Priorities for SA’s emergency resuscitation

For the past nine months, the Centre for Development and Enterprise (CDE) has been collaborating with experts, business leaders, former public servants, nongovernmental organisations, and academics trying to answer what is by far the most important question facing South Africa: what can a new government do to get the country back on track after 15 years of stagnation and decline?

When we started this project, the outcome of the election was difficult to predict. It was far from certain that the ruling party would lose its majority and form a coalition government. Fortunately, the Government of National Unity (GNU) is, we believe, potentially an unprecedented opportunity to turbo-boost reform and get South Africa back on track. CDE’s “Agenda 2024: Priorities for a new government” consists of a series of catalytic action reports, four of which have now been released and distributed to about 20 000 decision makers around the country, with two more to be released in September.

The necessity for a new approach to governing South Africa couldn’t be clearer. Annual growth has declined more or less continuously since 2009, and now averages less than 1% a year. We have the deepest unemployment crisis in the world, intensifying poverty, and a per capita murder rate that rivals that of war zones. Corruption is deeply entrenched, and the corrupt have little to fear from the law. We owe so much money as a country that we spend more repaying our debt every year than we spend on basic education, health, or policing.

The GNU has to deliver. It has to move with urgency to make sufficient progress so that individuals, communities, and investors feel confident that finally we’re moving in the right direction and that there are important milestones – targets for delivery – the government is trying its utmost to meet.

CDE has focused on five priority areas for action. These are: fixing the state; freeing up markets to drive growth and development; addressing the fiscal crisis; building a new approach to mass inclusion; and strengthening the rule of law.

To begin to fix all of this, the government needs first to fix itself. Key to fixing the government is making sure that the Cabinet and Cabinet processes are fit for purpose, and that the best possible people are appointed to critical jobs.

We have argued that a smaller, streamlined, more coherent Cabinet is essential to ensure better decision making by government. Together with this requirement is a theme throughout all our priority actions: ensure that the people in the most critical posts across government and state-owned companies (SOCs) – directors-general, chief executives, senior officials – are honest and capable. We are therefore proposing that the incumbents in about 120 “mission critical” posts all reapply for their jobs, and that, where individuals aren’t the best possible candidates for the job, they be replaced.

Addressing the fiscal crisis and fixing SOCs is the second major theme for new government strategy. The choices here are challenging as there’s little prospect of hastening the fiscal consolidation needed. An acceleration of economic growth after credible commitments to reform will ease some of these pressures, but is not enough. The government must avoid all new spending commitments. We have to get value for money. This requires that public servants are better led, managed, and supervised to improve productivity across government.

Fixing operational and commercial challenges of the most important SOCs such as Transnet and Eskom is urgently required. These challenges derive from corruption and mismanagement, but also from the absence of competition in the sectors they dominate. This results in operational failures that persist long after the point at which customers would have defected to competitors, if these existed. Fixing the SOCs, therefore, isn’t just a matter of institutional-level tweaks, but requires a radical rethink of how the markets in which SOCs operate will be structured.

A third area of prioritisation is freeing up of the economy so that markets and firms, disciplined by competition but supported by a capable state, are able to thrive. It’s critical to recognise the untapped potential for firms – formal and informal – that has been held back by a combination of bad regulation, increasing crime, and a rapidly deteriorating logistics system. And by a negative government attitude to private firms that needs to change if we are to become a country that welcomes investment.

The fourth priority concerns mass inclusion and a new perspective on how to ensure that people can move out of poverty and unemployment in the millions. To achieve this, the new government has to rethink the present approach to empowerment, which, even if it hadn’t been wholly corrupted, would empower only a small minority of people. What the country needs is a new approach focused on rapid employment growth and expanding opportunities for all those without any. It also requires rethinking procurement policies that have become the vehicle for transformation, but largely at the expense of higher costs of service delivery, coupled with considerable corruption. Empowerment policies that hold development to ransom so that a small elite can benefit need to be rejected and replaced.

The final priority for action by the new government concerns the rule of law. Catalytic actions here include a focus on reforming the Judicial Service Commission – the constitutional body that appoints judges – and which is failing in many respects; and a second report on strengthening the National Prosecuting Authority. This report will be launched on Thursday, 26 September, at a public event (see www.cde.org.za).

Arresting South Africa’s devastating decline requires a new approach for the government. Hard choices must be made about people, policies, and how to get things done. Time is running out. Half-hearted, half-baked reform won’t change the country’s trajectory. The government needs to act quickly and decisively. After all, we have a country in crisis to fix.

• Ann Bernstein is executive director of the Centre for Development and Enterprise. This article draws on CDE’s “Agenda 2024: Priorities for South Africa’s new government” series of reports. See cde.org.za