11.07.2018

2018 Agbiz Congress - President Ramaphosa has done well so far, but an uphill battle lies ahead

President Cyril Ramaphosa has taken a number of important steps so far this year in stage one of the Ramaphosa reform era. These include recalibrating key areas of economic and institutional importance. He also overhauled the security cluster, said Goolam Ballim, chief economist of Standard Bank, at the 2018 Agbiz Congress.

President Cyril Ramaphosa has taken a number of important steps so far this year in stage one of the Ramaphosa reform era. These include recalibrating key areas of economic and institutional importance. He also overhauled the security cluster, said Goolam Ballim, chief economist of Standard Bank, at the 2018 Agbiz Congress.

These include the dismissal of Richard Mdluli, the appointment of a commission of inquiry into state capture, the appointment of a new Eskom board, President Ramaphosa’s successful appearance at Davos, the Hawks raiding the Guptas’ home and the cabinet reshuffle.

Other far-reaching consequences of the new governance include the National Prosecuting Authority reinstating 16 charges against the former president, no downgrade by Moody’s and S&P, establishing the Youth Employment Service (YES) and giving the green light for renewable energy producers.

To these can be added the fact that the Special Investigation Unit are going to probe Eskom and Transnet, ex-president Jacob Zuma appearing in court, new interim boards established at Denel, Prasa and Transnet, Arthur Fraser being redeployed and President Ramaphosa securing foreign investment of USD 100bn.

The so-called stage two of the Ramaphosa reform era, however, requires structural reforms to elevate South Africa’s growth prospects. Among others, government must be reformed into a capable and smaller state. There should be state-owned entity rationalisation and privatisation and education and agriculture, especially the land reform issue, should receive priority attention,” Ballim said.

He also pointed out that the mining industry should be revitalised. “The president must consider what could move the Moody’s rating up. It is also essential that real action must be taken against those behind state capture,” Ballim said.

He said that South Africa could learn some lessons from the ‘clean-up’ operations in Brazil. These included that the attorney general’s offices and judiciary becoming independent and autonomous and them fostering legal cooperation between public prosecutors without the interference of the executive branch. Joint research teams and the use of plea agreements were effective tools for dismantling criminal organisations in Brazil and the region.

“President Ramaphosa must fortify his political capital within the ANC. He only secured 51% of the votes in the December ANC election and he must strengthen support across the party’s provincial and league structures. He must neutralise Ace Magashule, and prevent Jacob Zuma from rebuilding his political base. For now, David Mabuza is aiding in this drive, but, down the line, he will have to be managed too.

“The president will have to find the line between reform, stability and ‘radical’ transformation.” Ballim said that although South Africa’s GDP growth is improving, it is still far from stellar since the Zuma-era stagnation.

“Unemployment levels are stubbornly high, levels of trust are exceptionally low and land reform is supposed to address the ‘original sin’. There is a proxy for wider transformation and pressure for more vigorous land restitution.”

Ballim pointed out that a weak performance in next year’s election would strengthen President Ramaphosa’s internal ANC adversaries. He has to secure a comfortable victory. “Although Gauteng and the Western Cape has 35% of population, and account for more than 50% of South Africa’s GDP, they only have 14.5% of the ANC membership. The three ‘premier league’ provinces account for 35.6% of ANC membership but just 19% of the national population. It is only in KwaZulu-Natal and the Eastern Cape that the ANC membership and the demographics are aligned.

“The opposition is battling to adjust to life without Jacob Zuma. The Democratic Alliance is internally divided and the Economic Freedom Fighters are desperately seeking new platforms,” Ballim said.

 

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