they are speedily dismissed rather than suspended, often for years, on full pay.

Addressing the fiscal crisis and fixing the SOCs are the second major theme for a new government’s strategy. The choices here are challenging as there is little prospect of hastening the fiscal consolidation that is needed. An acceleration of economic growth after credible commitments to reform will ease some of these pressures.

Importantly, however, the government has to commit to accepting that the fiscal constraints we face are real, not a phantom of the “neoliberal” imagination. The government must, therefore, avoid all new spending commitments. Attention must also be paid to ensuring that public servants are better led, managed and supervised to improve productivity across the government.

Fixing operational and commercial challenges of the most important SOCs is urgently required. These challenges derive from corruption and mismanagement, but also from the absence of competition in the sectors it dominates. This means its operational failures persist long after the point at which customers would have defected to competitors, if these existed. Fixing the SOCs, therefore, is not just a matter of institutional-level tweaks, but requires a radical rethinking of how the markets in which SOCs operate will be structured.

A third area for prioritisation is the freeing up of the economy so that markets and firms, disciplined by competition but supported by a capable state, are able to thrive. It is critical to recognise the untapped potential for firms — formal and informal — that has been held back by a combination of bad regulations, increasing crime and a rapidly deteriorating logistics system. And by a negative attitude to private firms that needs to change if we are to become a country that welcomes investment.

After all, the new government has a country in crisis to fix.

• Ann Bernstein is executive director of CDE. This article draws on CDE’s Agenda 2024 project which identifies urgent priority actions that the new government, once established, needs to focus on.

This article first appeared in the Sunday Times.