The first way one deals with a problem, is to recognise there’s one. And the first way to recognise this, is to open the lines of communication. President Cyril Ramaphosa has opened the door with his first weekly message titled From the Desk of the President. It’s a platform he’s created to help unpack the challenges and opportunities that lie ahead, with everyday South Africans. Have a read and more importantly open the dialogue. – Stuart Lowman
From President Cyril Ramaphosa
Dear Fellow South African,
Welcome to the first weekly message ‘From the Desk of the President’. Each week, I will discuss some of the issues that interest and concern South Africans, and talk about the work we are doing in government to tackle these issues. I hope you will find it useful.
Almost everyone I meet in the country, whether residents of Lusikisiki or business leaders in Johannesburg, is deeply concerned about the state of the economy and the stubbornly high rates of unemployment. After a decade of low growth and deepening poverty, people are looking for signs of progress in tackling the many challenges confronting our country.
These concerns are real. This year, the economy will record growth that is lower than expected (and much lower than what we need). Government finances are stretched about as far as they can go, and several industries are looking at retrenching workers.
Much of the confidence that the country had 20 months ago has dissipated as the reality of the problems we face became clearer. This confidence was born out of the hope that we would quickly undo the damage that was done over a number of years. Implementing change does take time. The important issue is that we should move in a determined way to effect change while remaining irrevocably committed to rooting out state capture, corruption and malfeasance.
We collectively have a common task: to rebuild the confidence of our people, this time based not merely on hope and expectation of change, but on concrete things that make a difference in the economy, real actions that ‘move the needle’.
I believe this is eminently possible. Despite the difficulties, South Africans from all walks of life are still moved by the spirit of Thuma Mina to become involved in fixing our country. They want to change the narrative of doubt to a narrative of opportunity not through clever spin, but through action. South Africans are ready to rise to the challenge.
Most of the people I speak to recognise that we have made progress in turning our country around. The changes that have taken place in many state-owned enterprises and in bodies like the NPA, SARS, the police and the State Security Agency give people confidence that we can restore the credibility and integrity of the State. It shows that we are serious about tackling corruption and ending state capture.
There has also been progress on the economic front. A year ago, we announced an economic stimulus and recovery plan in response to our economy’s first recession in nine years. Since then we have embarked on several reforms to create a more investor-friendly environment. We have finalised a Mining Charter that has been broadly welcomed by the industry and finalised policy on the allocation of valuable broadband spectrum. We have and continue to make changes to our visa policies.
Funds have been redirected to stimulate economic activity in areas where the majority of South Africans live. This includes finance to support black commercial farmers, the revitalisation of industrial parks in townships and the establishment of a Township Economy Fund. Government is also increasing the value of goods and services it procures from small business and cooperatives. Much work still needs to be done in many of these areas to ensure they have the effect on the economy we seek.
Building on the stimulus and recovery plan, government will finalise a clear economic growth strategy within the next few weeks. This strategy will draw on the many valuable contributions that have been made by South Africans on the discussion paper released by National Treasury.
Several parts of the growth strategy are already in place. These include how we can strengthen our reform programme, a revitalised industrial strategy in support of key growth sectors and the establishment of an Infrastructure Fund with a clear plan to revive infrastructure investment. Much work is underway to improve the ease and reduce the cost of doing business, as are efforts to restructure state owned enterprises and ensure that they perform better in meeting the country’s needs. A clear strategy to place Eskom on a sustainable path of recovery is also being finalised.
All this work is taking place at a time when government’s finances are under great strain, and there is very little room to increase spending or borrowing. This means that we need to spend our limited resources more smartly, get rid of wastage and shift more resources to infrastructure investment.
On the first Monday morning of each month, the Deputy President and I meet with the leaders of business, labour and the community sector to review the implementation of measures agreed at last year’s Jobs Summit. Our continued focus is on job creation and how we can reduce the numbers of people who are unemployed.
It is clear that, as a country, we are taking firm action to grow the economy and create jobs. But we need to do more to turn things around. We need to finalise a comprehensive growth strategy that takes all the work being done to another level. I am certain that with the active involvement of all sectors of society, this will be achieved.
South Africans are ready to rise to the challenge.
Comment from Azar Jammine, chief economist, Econometrix
Ramaphosa starts issuing weekly letter to try to persuade the public that he is serious about economic reforms, but is he really playing for time amidst resistance to these reforms from within his party.
- President Ramaphosa embarked upon a new initiative yesterday, inaugurating a new newsletter which he intends to put out on a weekly basis. Undoubtedly, this innovation is likely to be welcomed since one of the criticisms of the president in recent times has been that he has been too quiet about implementation of policies and structural reforms. Hopefully, communication in this regard will improve.
- Nonetheless, there will be sceptics who will question whether all that much good will come out of this initiative, because of the perceived opposition which the president is receiving from within his own party to proposed measures to reform the economy in a way that will speed up growth and employment creation.
- His first newsletter represents a classic example of how and why his letters might be received sceptically. The president acknowledges that the economy is in a parlous state and that the government’s fiscal situation is very tight, with little funding available to improve economic growth through its direct interventions. He alludes to the fact that he meets with business leaders on the first Monday of every month. By all accounts, the last time they met, business leaders let him know that frustration was building on the inability of the government to implement structural reforms. Ramaphosa also acknowledged that the public at large is “looking for signs of progress in tackling the many challenges confronting the country”.
- To this end, the president refers to the ideas contained in the recently published National Treasury strategy document and also points to the restructuring of key institutions such as the National Prosecuting Authority, South African Revenue Services, the police and the State Security Agency. He emphasises how important the restructuring of these institutions is in the fight against corruption.
- The president also makes it clear that the government will soon release a detailed document of what it intends to do about restructuring the economy and how it has already initiated processes by which to revitalise industrial strategy, establish an Infrastructural Fund, improve the ease and reduce the cost of doing business, reduce the cost of broadband spectrum, alleviate impediments to the provision of visas and restructure state-owned enterprises and place Eskom on a sustainable path to recovery.
- However, many will question why it has not been possible to achieve all the above given that these issues have already been presented as intentions on previous occasions, including in his own State of the Nation addresses since taking over as leader of the country. Is there any reason to believe that implementation of these intentions will be forthcoming any more readily once an announcement has been made of a new comprehension government strategy. Already there has been talk that the National Treasury’s strategy document will only proceed (or not) once it has been thoroughly aired at the next ANC policy conference. If that is so, then the risk is that we will continue having the notion of structural reform dangled before us as a business community, without actually witnessing concrete action taking place in this regard.
- Under the circumstances, confidence will only return once hard evidence begins emerging that government is seriously implementing the reforms it talks about. For the present, the fact is that government keeps berating the private sector for not investing its billions in new projects and waiting on government to do everything. The reality is that private sector investment has been holding up reasonably well, albeit not increasing strongly, but government investment is the culprit which has been declining. In contrast, remuneration of public servants increased by 4.4% and 2% in inflation-adjusted terms in 2017 and 2018, compared with a decline of -1% and a marginal increase of 1.1% in private sector remuneration per worker over these two years respectively. Furthermore, these trends have continued into the current year. Until we see such trends being reversed, it is Ramaphosa starts issuing weekly letter to try to persuade the public that he is serious about economic reforms, but is he really playing for time amidst resistance to these reforms from within his party doubtful whether the kind of investment needed to boost economic growth will be forthcoming. We hope that the president addresses these issues in forthcoming weekly newsletters.
