Is Ramaphosa winning the race?

It’s now a case of wait-and-see if the president will be able to push through more reforms.

The structural reforms that President Cyril Ramaphosa is currently introducing are a strong indication he is gaining an upper hand over left-leaning populists in the battle for control of economic policy formulation inside the ruling ANC.

After taking over the reins of the ANC in December 2017, Ramaphosa made a raft of promises to tackle our country’s biggest bugbears – endemic corruption, a failing economy, and runaway unemployment. For a while he dithered, then stalled, on making good on his promises, to the disappointment of many South Africans who had bought into his message of “renewal”, “unity” and a “new dawn”. The murmurs of disappointment also extended to the investment community, which has been losing patience over the slow pace of policy reforms needed to breathe new life into a flagging SA economy.

Ramaphosa’s supporters urged the public to be patient, arguing that the slow-moving president was consultative in his nature and preferred bringing everyone on board with him. However, the president was perceived to be overconsultative as South Africans wanted to see meaningful change following a decade of massive corruption and state ineptitude under his predecessor, former president Jacob Zuma.

It turns out that Ramaphosa has been biding his time, painstakingly consolidating his power. Now we are beginning to see him flexing his power. He is enabling law enforcement agencies to pursue people that were involved in grand-scale corruption under Zuma’s rein, euphemistically referred to as “state capture”. Ramaphosa is also pushing through economic reforms to stimulate economic growth and employment.

Fighting corruption

Having supported the suspension of his party’s secretary general, Ace Magashule, who is implicated in asbestos tender fraud, Ramaphosa has given law enforcement agencies such as the elite crime-fighting police unit, the Hawks, and the National Prosecuting Authority (NPA) free reign to bring to book businessmen and politicians involved in illegally siphoning funds from the state during the period of state capture.

Recently, the fightback against corruption has been bolstered by the ratification of an extradition treaty between SA and the United Arab Emirates (UAE), which will open the door for SA to extradite members of the Gupta family, who are accused of being kingpins of state capture.

Ironically, Zuma, who allegedly enabled the Guptas to loot the state, was sentenced earlier by the Constitutional Court to a 15-month imprisonment for contempt of court. He had ignored a court order compelling him to appear before the Zondo commission after he was implicated by more than 30 witnesses in state capture.

Economic reforms

Another area where Ramaphosa’s administration is making progress, is economic reforms. It recently made big announcements related to restructuring and repositioning of state-owned enterprises (SOEs), particularly power generator Eskom, airline SA Airways (SAA), as well as the railway and logistics company Transnet.

If these reforms are executed meticulously, I expect them to bear fruit and provide sustenance for our country. Regarding Eskom, the government has opened electricity generation to private investment. In addition, the government sold a 51% stake in SAA to a private consortium while Transnet’s division, the National Ports Authority, has been established as an independent subsidiary with its own board of directors.

These reforms are intended to crowd in private sector investment, boost the SOEs’ balance sheets, and improve their operational efficiency. The Minerals Council has already crunched numbers and estimated that the relaxation of the energy regulations could pave the way for investment in new projects amounting to R27bn while Business Unity South Africa (BUSA) said 16 000 jobs could be created as a result.

The looming privatisation of SAA is a welcomed relief for taxpayers, who have forked out nearly R70bn since 1994 to save an airline that has made more than R32bn in losses since 2008. The consortium, made up of Global Airways and Harith

General Partners, will stop the bleeding, make the airline competitive and operate it along commercial principles.

Beyond these reforms, the government also must explore amending labour laws to make it easier to hire workers, particularly young South Africans who are bearing the brunt of high unemployment.

Broad-based black economic empowerment (B-BBEE) must also come under scrutiny, particularly the implementation and enforcement of laws and regulations. The policy must be implemented in a manner that improves regulatory compliance, expands black ownership of the economy, promotes entrepreneurship, and stimulates investment and employment. For nearly 20 years, the policy encouraged quick enrichment with little contribution to employment and new economic value creation.

The reforms that the ANC-led government is implementing are tantamount to an admission that the state developmental model, where the state plays a bigger role in the economy, is being quietly ditched. This model is favoured by socialist conservatives, such as Cosatu and the SACP, and the so-called RET forces, comprising of ANC politicians and their business associates who want to make money from state procurement.

This group has been making unfriendly and hostile statements towards white capital, a behaviour that could scare away investors and threaten Ramaphosa’s efforts of attracting R1.2tr worth of investments into the SA economy. He wants an economy that is largely driven by the private sector, ably supported by the state. I am hopeful that Ramaphosa is going to hold his ground and push through more reforms, paving the way for future prosperity and employment. ■ editorial@finweek.co.za

By Andile Ntingi

Andile Ntingi is the chief executive and co-founder of GetBiz, an e-procurement and tender notification service.