Investment Insights | 3 min read

Ramaphosa’s challenge

‘Is South Africa a Party or a State?’ was the philosophical question that political analyst, Daniel Silke, explored in his insightful presentation at the Glacier 2021 Outlook webinar held on Friday, 5 February. In the webinar, which aimed to provide a view of the global socio-economic and political landscape in 2021, Silke reflected on this year’s bizarre start at the US Capitol; the political polarisation that underpinned these events; and geopolitics involving the US and its adversaries – Russia, China and North Korea – that will continue under a Biden administration.

A tale of two pandemics

With this global backdrop, South Africa is in the grips of the second wave of COVID, although these numbers are softening. He noted that while COVID continues, there is something of a pandemic within the ANC as well, that doesn’t seem to abate. There are times when the economy is a priority, while at others, politics seems to come first. Central to this internal ‘pandemic’ is how corruption is being dealt with and whether the Zondo Commission will be upheld as a legitimate institution whose findings and decisions will be acted upon with due process and expedience.

Change isn’t a-coming

Silke pointed out that the ANC is at a crossroads. Central to its dilemma is how it will approach corruption through its own policies and institutions – the very organs of state that it has taken pains to develop and build over time. And it’s precisely some of these organs of state whose trustworthiness and integrity the Public Protector has called into question recently.

While the ANC is a cohesive political party, there is a shelf life for how long the party can ‘paper over’ its flaws and cracks.  While its cohesiveness is found in its tradition as a liberation movement, there are pressures from all quarters of society (and across the political spectrum) where frustration is high over the slow pace of change.  While maintaining party unity, does President Ramaphosa have the mettle to deal with corruption? Only time will tell. In Silke’s view, factional tensions will continue, charge sheets will increase in number, and tensions will also continue to mount, the closer we get to the point of prosecuting the guilty.  

Growth should be the priority

At the ANC National Executive meeting held last December, three issues were on the top of the Party’s priorities: land, health insurance and the basic minimum wage for the unemployed. While these are all instruments of redistribution, Silke says that the key question beckons: what about growth? What will we do to ease the fiscal strain? As a nation, we are currently in the wrong economic quadrant of “higher debt, low growth”.

As the costs associated with COVID continue to mount, there will be a strain on government’s ability to continue patronage networks – and that’s a good thing, says Silke. The ‘brown envelope’ politics will decrease as money is running out.  

Decreased pay for government workers?

Silke says that we need to watch the Finance Minister’s approach to the public sector salary bill. Does he have the political will to do what may need to be done in an election year? The reality is that public sector remuneration has grown out of context in relation to other sectors, and the simple truth is that South Africa is running out of cash.

Restoring confidence

President Ramaphosa has a window of opportunity to restore confidence in his leadership and the ANC and this may have arrived in the form of the COVID vaccine. There is no space for looting and incompetence in delivery of the vaccine in South Africa, and take-up needs to be ensured to prevent infection waves into the future.

At the heart of this is President Ramaphosa’s opportunity to redress the failures of the past by efficiently rolling out the vaccine, to save lives, to help the economy and to do something significant for the State that remedies some of the inefficiencies of the Party.  He needs to choose a good balance between the two agendas – Party and State – to succeed.

The plan is there – how will we implement?

The nine priority interventions of the South African Economic Reconstruction and Recovery Plan (2020) is a cogent, considered list of actions the government needs to take to get South Africa back on track to recovery and growth, in a post-COVID world. In June 2020, President Ramaphosa seemed decisive when he said, “we are determined not merely to return our economy to where it was before the coronavirus, but to forge a new economy in a new global reality”.

Silke says that for this to happen these points need to translate into policies and they need to include private-public partnerships, especially in the area of infrastructure development. Much of the success of this Plan hangs in the balance of the ANC policing its own and delivering the vaccine to all of its citizens.

View the Glacier Outlook 2021 webinar content page

Glacier Financial Solutions (Pty) Ltd and Sanlam Life Insurance Ltd are licensed financial services providers.

Your Next Read

Investment Insights | 5 min read
The benefits of fixed income hedge funds in portfolio construction

Receive the latest Glacier Insights delivered to your inbox


Please enabled javascript to view Glacier.