Economic policy

The ANC fails to define its own economic policy

In last week’s State of the Nation address, President Cyril Ramaphosa ventured to utter a few words that exposed the naïveté of the politician and his office. The offensive words were: “We all know the government doesn’t create jobs. Businesses create jobs. Of course, these comments were consistent with ANC economic strategy, but the politician should have recognized that there has always been a deliberate distinction between ANC economic policy and ANC rhetoric.

In January 1986, Anton Rupert sent a fiery personal letter to President PW Botha, chastising him for the government’s failure to renounce the policy of apartheid. Rupert argues in the letter that the government’s continued toughness on apartheid is pushing South Africa down a path of “both poverty and black control”.

Rupert explained how unemployment was the most common cause of black unhappiness and how apartheid as a policy was a source of humiliation for Afrikaners, especially members of the business sector, who had been forced to wear shamefaced at international business meetings. Outside of South Africa, young people were learning that apartheid was analogous to Nazi Germany, which infuriated Rupert.

In many ways, Rupert’s letter to Botha expressed the views of South Africa’s white economic elite: their fears of “black control”, their desire that the internationally unpopular apartheid regime be abandoned so that South Africa can “get back to business”. Companies were not just pushing for an end to apartheid, the government at the time was slow to privatize. This was partly due to the economic environment, but also to the fact that apart from the private sector there were no political demands for privatization.

And when Botha failed to cross the Rubicon, the business sector pushed harder for measures to promote international trade. The new ANC administration will ultimately bear the brunt of this pressure.

For Valentine’s Day, Ramaphosa offered the nation a slight step back from his initial statement. Lamenting a rhetoric that asks ‘us’ to choose between a developmental state and a vibrant private sector, the president counters that this is a false dichotomy, because after all the ANC of 1992 ready to rule document “directs both growth and transformation through levers such as competition policy, broad black economic empowerment provisions and employment equity laws, and by linking the granting of various licenses to universal service and empowerment obligations”.

However, if one wants to understand why the rage at the president is misguided, the Ready to Govern report is not the most honest place to start. Early ANC publications, such as African claimswere influenced by the prevailing global concept of citizens’ rights, political rights and civil liberties, which was influenced by the United States Declaration of Independence and the United Kingdom Jobs White Paper of 1944 , as well as other sources.

Following these early articles, principles based primarily on Keynesian economics became more entrenched in ANC policy over time. The Freedom Charter also called for the provision of universal social services by government and the management of the productive resources of the nation by the federal government. Although the first draft of the Reconstruction and Development Program (RDP) drew on the social-democratic roots of the ANC’s political thought, by this point the ANC had begun to rapidly move away from ideas of a social-democratic welfare state in favor of policies dominant neoliberals promoted by the World Bank and the International Monetary Fund. (IMF).

Gear (the Growth, Jobs and Redistribution Strategy) represented a sea change to what is now ANC policy. The 1996 equipment was aligned with IMF thinking, but not with the basic tenets of the RDP text. There was a greater emphasis on budgetary restrictions and the basic elements of the RDP, such as redistribution, were eliminated as objectives. More importantly, the function of the state shifted from revolutionary leadership to coordination. Economic transformation and restorative justice were no longer priorities.

Unlike the RDP, which was produced collaboratively by the social partners of the democracy movement, the ANC’s changes to the RDP and the subsequent Gear program were not designed in collaboration with the social partners. There were even accusations that the ANC leadership was not upfront about the critical assumptions of the economic models used to generate policy during this ideological shift, and therefore these models were not subject to the rigor of the social partners.

Labor federation Cosatu and the Communist Party of South Africa opposed the content of the Gear policy and the consultation process. These tensions led Nelson Mandela to tell the alliance partners: “We are convinced that this is the strategy that will eventually put our economy on a sound footing, which will make it internationally competitive. We have no hesitation in this and I want you to know that Gear is the fundamental policy of this organization and we are not going to change it.

It was 1996, and the Freedom Charter ANC was gone. The ANC had abandoned the social democratic principles that underpinned the political struggle.

None of these decisions are Ramaphosa’s. The president did not make the ANC what it is today, the ideological position of the party is as old as South African democracy. Ramaphosa did not convince the ANC to abandon the principles of universality in the provision of public goods, only to rethink that decision when heavy investments in public goods were not yielding the social returns promised by donors and lenders. international funds.

Some have a problem with Ramaphosa’s statement because it does not follow the ANC’s presidential communication code of avoiding sending strong business-centric messages on political platforms, especially speech on the subject. state of the nation. But the main problem with the statement is that it is exactly the type of statement that signals the growing ideological conflict within ANC politics. Previously, the ANC president would attend Cosatu rallies and chastise alliance partners for publicly disagreeing with the party, but today such an act would not pass.

After a quarter of a decade of democratic governance, the South African state continues to face obstacles to changing society, including unemployment, inequality and poverty. The post-apartheid environment was difficult. South Africa’s economic growth had been in decline since the late 1970s, and had fallen below the rate of population increase in the mid-1980s. Population growth rates are now 1.3 %, with a pre-pandemic growth rate in 2019 slightly around zero.

Compare that to two African giants that both overtook South Africa in the list of Africa’s largest economies. Nigeria, the largest, has a population growth rate of 2.5% while its growth rate in 2019 was 2.2%. Egypt, the second largest economy in Africa and likely to be in the next few years, has a population growth rate of 1.9% and grew by a staggering 5.56% in 2019.

The government’s macroeconomic policies have not worked. The country loses its economic position on the continent and loses its political position in the world. Talk of a capable (and large) state is meant to signal a move towards state-led Keynesian policies without committing to them.

Pipped: Egypt could soon claim the top spot as Africa’s largest economy, growing 5.56% in 2019. (KHALED DESOUKI/AFP via Getty Images)

When Francis Fukuyama visited South Africa in 2019, many attendees at his events were eager to hear his perspective on big states. Much to their disappointment, Fukuyama’s response was much more nuanced. The size of the state does not matter, he proposed, it is the capacity of the state that counts.

A State must be able to implement coherent policies. Aiming to build a capable developmental state is not a political position, it is a lever for implementation. The government still needs a coherent ideological position to which policies must align.

There is an argument that in the democratic transition the ANC could not act freely as if there were no restrictions. He had to carefully navigate the gap between his leftist political roots and a global context that favored globalization and contained states.

This time has also passed. Neoliberalism is out of fashion. Yet ANC policies have not adjusted to fully reflect a change in mentality. Given how quickly the ANC changed course in the early 1990s, it is surprising to see it stuck in an ideological quagmire, too scared to commit one way or the other.

Perhaps the president’s great contribution to his party would be to ask him that question. What does the 2022 ANC represent? What does he believe? According to her, what must be done to transform the lives of the vast majority of South Africans? If the ideological position of the ANC has evolved over the past two decades, what is it today?

To quote Fukuyama, “If you want economic growth, you have to pay attention to politics.” If the president wants to have an impact, he must start by getting a clearer mandate from his own party, so that when he communicates his policy, it is not his party colleagues who contradict him.