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28 September 2020 | Story Andre Damons | Photo Pexels
Dr Trevor Manuel, Chairperson: Old Mutual Limited and former minister of finance (top left), Ms Ann Bernstein, Executive Director: Centre for Development and Enterprise (CDE) (top right), and Mr Mondli Makhanya, Editor-in-Chief: City Press (bottom left), were the panellists at the University of the Free State’s (UFS) second Thought-Leader Webinar for 2020, which focused on the economy. Dr Max du Preez, Editor: Vrye Weekblad (bottom right), was the facilitator.

The state is broken, and the country cannot move forward unless the state is fixed and bold, tough decisions are made.

This is the opinion of panellists who took part in the University of the Free State’s (UFS) second Thought-Leader Webinar on Wednesday (23 September), which focused on the economy. This webinar is part of a series with the theme ‘Post-COVID-19, Post-Crisis.’  Dr Trevor Manuel, Chairperson: Old Mutual Limited and former minister of finance, Ms Ann Bernstein, Executive Director: Centre for Development and Enterprise (CDE), and Mr Mondli Makhanya, Editor-in-Chief: City Press, were the panellists. Dr Max du Preez, Editor: Vrye Weekblad, was the facilitator.

Country needs reform

Both Bernstein and Makhanya said that the state is broken, with Bernstein saying that the state is corrupt, and government decision-making bandwidth is much weaker than it used to be.

“The country is in a very serious situation and cannot do more of the same. We have to reflect honestly on what got us into this terrible situation, and then COVID exacerbated all our problems. What got us into it and what we have done previously has to change.”

“The country needs reform and it is my view that we will not move forward unless government’s credibility as a reformer is establish, and two and a half years of promises and very little action of any significance has undermined that credibility. I think you have to start from that,” says Bernstein.

According to her, bold choices must be made if we are to save what growth we have, if we are to expand growth, to expand more labour intensively. 

“South Africa has all the potential to be a great African economy, with all sorts of strengths that we could build on. But we keep disappointing.”

Building a capable state

Makhanya said going forward, a good starting point is to fix and build a capable state. “The fundamental thing of the NDP (National Development Plan) – a plan that can take us forward – was the part about a capable state.” 
“The state is very broken, and there is no way we can move forward while the state is as broken as it is now. This is what we saw during lockdown, when it was so easy for certain elements to steal from very essential funds that were meant to save lives. It was a classic example of a broken state.”

Another thing we absolutely need to do, is to have one message and one conversation.  

“Tough decisions should be taken. It was frustrating again to find us as a country talking about where to find R10,5 billion to fund our ailing airline. Why is this a priority? We know what our priorities are. We know Eskom is a priority, we know food security is a priority, unemployment is a priority. Why is it necessary for us as a country to have this hectic debate about having a national airline?” 

“Decisions need to be taken around the health of the fiscus, decisions around the public wage bill, around issues of freeing up enterprise, and about reforms. The decisions will take a long time to make and some of them will be unpopular, but they need to be taken,” says Makhanya.

According to him, President Cyril Ramaphosa needs to take these decisions. He also needs to tell himself that he would be happy to serve one term, and that he does not need friends to vote him back as leader of the ANC and as President of the country in 2024. President Ramaphosa needs to do things now, knowing that he will leave a legacy of having fixed a country, and importantly, having fixed the economy.

Announcement of hard lockdown saw the economy hurtling down a cliff

Dr Manuel said the hard lockdown announced at the end of March saw the economy hurtling down a cliff. This happened after three successive quarters of contraction. “We find ourselves at the base of this ravine, having tumbled down. How do we extricate the South African economy from where we are given the geography of where we are?”

According to him, the country has fewer options than we would like to imagine. 

“I think the 51% contraction in the second quarter must introduce a sense of urgency and focus the mind. We are not alone. But we need to be rigorously honest about where we are. And we need to also ask ourselves tough questions of whether we have the wherewithal to reconstruct the economy,” says Dr Manuel. 

According to him, the $3,4 billion borrowed from the IMF is unlikely to be sufficient, and there is a growing consensus that the full-on standby facility from the IMF will probably be needed.  

