Gerhard Erasmus, tralac Associate, discusses economic policy in South Africa following the recent general elections

The results of the fifth democratic South African elections after the election on 7 May 2014 are clear. The ANC will continue to govern South Africa, albeit it with a slightly reduced majority. However, with just over 62% of the vote its mandate is beyond question. The Democratic Alliance (DA) has increased its support to 22%; while Julius Malema’s Economic Freedom Fighters (EFF) has won 6% of the vote and secured official opposition status in two provinces.

The final results are generally good news for those who favour pro-growth policies and clear government action. In this regard the election results have also brought more clarity; the vast majority of South African voters oppose the radical notions of expropriation and large scale government ownership of the economy.

Many local commentators have noted that the ANC government now has the opportunity, and presumably the inclination, to implement ‘pro-business’ reforms. One of President Zuma’s final calls to the electorate was for ‘an overwhelming majority so that we can change certain things so that we can move faster.’ He now has this mandate; it is up to the President to demonstrate leadership, to introduce the necessary reforms, and adopt clearer implementation strategies. It has also been observed that the election outcome makes him ‘much less beholden to the left.’

During his first term the economy has been burdened with sluggish economic growth, damaging strikes and anger about poor service delivery. The task now is to boost growth and restore investor confidence. The ANC is reported to be committed to ‘restoring investor confidence with stable policies’, and ‘being clear on the policies of the ANC’. The government's far-reaching National Development Plan (NDP) ‘will guide our implementation over the next five years’ ANC secretary General Gwede Mantasha has said. The NDP envisages major infrastructure projects and rejects the nationalisation of key sectors such as mining. President Jacob Zuma has said the movement's strong showing at the polls gave it a clear mandate to forge ahead with the programme (full report on the Fin24.com site).

We would like to add another important goal; the need for a clear ‘neighbourhood policy’. By this we mean a policy which will communicate a positive and practical agenda to other African nations regarding South Africa’s regional integration and trade policies. This, we believe, is critical for regional stability and necessary in order to achieve those very domestic goals of increased growth, more jobs and better service delivery. The manifesto of the ANC promised the creation of 6 million job opportunities. This ambitious target remains impossible without a proper regional, trade facilitation, and services strategy.

The African region needs clearer signals about Pretoria’s vision for inclusive regional trade and development. The South African economy plays a pivotal regional role but also needs the continent’s markets. This is two-way traffic; South Africa cannot prosper in isolation. What are required are clear indications of a shared vision and active steps to consolidate the trade arrangements which already exist, and for anchoring regional infrastructural and industrial development. These initiatives should also target those trade negotiations presently on the African integration agenda; the Tripartite FTA and the Continental FTA.

The very logic articulated for the new domestic policies applies to, and in fact requires, a regional dimension. The head of the ANC’s election campaign, Malusi Gigaba, is quoted as saying the party’s leaders were aware of the need to get the economy growing in an inclusive manner. ‘We need to ensure continuity of our economic policy and programme and we must embed the National Development Plan (NDP) in the work of government in the next five years’. To do that would require that all Ministers, provincial MECs and mayors ‘pursue the same agenda’, Gigaba said. Over the past two years, since the Cabinet adopted the NDP, there have been examples of departmental policies and programmes adopted in direct contradiction. These include important areas such as labour market policy, economic regulation and red tape, and energy pricing. ANC treasurer-general Zweli Mkhize said the starting point for the economy remained the NDP, which invited a greater engagement between the government and the private sector. ‘We want to see bolder steps from the private sector to say this is how it is going to support the NDP in its own planning. ‘The government and business need to build the country together. The biggest issue is the issue of trust, and the gap between the private sector and the government will have to be narrowed’ (Business Day, 12 May 2014).

These very notions of inclusivity and joint action should underpin South Africa’s broader and regional strategies. In a recent speech by the Minister of Finance at the opening of the Integrated Port of Entry Control Centre in Cape Town on 2 May 2014 he too referred to the National Development Plan as ‘the strategic framework to put our economy onto a new growth trajectory with a strong emphasis on lowering the cost of doing business in South Africa, improving our competitiveness and exports, and linking our products with other emerging markets’. 

All of this makes sense. However, border and customs management are essentially the portals which indicate how a nation does business with others. The Minister’s speech contains a strong plea for rules-based arrangements to underpin the way South Africa trades. They are not sufficiently in place.

The objectives and practices articulated in the NDP need to be expanded to include a clear rules-based trade and regional agenda. Hopefully the newly elected government will provide it; in substance, style, and execution. Self-interest so dictates; as does regional stability and legitimacy.

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