Five trends to understand and manage in 2020
9 January 2020
At the start of a new year, we all reflect on the year ahead, what we want to do, what we are excited about, and what we are afraid of. What about the country - politics, the economy and our social life? It is impossible to make predictions, but one can describe certain trends, which are accompanied by certain events and their possible consequences.
Broadly, there are five trends that emerged during 2019 that will significantly impact the political and socio-economic landscape in 2020 - and which can help one to understand and cope with the year.
The first is a growing trend of centralisation and state control (read ANC control) of various aspects of South African society. There are currently four pieces of draft legislation (most of which were recently published by the ANC-controlled Parliament before the December holidays) that have one thing in common: greater and/ or absolute control over important national issues, which do not necessarily need State control or that should not be controlled because it is in the private domain according to constitutional requirements.
The best-known and oldest one is the amendment of section 25 of the Constitution to enable expropriation of land without compensation - an exceptional infringement of private property rights. The second is the looming National Health Insurance (NHI) System, under which the State (and in effect the Minister) will take control of healthcare, to the probable exclusion of private provision and consequent deterioration of health services in general.
The third is the bill that will effectively give provincial ministers and heads of education the right to decide on the language of instruction in any school, and enforce the merger of schools. This will effectively make the constitutionally-based public school system a State school system and reduce the powers of parental control bodies to almost zero.
The fourth bill gives the national minister of sport the power (in his own words) to control sport. This is done with the noble motivation to try and limit the numerous incidents of in-fighting in sport, but the effect is that the State gains control over another aspect of South African society - and that even includes health clubs.
These four bills seek to give the State (ANC) control over aspects of society that a state should not have. And to make matters worse, the common underlying driver is that of racial transformation - to bring all participation in and control over aspects of South African society in line with the 80-9-9-2 racial principle.
It is light years away from the constitutional principle of non-racialism. It is almost as if the ANC, as it loses control over other matters (such as helping the economy grow, providing basic services and keeping law and order), is trying to gain other, seemingly easier, areas of control. This trend will grow in 2020 and pose great danger to ordinary South Africans, and especially minority groups.
A second, more positive trend is more and better investigations, charges and prosecutions by the National Prosecuting Authority (NPA) and the Hawks. By the end of 2019, there were already noticeably more charges and prosecutions, and as the NPA's capacity increases (partly as a result of outsourcing), more and higher-profile offenders will appear in court. These include senior leaders from both the ANC and the EFF. In fact, the Director of the NPA, Advocate Shamila Batohi, promised that February would be the starting date for this.
The third trend is not a new one, and in fact has been going on for years. However, it will reach new highs (or lows) in 2020. It is the gradual but definite decline in the ability of government agencies (especially State-Owned Enterprises - SOEs - and local authorities) to govern, manage, maintain and provide basic services. The most recent example is that of South Africa's once proud judicial capital, Bloemfontein, which is the first Metro placed under the administration of an equally shaky provincial government. This trend is often attributed to a “lack of capacity”. However, what is not mentioned by any government spokesman who wants to explain this defect, is that it has been directly caused by racial transformation, affirmative action and black economic empowerment (BEE), exacerbated by cadre deployment and a culture of appropriation. To admit this, however, is to touch on the heart and soul of the ANC's ideology - and it cannot happen. Racial transformation is more important than the interests of ordinary and even poor South Africans. Informed sources in Eskom, for example, point out that the vicious cycle that started in this once proud organisation with affirmative action and BEE, and has been exacerbated by cadre deployment, is still in full swing. After all, people who are appointed in this way will not easily leave. It's not going to make Eskom's rescue any easier. The only piece of good news in this regard is the precedent of business rescue under which SAA is now, and the possibilities it opens for other SOEs.
The fourth trend is the ongoing infighting within the ANC and its alliance partners. This, too, is not new, and has been raging since Mr Ramaphosa was voted president of the ANC in December 2017, and has increased since he was elected President of the country in early 2018. But this was especially heightened as the revelations and prosecutions of State capture and corruption began to increase, and also when it became clear that new economic policy guidelines were urgently needed for the dwindling economy. This includes plans to try to save Eskom and other SOEs. This infighting has an impact on President Ramaphosa's position of power inside and outside the party and may lead to attempts to remove him from power. This especially affects future economic policies and the rescue efforts of the SOEs. Some commentators, such as Max du Preez, even believe that President Ramaphosa's position in the ANC is currently the worst since he was elected President. Time will tell if this is true, but this trend will complicate many issues for the Ramaphosa administration in 2020. If the President wants to change something permanently, he will have to change the attitude of “ke pele” (“me first”) in the civil service to the former “batho pele” (“the people first”). For this, however, he needs the support of a majority of ANC NEC and caucus members. The infighting makes it very difficult. And a possible showdown between the pro-Ramaphosa faction and the Zuptas looms large when the planned ANC’s National General Council meeting takes place in June 2020.
The fifth trend, which is also not new, is the stagnant economy. The hope that the economy would pick up in 2020 has already been thwarted by the weak economic growth in the third quarter of 2019. But the bigger problems lie in a lack of policy certainty, a lack of stronger action to alleviate SOEs burden on the fiscus and lack of measures to instill confidence in business leaders and make it easier for small and medium businesses to operate. In addition, the impact of a recent call by President Ramaphosa for an even stronger emphasis on racial transformation in the private sector (after the clear negative impacts it had in the public sector) will be a further blow to the economy. Most commentators agree that a further downgrade by Moody's at the end of February is probable. Junk status will make it even more difficult to restore the economy. Hopefully, in his budget speech, Minister Mboweni can pull a rabbit out of the hat, but that is unlikely. South Africans are facing another year of tightening the belt.
The important events early in the year by which these trends can be confirmed, changed or adapted are, firstly, the ANC's annual January 8 meeting and declaration - which takes place this year on January 11. Thereafter, President Ramaphosa's State of the Nation Address will take place on February 13, with Minister Mboweni's budget speech at the end of February.
The above picture is hardly rosy, but undeniably part of the South African reality at the beginning of the third decade of the twenty-first century. The good news is that ordinary people and leaders can use these trends to understand and plan for our immediate environment. The outcomes of these trends are by no means an accomplished fact. They can be changed: whether it is court cases to protect our school system, whether it is companies that are doing well in spite of disruptive circumstances and regulations or whether they are ordinary people who do not pay attention to a government that wants to control everything and just go their usual course and do their jobs. Usually, no year in South Africa is boring. 2020 will be no exception.
By Theuns Eloff, Chair, FW de Klerk Foundation Board of Advisers, 9 January 2020
