It is funny how the pendulum swings back and forth. People join climate alliances, people leave them. Countries join the Paris Agreement, countries leave it, join it again and leave it again.
Social norms shift. Trade policy views shift back and forth over time. Sometimes stepping back, the pendulum crosses political boundaries — the US Inflation Reduction Act of the Biden administration was arguably only possible in terms of the extent of interventionism in trade policy because of the Trump administration before it.
All this seems to go on quite readily in developed markets given perhaps the maturity of their institutions (famous last words?) — but less so in SA. This country seems by contrast to have been one long glide from starting position to end position over the past 30 years. Can the pendulum swing back in various places? This is the question for the government of national unity (GNU) in terms of practical policy steps but also in terms of the political red meat some GNU members are after.
The state of the national address (Sona) is a key moment — with the medium-term development plan that comes with it — to show where the state of play actually is in SA on its policy pendulum. Alas, Sonas are often more statements of what is continuing to go on as opposed to visionary statements of end points. Contrasting the declaratory statements of US inauguration addresses (not just Donald Trump’s this week, but Joe Biden’s before) with Sonas does not yield positive results.
Yet firm statements are needed on a number of fronts. National Health Insurance is the most obvious. A universal quality healthcare is clearly needed but won’t be provided or affordable under present plans. How can the president pivot to an off-ramp of getting change and better healthcare to more people faster, rather than waiting out years of the National Treasury not funding anything and everyone waiting for court case after court case to resolve?
Similarly, on industrial policy it might be cheeky to say the country doesn’t actually have an industrial policy but a series of statements and actions that have built up into a presumed policy without understanding the impact or unintended consequences. Trade, industry & competition minister Parks Tau is now on the back foot after announcing an unworkable and probably illegal idea of a 3% tax on firms to fund a centralised pot. He will need to speedily regain the benefit of the doubt that people were (trying to) confer on him, of someone who could reverse the pendulum that had swung too far in the wrong direction under the disastrous Ebrahim Patel.
It is remarkable how much of the most recent administration was not really written down in policy. This is true of state-owned enterprises (SOEs), which was characterised by a minister ranting down the phone at the companies under his charge. Transport minister Barbara Creecy is now having to do battle with this by bringing forward further policy and holding entities to account on Operation Vulindlela policy.
The GNU cabinet certainly gives off vibes of being generally more “together” and “on it”, but we should be careful not to overread this into policy and conclude that all uncertainty or contradictions have gone. That is far from the case. Recent pronouncements on SOEs by minister in the presidency responsible for planning, monitoring & evaluation Maropene Ramokgopa fly in the face of the views of other departments, other parts of the presidency and of the ANC.
There is still too much of a hangover of notional islanding of policymaking from the Zuma administration and even the most recent administration, in which the cabinet largely allowed people to get on with whatever it was they were wanting to do. The lack of a coalition agreement means that is still the starting point, though political pressure and a cabinet that has woken up and asks questions (to be fair, not just the DA and other new parties, but also some new ANC ministers) is the start of change. However, much more needs to be written down, and the development plans as a coalition agreement in all but name are therefore important and necessary things.
The need for the red meat is important too, as all parties in the GNU need certainty to show their bases as wins and mechanisms to show they have control to enforce change. So far the ANC has operated on the premise that the DA particularly can provide gains, as on visas, but cannot have “negatives” such as the ANC not doing things. The Basic Education Laws Amendment Act wasn’t blocked (though the DA will shape its norms and standards) and the DA has not yet firmly forced a swing in industrial policy beyond rhetoric.
Tension will remain high as parties such as the DA look for these “negative wins” or pounds of flesh, but we should be careful to see this as noise that doesn’t necessarily derail GNU stability — as long as a balance remains versus the gains that can be shown.
Policy certainty is good for business and sentiment, but is also needed to allow the political dramas to settle so we can all move on with our year ahead.
• Peter Attard Montalto leads on political economy, markets and the just energy transition at Krutham, a SA research-led consulting company.
This article first appeared in Business Day.
