President Cyril Ramaphosa’s address to the nation on Tuesday night has the potential to go down as the moment when the economy of South Africa changed. To mark a point in time when the political and economic inertia that has so defined the past 15 years finally ended, and a new, more hopeful era, began. But to live up to this potential the words need to be followed by action, and a sense of momentum must be built up, against a massive veil of vested interests in our politics and economy.
We are living in an era when, politically and economically, up is down.
A US president, who prides himself on being the biggest champion ever of markets and big business is giving citizens money from the federal government, literally sending them cheques with his name on. In South Africa, a president derided by some as “WMC” and being in the pockets of big business has announced the biggest increase in the amount of money paid to people through social grants in a generation.
It’s enough to make one believe that the price of oil is negative.
The measures announced by Ramaphosa on Tuesday night were the work of several economists, from a wide range of the ideological spectrum. The measures have been met with almost universal approval. The ANC was quick to rush out its support, both through a statement and through interviews with its secretary-general, Ace Magashule, and its deputy secretary-general, Jessie Duarte.
Business Unity SA and Cosatu have welcomed the measures. The DA and even the EFF have also embraced the main gist of them.
If nothing else, this underscores the scale and depth of the crisis that we are in.
Unions are concerned about their members’ jobs, employers are worried sick about their businesses, the poor shudder at the thought of where their next meal will come from. Ramaphosa’s measures give everyone something: unions get support from the UIF, firms get support to keep going and keep workers employed and the poor and most vulnerable get increases in social grants.
For the first time, a grant, which could be understood as a basic income grant, will be there for those who are unemployed and don’t currently receive any grants.
Suddenly, there is some hope for a tough, but bearable future. A future that is certainly poorer than we had envisaged not too long ago, but a future nonetheless.
It is in these moments that the real change can happen in the economy.
As Ramaphosa put it:
“We are resolved not merely to return our economy to where it was before the coronavirus, but to forge a new economy in a new global reality. Our economic strategy going forward will require a new social compact among all role-players – business, labour, community and government – to restructure the economy and achieve inclusive growth.”
Certainly, the president now has more space than ever to accomplish this goal. When business supports higher social grants and Cosatu’s general secretary, Bheki Ntshalintshali, starts talking about his concerns over “supply and demand” on national radio, then you know that something has radically changed. Especially when Ntshalintshali says that he and Cosatu have no problem with the fact that government is now going to borrow money from the IMF, which has created a lending facility for countries during the pandemic. This money is available to be borrowed at the incredibly low rate of around 1% interest, and also, importantly, with no “structural adjustment” strings attached.
This moment could be seen as a victory for Ramaphosa’s policy of “social compacting”: all the role-players were included in the process, and while it must have involved trade-offs, they now have no choice but to support it. It may even have helped that some of the people who drew up the proposals were economists, and thus the process may have been depoliticised to a large extent.
Because so many people are so financially vulnerable at the moment, no one can begrudge the social spending increase that is about to occur. The government now has a space to properly “reprioritise” its priorities. Which means it is now acceptable to remove, or get rid of, or prune certain items from the Budget. And because the poor are getting so much help (even as it surely cannot be enough) no one wants to stand in the way of what will happen next.
Thanks to this, Ramaphosa is properly covered on his Left flank.
At the same time, as has been discussed elsewhere in Daily Maverick, the power of the unions has weakened dramatically over the past decade and has been weakened further during this time. These unions have no choice but to choose saving as many jobs of their members as possible over ideology.
Meanwhile, normal politics has gone into hibernation.
The EFF is almost silent. Magashule has spoken in public during this time only to support the measures announced by Ramaphosa. The DA has been able to use its power in the Western Cape to some effect but has not been able to seize the national narrative. And the SACP has been almost completely silent, on top of battling to pay its staff members due to financial problems.
It is this particular set of circumstances that has given Ramaphosa this reform opportunity.
However, this wormhole into a reformed universe is not stable and cannot last forever. At some point the lockdown must end, parties and factions will regain their voice at the first signs of trouble or non-delivery, and the volume of our politics will return to its normal cacophonous level.
At that point, it may be much more difficult for Ramaphosa and his allies to assert themselves. He must use this time of hibernation to make sure he can do as much as possible within it.
As the lockdown is phased out, SA politics as we know it will phase back in. Ramaphosa may want to try to stop that from happening. He may want to try to convince people that our politics has changed, and must be part of the “new normal”. When Parliament comes back, political parties may try to go back to simply scoring points.
This is what he must avoid; he needs a situation where all of Parliament stands to applaud both him and the emergency Budget that will soon be announced.
To do this he will have to ensure that the near-consensus we have seen so far is maintained. But because so many role-players were part of the main process, they will still be locked into it in some ways – as long as he delivers on the main points he outlined in his Covid-19 recovery plans. That could turn out to be a tough task for his team and the government, which is not known for world-class delivery.
Ramaphosa now has a head of steam. But if he loses any momentum whatsoever, the railway in front of him could start to veer sharply upwards. The next months, and possibly years, will define Ramaphosa’s, and South Africa’s, future. DM