JOHANNESBURG — Cyril Ramaphosa’s recent move to outline his economic plan for South Africa has subsequently been dissected by the likes of respected economist Azar Jammine. In this piece, Jammine cautiously welcomes Ramaphosa’s plan and says that if Ramaphosa is elected to power at the ANC conference in December, the prospect of an economic turnaround becomes more possible. Of course, that’s if the conference even happens amid infighting in the ruling ANC… – Gareth van Zyl
By Azar Jammine*
The tenets are by and large business-friendly, focusing on trying to drive growth through improved quality of education, fiscal and monetary discipline, increased infrastructural spending, a drive to promote minerals beneficiation and manufacturing and promotion of small business activity and township business development. At the same time, the emphasis is to drive growth in order to reduce inequality.
The ideas appear to be closely aligned to those of the National Development Plan (NDP), whose development he was in charge of.
Ramaphosa’s economic policy Blueprint contrasts with the radical economic transformation aimed at redistributing wealth from Whites to Blacks promulgated by his rival for the ANC Presidency, Nkosazana Dlamini-Zuma.
Many argue that Ramaphosa’s Blueprint will never work because there is nothing novel in what he proposes to lift South Africa’s growth. However, Ramaphosa is of the view that proper implementation of his policies stands to lift economic growth to 3% next year and to 5% by 2023, with the creation of one million jobs over the next five years.
This might appear impossible given the lack of progress in promoting growth through business-friendly policies in recent years. However, the fact is that a restoration of business confidence and a removal of onerous legislation and regulation and government interference in the running of the economy, could see such more optimistic projections actually materialising, if the policies are honestly and comprehensively implemented.
An additional prerequisite for success of Ramaphosa’s ideas is that under his leadership he can bring greater cohesion between private business and organised labour. Appropriate leadership is required to bring about compromise on certain conditionalities which stand in the way of proper implementation of the kind of policies which he is recommending. One of the impediments to higher domestic economic growth in recent years has been a lack of trust between the public and private sectors and organised labour. With Ramaphosa’s pedigree as a leading trade unionist, political negotiator and businessman, appropriate leadership on his part could bring about the kind of restoration of business confidence needed to fulfil his growth objectives.
One must bear in mind that it is conceivable that his election as ANC President and subsequently as the country’s President could restore confidence amongst international investors and improve the general business mood in a manner that might see South Africa’s investment grade credit ratings being restored, enabling the cost of capital to fall and in this way helping to promote economic growth. Conversely, should Nkosazana Dlamini-Zuma be victorious, this would usher in an environment of even greater uncertainty and loss of confidence, with a snowballing decline in the Rand, escalating inflation and interest rates and a collapse in economic growth.
The final key to potential success for Ramaphosa is the extent to which he can succeed in generating huge savings by eliminating corruption and State capture as he professes to want to do.
- Dr Azar Jammine is the chief economist at Econometrix.