On Wednesday President Jacob Zuma is going to be delivering his first state of the nation address. In a sense this is crunch time for the ruling African National Congress. The ANC was recently returned to power by the electorate on the basis of its promises to make amends for past failures by delivering proper services and creating decent work. The ambitions of the new ANC leadership, and the hopes of its supporters, are now running into the hard reality of economic recession and falling tax revenues.
The party's election manifesto placed much emphasis on a developmental state which would "play a central and strategic role in the economy. We will ensure a more effective government; improve the coordination and planning efforts of the developmental state by means of a planning entity to ensure faster change. A review of the structure of government will be undertaken, to ensure effective service delivery."
The international climate may currently be more conducive to greater state intervention. But, again the hard reality is that locally the state and parastatal sector is in a complete mess. According to Democratic Alliance estimates, "R100-billion of public money" had to be spent on propping up nine failing parastatal institutions between 2004 and 2008. And this was during a period of rapid economic growth. Denel, SAA and the Land bank have consumed billions of taxpayer's money - while Eskom is due to receive a whopping R60bn from state coffers.
The recession is going to hit any residual profitability of parastatal institutions, while the fall off in tax receipts is going to make it much more painful to continue bailing them out. The current financial difficulties the public broadcaster is facing are probably a portent of things to come. According to the Sunday Times the SABC, which is currently unable to pay its bills, will be asking for an R2bn lifeline from government this week.
Moreover, as Ray Hartley recently noted, "The public service which the Zuma government has inherited from the Mbeki years is in tatters. Hospitals and public schools are taking a lot of strain. They do not need more funding. They need better management of their existing budgets."
It is hard to see how the usual ANC remedies of more planning, greater central control and further institutional restructuring are going to cure the state's institutional sickness. The real challenge for the ruling party is to change itself - its own mindset and usual way of doing things - and start placing the proper value on expertise.