President Cyril Ramaphosa and his ministers need to harness the positivity around the government of national unity (GNU).
One of the positives relates to the drivers of policy, not the actual policies. It absolutely matters that Parks Tau is in charge of competition policy instead of Ebrahim Patel.
A sign that the private sector could use its capacity to bolster public policy was the launch of a study by Naspers and the Mapungubwe Institute for Strategic Reflection (Mistra) this week on the potential for digital transformation to revolutionise traditional industries.
At the launch, Tau and his counterpart, communications & digital technologies minister Solly Malatsi, were among the speakers and welcomed the study. It modelled the economic impact of South Africa’s digital platform economy, slating it at just under R100bn in 10 years. This has to be a conservative figure considering the pace of the global wave of digitisation and generative AI.
But the scale is neither here nor there. What is of importance is the private sector’s endeavour to back policy research that is of benefit to the economy and the public. The government often lacks the capacity and focus to research and generate implementable policy ideas. Luckily, Malatsi and Tau value working with the private sector to research policy and generate ideas to boost the economy. The circle could be widened to bring in technology giants such as MTN and Vodacom, so there is critical mass around the transformative potential of the digital economy.
The Naspers-Mistra study sharply reflects how South Africa’s digital transformation is lagging behind competitors such as Kenya and Nigeria
Business for South Africa and the government have shown what is possible when commercial and public interests are executed in a mutually beneficial way. There’s always the risk that the state could be captured for private gain when the private sector has unfettered access to the bureaucracy.
To guard against that, the media and civil society need to pay close attention to protect the process from derailing into an affair in which business takes over the running of the state.
The reduction in power cuts, and a general positivity about Eskom’s performance, are a big part of the positive sentiment. Even with the logistics issues, there are signs that there’s some improvement, albeit marginal. The Naspers-Mistra study sharply reflects how South Africa’s digital transformation is lagging behind competitors such as Kenya and Nigeria. South Africa needs to get on with it, to create the necessary infrastructure and regulation environment for the new world. We should be grateful that Patel is not around to smother the whole process and single-handedly manage such levers.
Beneath the glow of the GNU is the sorry story of a country that is producing more inequality and more poverty. The structural reasons for such developments have not been dealt with by the political reality that gave us the coalition government. The GNU itself is not about to deal with the deep-rooted causes of the various crises, such as poor education outcomes and skewed access to opportunity and services.
But positivity around South Africa is necessary even if it leads to just a percentage or two of improvement in growth. The South African Reserve Bank may start cutting interest rates later this year, and that could boost consumer confidence. All of a sudden South Africa will look like a different country altogether. But we can’t reach for the champagne bottles just yet.
Central bank governor Lesetja Kganyago recently warned about focusing disproportionately on interest rates as the main driver of change. Ultra-low interest rates, he says, typically end up undermining the short-run increase in growth that they cause. Such rates reduce savings and prop up low-productivity zombie firms — companies that are only viable with cheap debt. This, in turn, limits productivity growth and constrains more sustainable firms from expanding. The job creation effects of these misallocations of capital are far-reaching, not least because they imply an economy that will struggle to recover jobs lost during big shocks, like the pandemic, he says.
“Changing interest rates is certainly easier than improving education, managing urbanisation or ending load-shedding,” says Kganyago.
More genuine partnerships and more profound research could help South Africa encourage evidence-based discourse around what is possible about changing the picture of a Zombie nation instead of merely enjoying the newly-found positivity — welcome and necessary as it is. A faster digitising world could provide us with an opportunity to reimagine South Africa.
• Mkokeli is lead partner public affairs consultancy Mkokeli Advisory
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