He says while the RFID has no obvious conditions, it is important to pay attention to the fine print. “In the letter of intent, which was jointly signed by the Governor of the Reserve Bank and the Minister of Finance, we committed to take action to revoke the upward trajectory of the debt-to-GDP ratio, and also a commitment to remove the structural impediments to growth. So, it is quite important to understand what we committed to and against what we will be measured.” 
“The IMF, in accepting those commitments, also warned about the urgency and the sequencing of the series of policy measures to prevent – in their words – the risk of social unrest. They also raised a series of red flags that are important in the context. The first is the growth of the public sector wage bill, something that is in the public domain and about which NEHAWU is threatening to strike. The second issue is the scale of transfers to state-owned enterprises. Thirdly, the risk of the curtailment of infrastructures.”

There has also been a flurry of policy writing and discussions. The National Treasury, Business for South Africa, and the ANC have written their own papers on reconstruction, growth, and building an inclusive economy.  According to Dr Manuel, however, the question is how to get things done. 

“The concern I have about these papers is that there is inadequate attention to public finance, which sets a frame for all economic development that needs to take place. And it is basically an equation – what you have to spend is the sum of what to tax and what you can borrow.”

What the country needs right now is clarity on the trade-offs, and not even the social partners paper deals with trade-off clearly enough. If you put money into an airline, it has to come from somewhere else. Your ability to govern and exercise choices is therefore severely limited.

News Archive

Prof Tim Murithi calls for Africa to design new global order
2016-06-02

Description: Prof Tim Murithi calls for Africa to design new global order Tags: Prof Tim Murithi doen ’n oproep op Afrika om ’n nuwe wêreldorde te skep

From left: Prof Heidi Hudson, Head of Centre for Africa
Studies (CAS); Prof Tim Murithi, Extraordinary Professor
at CAS; Prof Lucius Botes, Dean of the Faculty of
the Humanities; and Prof Prakash Naidoo, Principal of
Qwaqwa Campus.
Photo: Stephen Collet

“What do Africans have to say about the remaking of the global order?” was the opening question of Prof Tim Murithi’s lecture which was hosted by the Centre for Africa Studies (CAS) of the University of the Free State (UFS) to celebrate Africa Day on 25 May 2016.

The annual Africa Day Memorial Lecture, entitled: Africa and the Remaking of the Global Order, doubled as Prof Murithi’s inaugural lecture. He is CAS’s newly-appointed Extraordinary Professor, as well as the Head of the Justice and Reconciliation in Africa Programme at the Institute for Justice and Reconciliation in Cape Town. He made a compelling argument for the need for Africa to exert an active influence on international narratives of peace, governance, justice, and reconciliation.

“If we are waiting for American leadership to get us out of the quagmire of a situation we are in, we will be waiting for a long time,” said Prof Murithi.

The Head of the Centre, Prof Heidi Hudson, concurred with Prof Murithi’s suggestion of devising African solutions for African problems. She quoted Audre Lorde’s well-known assertion that “The master’s tools will never dismantle the master’s house.”

Remembering 1963
Over five decades ago, on 25 May 1963, the Organisation of African Unity was formed, and was renamed the African Union in 2002. Africa Day marks this pivotal point in the continent’s history. On this day, we reflect on the continent’s journey into democracy, peace, stability and socio-economic development. It is also an opportunity to celebrate African identity and heritage.

Continent-building dialogues
The UFS Sasol Library celebrated Africa Day with a book launch. Facets of Power. Politics, Profits and People in the Making of Zimbabwe's Blood Diamonds by Tinashe Nyamunda is a reflection of some of the challenges that Zimbabwe continues to face. It details the disadvantaged position which the country finds itself in due to greed, maladministration, and corruption, despite possessing large deposits of minerals.

In celebration of Africa Month, CAS has held a series of lectures by esteemed scholars from across the globe.  Earlier in the month, Prof Henning Melber presented lectures on Namibia’s independence and the African middle class. Kevin Bloom and Richard Poplak unpacked the issues surrounding Africa’s continental shift, while Prof Joleen Steyn Kotze focused on the possible fall of the African National Congress.

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