There’s no doubt about it – from an SA perspective, the worst has happened. Not only is the country in lockdown as coronavirus spreads, but Moody’s has downgraded our debt to junk.
We are clearly approaching what alcoholics call rock bottom – the low point of our slow slide into economic stagnation. The lockdown means a painful recession, the loss of many small businesses, and higher unemployment, while the downgrade means that financing a recovery is going to be much tougher because SA will struggle to borrow at attractive rates.
In short, things are bad. We should not pretend otherwise. There is nothing to be gained from ignoring reality.
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However, there is also nothing to be gained from fatalism, pessimism, or giving up. We are already seeing inspiring stories of companies and wealthy individuals stepping up in the hour of need. Naspers has donated R1.5 billion to aid in the country’s fight against the coronavirus and the Motsepe family has donated another R1 billion, as have Johan Rupert and Nicky Oppenheimer. We are also seeing inspiring acts of kindness and humanity, from companies and families paying workers who aren’t able to work to donations of food, clothing, and much needed medical gear.
Crisis brings out the best in people, especially when it first hits, and so far, most South Africans have stepped up and tried to do their part to fight the coronavirus. We saw a similar thing in Cape Town during its water crisis – ordinary people behaving with extraordinary grace and kindness in the face of disaster. Let us hope that this continues and that the incidents we have all heard of, of police and the army acting violently against citizens, remain isolated and rare.
Importantly, crisis also has another effect – it makes the unthinkable suddenly thinkable. And this, I believe, is where SA has a very valuable opportunity.
The situation could hardly be worse. The country is in lockdown, the economy is bleeding, and the lifeline offered by global credit markets is being withdrawn as the impact of our credit downgrade hits. The rand is tanking. In such a moment, we have a rare opportunity to rethink our approach to our troubles. As Tito Mboweni reportedly said, “There is no time for ideology… I cannot eat ideology.”
For far too long, SA has been hamstrung by rigid adherence to ideology and an emphasis on loyalty and ideological purity over competence. The ANC has prioritised deploying loyal cadres over hiring competent workers and it has prioritised sticking to a statist approach over finding solutions that work.
Now, facing an unprecedented set of challenges, the ANC has the opportunity to wash its hands of its ideological past and embrace a crisis mindset – “Let’s do what works.”
Note that this is not to say that we should embrace some alternative ideology, such as puritanical libertarianism that wants the state to do nothing at all. Such an ideology is likely to be just as damaging right now as its leftist counterpart. Indeed, some economists argue that the US insistence on right-wing ideology is behind its unusually painful economic crunch in the face of the crisis.
Rather, SA would benefit from a pragmatic government, something like the government of Franklin D. Roosevelt in the US in the 1930s. Roosevelt was no ideologue. He didn’t implement government spending programmes because he believed in big government. He did it because the country was in crisis and the usual hands-off approach – allowing banks to fail and hoping that the market would sort it all out – wasn’t working. He experimented. He tried different things. Some worked, some didn’t. The point was that he didn’t start off by assuming that he already knew the best strategy, he started off by asking for ideas and then trying out the ones that seemed promising.
This is the polar opposite of today’s ideological rigidity in both SA and the USA (the two countries I know best). In both nations, ruling parties start with the firm belief that their prejudices – their ways of thinking, beliefs, and theories of government – are absolutely correct. They then filter every idea or problem through the lens of their pre-existing assumptions and act out of a set of pre-determined patterns.
This rigidity serves no one, especially when a novel crisis – whether that takes the form of a novel coronavirus or a predictable but dreaded debt downgrade – hits. In times of crisis, it is the nimble, the adaptable, and the innovative that will survive. This is as true for government as it is for companies.
Now is the time for Ramaphosa’s government to throw off the chains of ideology and to think fresh, to talk to businesses and NGOs, to try out novel ideas for solving entrenched problems. Above all, it is the time to take advantage of the chaos caused by the crisis to wipe the slate clean and begin fresh.
