Tackling economic challenges

15 February 2017

By Minister Faith Muthambi

The president has been more successful than the neo-liberal narrative suggests and he is committed to economic transformation

President Jacob Zuma, is continuing efforts of his administration to tackle increasing levels of inequality and economic exclusion plaguing the majority of South Africa’s people.

In one of those rare moments of fair reporting, then editor of the City Press Ferial Haffajee observed: “President Jacob Zuma is an extraordinarily hard-working leader, but his efforts are derailed by an incapable state.

No slouch, the president keeps up a punishing schedule, and works to a system of strategic frameworks and ministerial performance agreements in systems that former president Thabo Mbeki was not able to institutionalise.

“This enables a transparent system of state management that suggests two things.

The president is more successful than the national narrative suggests, and the state’s incapability is deeper than we think.” (City Press, February 10, 2015).

It must have taken some courage for Hafajjee to depart from the usual Zuma-bashing script that adorns most of the media landscape. However, for those of us working closely with President Zuma, Haffajee’s description would not raise eyebrow.

The Zuma presidency didn’t have the luxury of time his predecessors could count on.

Mandela could for a period ride on the wave of liberation euphoria. President Mbeki could argue that it took time to build a postapartheid state machinery. Both presidencies laid the foundation for a non-racial, non-sexist, united and prosperous society.

Indeed, despite the usual post liberation hiccups, South Africa is a better country than it was 20 years ago.

Under the ANC government employment expanded from “9.5 million in 1994 to 16 million at the end of 2015”.

Millions have been taken out of abject poverty. There has also been a growth of “a vibrant and successful black middle class”.

The intractable challenge of economic transformation was left to the Zuma presidency. Addressing a luncheon of captains of industry and labour leaders on the eve of the state of the nation address, President Zuma observed:
“A most important challenge we need to confront head on this year, is the scale of inequality and exclusion in this country. It needs urgent action.

“After two decades since democracy, the black majority still remains largely outside of the mainstream economy. Social justice cannot be achieved if we allow the status quo to persist.

“We have to rework and sharpen our transformation model and more importantly demonstrate commitment and empathy. We should never rest until the vision for a better life for all is realised, all of us as labour, business, the community sector and the government.”

Since assuming office as both the leader of the party and head of state, economic transformation has been a singular preoccupation of President Zuma.

The national planning commission, which produced the National Development Plan (NDP), was established under his watch. Thanks to President Zuma’s insistence on the NDP, the country has a socio-economic blueprint to guide its programmes on what needs to be done to eradicate poverty, increase employment and reduce inequality.

The government’s Medium Term Strategic Framework (MTSF) is the programmatic expression NDP. Aligned to the ANC’s election manifesto, the MTSF “provides a framework for prioritising and sequencing government programmes and development initiatives for the next five years.”

The emphasis on the economy finds expression in the call by the ANC for a radical economic transformation. Radical economic transformation is defined as “placing the economy on a qualitatively different path that ensures more rapid, sustainable growth, higher investment, increased employment, reduced inequality and deracialisation of the economy.”

To place the economy on a qualitatively different path will not come on its own.

It demands a full appreciation of the problem and the crafting of appropriate and adequate solutions to address the problem.

In this regard, government, business and labour agree that “the most effective weapon in the campaign against poverty, is the creation of decent work, and that creating work requires faster economic growth”.

This would require addressing the binding constraints. While some challenges are external, arising out of the global economic downturn, President Zuma was crystal clear that domestic constraints within our means should be resolved. He needs therefore to be judged on the promises that he made.

Prominent among the constraints were energy shortage, workplace conflict, and prolonged under investment in economic infrastructure. Key to the government’s approach is the crowding of investment through infrastructure programme, enhancement of the competitiveness of productive sectors of the economy and elimination of regulatory burdens of doing business in South Africa.

President Zuma promised to embark on “a radical transformation of the energy sector, to develop a sustainable mix that comprises coal, solar, wind, hydro, gas and nuclear”.

Stabilisation of Eskom became key in enabling the entity to focus on its primary mandate. This entailed embarking on the short, mediumterm and long term.

The short term to medium term involved “improved maintenance of Eskom power stations, enhancing the electricity generation capacity and managing the electricity demand. The longterm plan involves finalising our longterm energy security master plan.”

The strategy has worked. The country has not experienced any load shedding for the last 15 months.

The beginning of the fifth administration also coincided with a prolonged and at times violent strikes in the mining sector. On this score also, it could be argued that President Zuma’s strategy of resolving or minimizing workplace conflict seems to have worked. The country has not experienced prolonged strikes in the past three years.

As part of the effort to minimise workplace conflict, government working with social partners in National Economic Development Labour Council (Nedlac) has embarked on the exploring the feasibility of introducing national minimum wage aimed at reducing income inequality.

The Federation Unions of South Africa has agreed to sign on the agreed figure while Cosatu is in the process of seeking a mandate from its affiliates.

With regard to under-investment in the economy, the ANC government decided to lead by example.

It has embarked on a national investment infrastructure programme. Aside from addressing the infrastructure gap, the programme will “also provide employment opportunities for women and youth, promote broad-based black economic empowerment and support local procurement”.

As a mark of confidence in the public sector and providing incentives, the government committed more than R2.8 billion to companies in the sector, through the manufacturing competitiveness enhancement programme.

The Department of Transport will spend about R9 billion on the provincial roads maintenance grant or the Sihamba Sonke programme and R11billion on upgrading and maintaining roads which are not tolled. Over R6 billion will be spent in 13 cities on planning, building and operating integrated public transport networks during this financial year.

With regard to the cost of doing business in South Africa, government has established a onestop shop.

The intention is to streamline and improve the efficiency of regulatory processes and removing unnecessary obstacles.

This in keeping with President Zuma’s promise to “work with the private sector to remove obstacles to investment. We would like to see the private sector showing as much confidence in the economy as the public sector”.

The above serves as proof of a government hard at work. Whereas president Mandela gave us hope and president Mbeki helped build the architecture of the postapartheid state.

Through the African renaissance project, he helped to heighten our African consciousness and ensured South Africa’s future is linked to the broader African agenda.

President Zuma has built on this by providing us with a plan, a blueprint for socioeconomic development.

As the saying goes, those who fail to plan, plan to fail.

Faith Muthambi is the Minister of Communications.