Ramaphosa’s bold plan (2): weak on detail, strong on flights of fancy

Johannes Wessels
@johannesEOSA1

Two recent key government speeches gave rise to two important questions:

  • Is the inability of the government to effectively implement its policies & plans (?) worse than its inability to table concrete action plans, underpinned by clear strategies, designs, milestones, budgets and target dates?
  • Why can even Thabo Mbeki see the president is naked whilst organised big business still praises the beauty of his imaginary clothes?

The president’s tabling of the Economic Reconstruction and Recovery Plan (ERRP) was lame and lacked detail, whilst the Minister of Finance’s Medium Term Budget Policy Statement (MTBPS) left one with a feeling there is not much grasp within the collective government on how to prevent SA from slipping rapidly, if not tumbling, down the slope.

Instead of rekindling confidence and inspiration, vague and mixed messages fuelled doubt and a disbelief that the government can prevent SA from boarding the proverbial bus to Argentina (debt default). I put the following three arguments to illustrate this assessment:

  • Will the government stand solidly behind Mboweni’s strategy of freezing public sector wages for three years when they cannot deal with the much easier route to stop financing the effectively bankrupt SAA? Recall also how Pravin Gordhan in 2018 (knowing well that Eskom was not only overstaffed, but the personnel besides overpaid) overruled the Eskom Board and management when they had decided on a zero salary increase as part of addressing the Eskom viability issue.
  • Can one rely (trust would be too much to ask) on the government’s undertaking to reign in public expenditure? This, when they had failed multiple times to table a comprehensive plan on how to deal with Eskom’s debt and the growing debt burdens of other State-owned Enterprises (SOEs).
  • How is the “growth through infrastructure roll-out” approach different from numerous previous attempts – since the days of Thabo Mbeki – to strengthen the country’s economic fibre by infrastructure investments announcements, with the emphasis on announcements?

Flipchart notes or a detailed plan?

The Enterprise Observatory of SA reckons four fundamental problems underpin the ERRP and the MTBPS:

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Ramaphosa’s bold plan (1): Is ‘buying local’ BEE disguised by a face mask?

Johannes Wessels
@johannesEOSA1

If Ramaphosa’s bold plan to restart the economy was a film, the premiere already proved it’s not an ‘out-of-the-box’ blockbuster that will rake in Oscars for economic growth and sustainable job creation. Growth through state-led infrastructure development XXI is a lame sequel fit for an infamous Razzie award.

Like its predecessor – the lengthy National Development Plan – the Economic Reconstruction & Recovery Plan (ERRP) is a sure box office flop.

The ERRP announced by the president after lengthy consultation processes with big business and big labour states “Non-implementation of the ERRP could lead to loss of economic capacity, including collapse of the supply capacity, consumer and business confidence, the labour market and increased vulnerability of the poor. The overall plan aims to mitigate these risks”.

This script suggests its authors live in a make-believe reality: South Africans, whether tax payers or the growing number of unemployed, know consumer and business confidence and employment are not waiting for collapse through the non-implementation of a plan. It has collapsed already and was meticulously crafted by the very same government now purporting to be capable of getting the economy firing on all cylinders again.

There is a hidden sub-text as well: Covid 19 was the excuse to gain more arbitrary power and programs to recover from the lockdown devastation are aimed at cementing these arbitrary powers.

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England’s Norman Kings had a better grasp than the ANC of the importance of export for economic growth

Had the Norman kings of England in the 11th and 12th centuries a better grasp of economics than that displayed this week by Rob Davies, Minister of Trade and Industry?

In briefing Members of Parliament about Government strategy to support local industry now that Government is facing a fiscal cliff, Davies said it was unlikely to receive extra cash to support industrialisation (As the Budget bites the focus shifts to buying local… ) Government would therefore be “more vigorous” in getting value for money out by procurement of local inputs, rather than imported ones.

The strategy Davies proposed was (you guessed it!) more state control and prescriptions: Rather than pursuing growth through the tradeable sector, stimulation is sought through consumer spending with Government as the main consumer…

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