2016: A year of economic failure but political promise

John Kane-Berman questions whether Cyril Ramaphosa will be the person to drive structural reform

Although the National Treasury and business leaders have spent plenty of time this past year promising that South Africa is on the verge of "growth-inducing economic reforms", the best developments have been on the political rather than the economic front.

The first promising political development was the advance by the Democratic Alliance (DA) in the municipal elections in August. The second was the growing revolt against President Jacob Zuma in his party, in some state institutions, in civil society, and in the media. Corruption, not policy, inspires this revolt.     

On the economic front, South Africa has marked time in that we have avoided relegation by international credit ratings agencies to junk status. Not only have none of the "structural reforms" promised by both business and government failed to materialise, but the country ends the year with a national minimum wage in the offing, along with more threats to the mining industry. "Structural reform" is seldom defined but it includes liberalisation of the labour market and of the regulations governing business.   

Capitulating to union demands for a minimum wage is bizarre when the trade union movement is weak and divided. But it is a warning that the man driving it, Deputy President Cyril Ramaphosa, may not be the person to lead structural reform should he ever succeed Mr Zuma.

Mining faces the uncertainties of a revised charter. It also faces interference by the Public Investment Corporation in investment decisions as it pursues the chimera of a local mining giant. And it faces threats by Mr Zuma to cancel mining licences.

Yet promises to improve the investment climate and to remove constraints upon growth have been repeated throughout the year. In April Goldman Sachs promised that government and business would tackle a basket of reforms "with a vengeance". Enoch Godongwana, chairman of the ANC's transformation committee, said bureaucrats were working "day and night" to implement reforms. The Banking Association said "a phenomenal amount of work and progress had been made" in collaboration between the private sector and the state.

In May 90 chief executives said work to stimulate growth was progressing with "unprecedented urgency". In August the treasury said the government was "fast-tracking" reforms to raise the level of growth. In November the Presidential CEO Initiative said strategic measures had been put in place to boost growth.

Most of these promises have been directed at the ratings agencies. Although it is not clear whether the agencies actually believe them, they have served the purpose of helping to buy South Africa time.

Partly because of lower demand, electricity supply is now more reliable. There are fewer strikes. The youth employment tax incentive has been extended for another two years, and the learnership programme for another five. R1.5 billion has been set aside by big business to help small business. There will be a non-binding "code of conduct" for industrial relations.

But of "concrete action" promised by Finance Minister Pravin Gordhan to place the country on a "different trajectory in the near term", there is little sign. What with trying to protect the treasury from political interference, Mr Gordhan has had other things on his mind. Even so, a finance minister without presidential backing cannot do much about policy reform anyway, although it is not clear how far Mr Gordhan would go even if he had the power.     

In September, after a meeting of the CEO initiative, Mr Zuma spoke of "reigniting growth". This comes four years after exactly that was supposed to have been done by the National Development Plan. Like the current programme of promises, this was a joint effort of government and business, hailed across the country, but which the IRR, almost alone, dismissed as the fantasy it has turned out to be. What South Africa now needs is for the revolt against corruption to extend into a revolt against failing policies and false promises.

* John Kane-Berman is a policy fellow at the IRR, a think-tank that promotes political and economic freedom.