Ramaphosa will go to Davos with a credibility deficit

17 January 2019

President Cyril Ramaphosa will travel to Davos next week for the World Economic Forum where he will represent South Africa in an attempt to attract foreign investment. However, the ANC’s manifesto has already harmed the potential for success.

In their manifesto, the ANC expressed its intention to submit itself to the will of COSATU and the SA Communist Party by changing the mandate of the South African Reserve Bank (SARB). This coupled with the battle to control the licencing of financial institutions, with reduced threshold requirements for new entrants, undoubtedly constitute a threat to the independence of the SARB.

This has now resulted in massive confusion, as once again it seems like the ANC’s one hand does not know what the other is doing.

Yesterday Ramaphosa told delegates that the ANC’s election promises “shouldn’t alarm anyone” and that “[t]he manifesto had a paragraph on a wish and an aspiration, acknowledging that the Reserve Bank is independent and that there is no intention whatsoever to tamper or tinker with the independence of the central bank. The wish that is expressed is, that as it goes ahead with monetary policy machinations, it will keep an eye on employment”. He went on to say that it is precisely what the SARB was focusing on already, and that everything is perfectly fine at the central bank. Finance Minister, Tito Mboweni reportedly agreed in this regard.

Yet, on the other end the ANC’s secretary-general Ace Magashule on Sunday said that a “flexible monetary policy regime” means that the ANC will nationalise the SARB and that “as officials of the ANC, we have met and we said we are going to implement every resolution from the national conference without flinching”.

The ANC frequently takes both sides of an argument to appeal to different constituencies. This means potential investors are unlikely to trust Ramaphosa and significant job-creating investment is unlikely to follow. The President should be securing investment that would help some of South Africa’s 10 million unemployed attain work, but instead, as usual, he is placing the ANC’s political needs ahead of the needs of South Africans.

Issued by Alf Lees, DA Shadow Deputy Minister of Finance, 17 January 2019