In his memoirs, Ben Bernanke, former chair of the US Federal Reserve board, sings the praises of the men and women of the US central bank who, during the global financial crisis, had the courage to act.
“When the economic wellbeing of their nation demanded a strong and creative response, they mustered the moral courage to do what was necessary often in the face of bitter criticism and condemnation,” writes Bernanke.
How one wishes that SA’s political leadership and policymakers could have similar courage — courage to do what their fellow citizens have been long calling for. But there’s no light at the end of this tunnel.
That’s because the governing party has been navel-gazing for far too long. It’s now gone into full electioneering mode and is in overdrive so not much can be expected between now and the 2024 elections.
Aspirant leaders have their sights on the elective conference in December, but to get there, they must mobilise support. For those in office it means not to do anything that might upset important power blocs.
And after the December conference those who didn’t make the cut will be walking on egg shells lest they get kicked out of office, as has become the practice after every elective conference. Public servants are already making sure they don’t do anything that may deprive their future political bosses of opportunities.
When the economic wellbeing of their nation demanded a strong and creative response, they mustered the moral courage to do what was necessary often in the face of bitter criticism
— Ben Bernanke
It has become standard practice for a new political head of a government department to order a search for the juiciest government contracts as soon they take office. These investigations often have nothing to do with uprooting corruption. They have become a crowbar to dislodge a supplier from a juicy contract that the incoming politician wants for his/her cronies. Public servants know this, so they adopt a holding position as the party edges closer to its elective conference.
The effect of this is that the country sinks deeper into stagnation — a state of low growth and high unemployment.
This means the economic wellbeing of South Africans, which demands a strong and sustained response by the political leadership and policymakers, takes a back seat. Political survival takes centre stage.
Almost all the factors holding back the SA economy are within thegovernment’s control, as the latest Reserve Bank review shows.
It’s the lack of reliable energy to power the economy and enable citizens to go about their daily lives without undue interruption. It’s the inefficient goods trains and ports, the dysfunctional municipalities — responsible for water, electricity, waste removal and road maintenance — that have a huge bearing on the quality of life.
Six of the 12 mining subsectors contracted in the second quarter of this year. Coal miners produced less coal in spite of higher prices on international markets. The reason, as the Reserve Bank’s September Quarterly Bulletin says, has to do with “the binding constraint of insufficient rail capacity on exports”. In simple language: Transnet didn’t have enough rail capacity to move coal from the mines to Richards Bay where it would have been shipped overseas.
“The level of real mining output was 7.3% lower in the first half of 2022 than in the corresponding period of 2021, hampered by factors such as electricity supply constraints, high operating costs, prolonged industrial action as well as rail and port inefficiencies.”
This from a country that has already missed two major mining booms in the past two decades. Clearly, policymakers haven't learnt anything.
It’s the same with other economic sectors. Production in eight of the 10 manufacturing subsectors decreased in the second quarter. These include petroleum, chemical, rubber and plastic products; food and beverages; motor vehicles, parts and accessories and other transport equipment; basic iron and steel, non-ferrous metal products, metal products and machinery; as well as textiles, clothing, leather and footwear.
Manufacturing, according to the bulletin, was hit by “idiosyncratic domestic factors”, including intensified electricity cuts, which reached the intensity of stage 6. Then there were rising costs for manufacturers, port disruptions as well as domestic and global supply chain disruptions.
This is repeated with wholesale and retail activity. In addition to the April floods that hit KwaZulu-Natal, the sector was hit with rising operating costs, electricity supply constraints, and domestic and global supply chain disruptions. Continued high unemployment and reduced purchasing power due to rising consumer prices were additional factors.
No wonder unemployment remains stubbornly above 30% — higher than the 25% rate that the US reached in the Great Depression in the 1930s, which Bernanke and other economic historians have characterised as a disaster because of its length, depth and consequences. Young South Africans bear a disproportionate burden of all of this, with more than 60% of those aged between 15 and 24 unemployed.
To break stagnation, SA needs some major reforms — and the list from which to choose has been a subject of debate for donkey’s years. And the reason such reforms are needed is also well known — we need to achieve a higher economic growth rate and sustain it over a long period of time.
As the experience of India’s reforms of 1991 shows, a few decisive reforms can build enough momentum to power an economy for a long time.
However, since economic policymaking sits at the intersection of politics and society and since the ANC remains a big player (though declining) in the country's politics, to make progress on economic reforms, we need ANC leaders with courage to smash through the party’s intransigence. It’s either that or the electorate must bench the party.
• Mathebula is executive director of Ignite Africa Advisory Group and chair of the Black Business Executive Circle. He writes in his personal capacity
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