A cabinet with many mouths creates policy gridlock

The African National Congress (ANC) government' which was crafted by the new President of the Republic, Jacob Zuma, after 2009 general elections was much bigger than the previous administrations of Presidents Nelson Mandela, Thabo Mbeki, and Kgalema Motlanthe.

President Zuma's cabinet had 34 ministers and 33 deputy ministers. Methinks Zuma felt obliged to repay comrades who supported him after President Mbeki expelled him from the position of the deputy president of the Republic due to corruption allegations. Zuma's supporters ensured that he was elected the ANC president during the 2007 national elective congress.

It was during this conference wherein a resolution was taken to disband the policy elite investigative unit which was known as Scorpions. This unit was perceived as a threat to Zuma's march to the presidency of the Republic. Subsequent to this, the Scorpions were disbanded  and the National Prosecution Authority dropped the 783 counts of corruption charges against Zuma shortly before he was elected as the President of the Republic.

As you would deduce from the above paragraph, it was very clear that when Zuma took the office in the Union Buildings, he was beholden to so many comrades who saved him from unemployment and prison. It was on this premise that he rewarded these comrades with various lucrative positions in his administration, cabinet, and state owned companies. This led to Zuma's administration becoming unnecessarily big. The ministry responsible for education was divided into two ministries - Ministry of Basic Education, and Higher Education & Training. In my view, one minister for both basic and higher education would be sufficient. In other words, there would be a ministry of education with two departments that are headed by the directors-general.

In the Presidency, Zuma created two unnecessary departments of National Planning Commission, and Performance Monitoring and Evaluation. The Department of Performance Monitoring and Evaluation was headed by Minister Collins Chabane and this made him a de facto prime minister of the Republic. How can a minister review the performance of fellow ministers? Ideally, this responsibility should have been given to the deputy president. Unfortunately, the deputy president was redundant for a period of five years.

There was also a lot of duplication in the allocation of positions in President Zuma's cabinet. The responsibility of economic planning and management was allocated to five ministries as follows - Treasury, National Planning, Economic Planning, Public Enterprises, and Trade & Industry. The ministers occupying these positions held strongly differing views regarding economic planning and this sends confusion to the market and prospective investors. The rand has also been in the receiving end of the policy gridlock of these ministers.

The Minister of Economic Development had left-wing political views. He was a communist and served as union leader before Zuma appointed him in his cabinet. Patel crafted and published the New Growth Path (NGP) in 2011. The major thrust of this document was job creation. The NGP portraits the high nominal value of the rand as an inhibitor of economic growth and job creation.

The NGP argued that the value of the rand should be lowered because: "The strong rand permitted reductions in the interest rate, contributing to rapid credit creation, as well as cheaper imports, but it also contributed to lower profitability and [exports] competitiveness in manufacturing, agriculture and other tradable-goods sectors. It generated a consumption boom that was largely restricted to South Africans in the upper income group".

The truth is that Patel saw himself as a representing the Congress of South African Trade Unions (Cosatu) and the South African Communist Party (SACP) in the cabinet. How can a minister serving in the ANC's cabinet serve the interests of organisations that were not part of the government?

Patel was supposed to advance the agenda of the ANC as set out in its 2009 election manifesto. Both Cosatu and SACP had always argued that the higher value of the rand made the South African manufactured goods and raw materials expensive for exports. Truly speaking, they were wrong. The substantial reduction of the rand value at the beginning of 2014 didn't lead to any surge in the exports. Actually, the volumes of our exports are somewhat decreased. Coal exports are not decreasing but one would have expected volumes to increase due to the weak rand.

This observation was reiterated by the Editor of Financial Mail, Tim Cohen, who wrote that: "While coal production in South Africa is about where it was in 2003, Australian exports, already three times South Africa's at the start, have increased 30%. Indonesian exports have trebled. The result is an odd kind of tragedy where things haven't got worse but the pain of missed opportunities is palpable".

Unfortunately, Cosatu felt that Ebrahim Patel didn't push the left-wing agenda sufficiently while SACP gave him some lukewarm support. However, Patel received the backing of his counterpart at the Ministry of Trade and Industry, Rob Davies. Davies is one of the prominent communists in Zuma's cabinet. How can a communist be given the responsibility to drive trade and industry? I just shake my head.

Davies crafted and published the Industrial Policy Action Plan (IPAP) in 2013. In line with Patel's thinking, Davies used the IPAP to attack the strong rand. IPAP argued that an overvalued exchange rate leads to consumption boom which encourages imports in the expense of exports and job creation.

The only plan which supported the strong rand was the National Development Plan (2011) which was spearheaded by the South African longest serving Finance Minister, Trevor Manuel. The National Development Plan got more public support than the NDP and IPAP despite its imperfections.

The value of the rand and other currencies in emerging markets depend on the overall management of the economy, trade and industry. If South Africa wants to boost its economic growth and job creation, it should pay more attention to intra-African (regional trade), and the construction of infrastructure in the form of roads, rail, seaports, and airports.

On the other hand, Zuma has a chance to trim down his administration after the forthcoming general elections. His new cabinet should speak in one voice regarding the rand and the expected trajectory of the economic development.

A version of this article was published by the Business Report.

Dagada is a development economist based at the Wits Business School. You can follow him on Twitter: @Rabelani_Dagada

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