Daily Maverick CDE article

A realignment of politics will not arrest our decline unless it is recognised that we cannot continue along the path that has led to economic stagnation, institutional decay and a catastrophic rise in poverty. We have to stop a parasitic elite feasting on the State, and we must make communities safe.

In this series for Daily Maverick, executive director of the Centre for Development and Enterprise, Ann Bernstein, makes the case for a policy agenda that is substantially different from what we have seen over the past 15 years. It is drawn from Agenda 2024: Priorities for South Africa’s new government, which is based on CDE’s extensive policy work and recent collaboration with experts, business leaders, former public servants, and others across our society. The project sets out to answer the most important question facing South Africa: what can a new government do to get the country back on track after 15 years of stagnation and decline?

The first article in the series sets out the priority areas that the next government must focus on in its first 180 days in office.

***

Amidst the talk of coalitions and new politics for South Africa, we should not forget that the country is in deep crisis. The State is collapsing around us. Skilled people (black and white), firms and capital are leaving our shores in great numbers. We have world-beating unemployment and crime rates. And, after a near insurrection three years ago, not one ringleader is in jail.

A realignment of politics will not arrest our decline unless it is recognised that we cannot continue along the path that has led to economic stagnation, institutional decay and a catastrophic rise in poverty.

The new government needs to implement a new approach to governing the country that will lead to prosperity and mass inclusion. We are confronted with the same generational challenge that consumed us in 1994: the need to create and expand opportunities for South Africa’s millions of economic outsiders.

Since the beginning of the year, the Centre for Development and Enterprise (CDE) in collaboration with experts, business leaders, former public servants and academics, has been wrestling with the critical question facing South Africa: what can a new government do to get the country back on track after 15 years of decline?

If progress is to be made, then a limited number of core priorities must define the new government’s agenda during its first six months in office. A series of bold catalytic actions are required, driven by a clear vision, the right strategy, and effective leadership. What all of us need — citizens, civil servants and investors — are bold signals that decisive change is underway. These actions must reignite investor confidence, unleash pent-up energies in society and push South Africa on to a new path of increasing prosperity and new opportunities to get out of poverty.

So what should the new government do first? 

We have selected five priority areas for action: fixing the state; freeing up markets and competition; a new approach to mass inclusion; tackling the fiscal crisis; and strengthening the rule of law.

Rebuilding a capable state is a long haul. There are no quick fixes. An important place to start is to reorganise the Cabinet and the Presidency. To ensure effective leadership and governance we need a smaller, fit-for-purpose Cabinet characterised by excellence and common commitment to a deepened reform agenda.

The State cannot be fixed if we continue deploying people to senior public sector positions based on party loyalty instead of competence. The new government should grab this opportunity to ensure that only the most qualified people are appointed to senior positions in public service and State-owned companies.

Faster, market-driven, economic growth is the only way of lifting millions out of poverty — as we have seen for example, in India and China. Making this happen in South Africa requires a shift in attitudes and approach. The new government must focus on making the country a welcome place for investors, who have many other options.

And, instead of seeing every development challenge as a justification for state action, the new government should focus on harnessing the enormous energy in our society and freeing up firms, individuals, NGOs and others to rise to the many challenges we confront. Markets, competition and businesses can do so much more, whether it is in energy generation, the aviation industry or logistics.

Public-private partnerships are an important way to harness private sector capacity and capital for infrastructure, but private investors need a reliable partner: a capable state that offers policy certainty and stops blocking activities through over-regulation and antagonism to the private sector.

Interventions to create a conducive legal and regulatory landscape would enhance competition, broaden the scope for experimentation and innovation in the delivery of goods and services, and maximise economic growth and better developmental outcomes.

Employment

While government transfers to the poor are necessary when six out of 10 South Africans live in poverty, it is critical to recognise that the fastest route out of poverty is a job. South Africa’s approach to poverty and inequality has failed. Do we really want to be a country that boasts about the growing millions of people who depend on state welfare?

What we need is an economic strategy where inclusion is the central goal, not an afterthought. We should explore practical ways to incentivise employment at scale for low-skilled workers — the workforce we actually have. We should also redirect state funds away from ineffective government-controlled small business development programmes, towards private sector-run initiatives to support black entrepreneurs.

The fiscal crisis continues to hold the country back. We have to restrain spending and not commit to unaffordable programmes like the NHI and a basic income grant. The new government should redirect spending away from ineffective programmes that add little value towards prioritising growth-enhancing activities.

We need better value for money from State departments. State-owned companies are a massive drain on the fiscus which needs urgent remedy. Addressing the operational and commercial challenges of SOCs will require radical rethinking of how the markets in which these companies operate will be structured.

State procurement is another area prioritised for reform. Involving hundreds of billions of rand every year, procurement has become the vehicle for transformation, but largely at the expense of higher costs of service delivery and considerable corruption, allowing a small elite to benefit at the expense of everyone else.

Law and the judiciary

The rule of law, including an independent judiciary, predictable and fair legal processes, as well as the necessary policing and prosecution capabilities, are vital for turning around the country’s economic performance and attracting increased investment, both locally and internationally. We have to stop a parasitic elite feasting on the State, and we must make communities safe. That means putting fear into criminals — at all levels in our society — that they will go to jail if they break the law.

Catalytic actions here include measures that strengthen the quality and independence of the judiciary requiring reform of the Judicial Service Commission; and a renewed focus by law enforcement agencies on murder. The National Prosecuting Authority has failed to hold powerful people to account and needs to become a wholly independent reinvigorated institution. The Scorpions should be revived so that smart investigation and fearless prosecution work together.

There are two themes underpinning our five priority areas for action. The first is that “people matter, leaders make all the difference”. SA needs determined reforming leaders at the heart of government. Appointing the right people is in fact the first step in reforming the State.

The second theme concerns change to laws and regulations. The new government will need to bring a legislative agenda speedily to Parliament to help with the execution of these priority actions.

Arresting South Africa’s devastating decline requires a new approach for government. Time is running out. Half-hearted, half-baked reform will not change the country’s trajectory. Government needs to act quickly and decisively.

SA needs a new government that is committed to the Constitution, the rule of law and to deepening essential reforms. Negotiations about new governing arrangements for South Africa should, therefore, not only be about power, politics and positions, but also about priorities for action.

The new government has a country in crisis to fix. DM

Bernstein is the executive director of CDE. This article draws on CDE’s Agenda 2024 project which identifies urgent priority actions that the new government, once established, needs to focus on.