Daniel Silke: A SONA shackled by its own State

If one lived in Norway, Denmark, Finland or
Canada, the State of the Nation address from President Ramaphosa would’ve
perhaps sounded quite impressive.

After all, the context of trusting the
state to deliver services, developmental promises and a wish-list of economic growth-related
policies requires a track-record of credibility and capability certainly
prevalent in the countries mentioned but sorely lacking in the South Africa of

And there’s the rub. In presenting his 2020
SONA, the President outlined a host of initiatives on youth employment
creation, energy liberalisation, infrastructure spending, education
enhancements, the creation of a state bank, a sovereign wealth fund and of
course, the National Health Insurance (NHI).

Ultimately, many of these plans requite
scrupulous transparency and expert implementation. They require expertise of
conception and rigorous oversight. In a country where debt-to-GDP is rising to
dangerous levels due to the gross mismanagement of the past decade, there is still
precious little proof of the capacity of the State to deliver on Ramaphosa’s

At the heart of SONA 2020 was two issues
that are not new. Firstly – with the exception of the energy reforms – the
President continues to believe in the over-intrusive State. This largely
coincides with the prevailing view within the ANC that the Developmental State
remains at the heart of economic policy-making for the country.

The SONA largely skirted the core issues of
private sector participation in SOE’s and certainly did not make any remote
mention of the potential for – even limited forms of – privatisation. Of
course, even if he wanted to, the President couldn’t. His hands were always
going to be tied by his own party’s divisions and ideological confusion on
related issues.

In this way, there were few political risks
for President Ramaphosa in SONA 2020. It was largely in keeping with ANC
discussions points and framed in a way to antagonise as few within the Alliance
as possible.

Unfortunately, investors would’ve welcomed
a lesser state rather than one still clinging dearly to its pet projects and
ideological outcomes. In this way, the President simply couldn’t really press
the ‘reset’ button that so many were clamouring for.

Secondly, the President’s wish list has as
a departure point that South Africa has turned the corner from its
‘state-capture-past and is now in a ‘capable-state’ mode.

The President might believe that his new
administration is now fully emboldened with accountability and service
excellence and can now take on these projects but the reality of a myriad of
state inefficiencies tell another story. Just take the school drop-out rate and
poor numeracy and literacy levels as an example of big budget spending with big
delivery disasters.

However, there is little evidence to
suggest that the complexity of the issues at hand can be adequately dealt with
by the prevailing political elites and their bureaucratic surrogates currently
evident within the state apparatus.

Furthermore, the failure to prosecute (thus
far), those implicated in state capture adds to unease with which one would
want to once again rely on the existing personalities within the political and
bureaucratic complex to drive projects like a sovereign wealth fund, state bank
or even NHI.

Until such a time as the real rot has been
revered (and even legally arrested) suspicions around the ability of the state
to renew itself will persist – and should require a very active citizenry
oversight to avoid the graft of the past. Similarly, issues like Expropriation
without compensation continue to cast a policy pall on the country unless
adequately resolved.

With these fundamental flaws, it wouldn’t
matter how impressive or ambitious the President’s address was. And indeed,
there is much to praise in the speech. The President seemed more empathetic to
plight of ordinary South Africans. There was an urgency to some proposals
especially on the core issue of youth employment. There were some timelines

On energy, there were some welcome chinks
in the hitherto dominant (and debilitating) ideological narrative of state
control in the final acceptance of the integration of independent power
producers (IPP) to the grid and, more positively, allowing municipalities to
procure their own power from IPP’s.

This is a critically important step to
alleviating the pressures on the economy from load-shedding, but it remains
remarkable that it took the lights to go out and growth to stagnate before
government were prepared to make the concession.

What we saw in SONA 2020 was a masterclass
in packaging the prevailing confused ANC economic thinking into a relatively
palatable set of proposals which are still likely to fall short in delivering
the desired kick-start to a flatlining growth path. The ANC still believes that
its state will rescue the country and while it will modify certain aspects of
its ideology, it will only do in absolute extremis.  

President Ramaphosa has proven once again
that he is an expert messenger. He remains the ANC’s biggest asset despite the
protestations and chaos of the first 90 minutes during the EFF’s disruption.
The President even managed to restore a sense of decorum and hope on an evening
in which his message could’ve so easily been derailed.

Still, a tougher message might be in the
offing from Tito Mboweni’s Budget at the end of the month. There the harsh
reality of current economic data will be laid to bare. And it’s in the figures
that South Africa will really have to judge whether our current trajectory of
muddled policy-making is really the best we can do.

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