Sun, 09 Aug 2020

South Africa was not alone in facing unprecedented economic circumstances arising from its Covid-19 lockdown. Both developed and developing nations are (and will) battle with consequences for many years to come.

All countries faced the of balancing the double whammy of the immediate response to the pandemic with the extreme economic toll that would simultaneously be unleashed.

South Africa's weakness was its poor economic foundation that had been crumbling for most of the last decade. If the platform is weak, the earthquake will surely topple it over.

And sure enough, the extreme lockdown regulations - perhaps induced by panic, perhaps by the worldview of a command-driven response - have taken its toll on unemployment, debt and poverty levels.

The problem for the country is that it simply has an unclear default position. What exactly is the South Africa one would realistically wish to return to after Covid-19?

Lack of cohesion

South Africa's opposition parties are relatively weak or battling their own inner demons and are failing to achieve critical mass. It is therefore likely that the economic future will therefore still - at least in the short-to-medium term - be decided by the ANC.

However, until such a time as the governing party, too, reaches an inner consensus accompanied by an inner peace on substantive structural reforms, ruthless accountability and ideological shifts, a piecemeal type of reactive decision making will trump a potentially more effective proactive approach.

For the ANC, there's a very bitter pill to swallow. The "developmental state" has not worked. Graft and corruption halted it in its tracks. ANC ideologues, economists and insider strategists will now need to scramble to find a new angle on reviving the centrality of the state as per the ANC's avowed philosophy and recurrent congress resolutions. But persistent inequality cannot be fought on the basis of a similar developmental policy that has already failed.

READ | OPINION | If Covid-19 doesn't destroy SA's economy, factionalism will

Time for introspection

Whilst economic growth requires a major mind-shift from deep within the ANC on policy, it goes much deeper. It also requires the re-establishment of trust and credibility in a state so patently damaged that much of its time is now consumed with trying to reframe its own weakened narrative.

As the country battles through 100 days of lockdown, the ANC continues to be unable (or as some critics would argue unwilling) to adequately face its own demons.

Judge Raymond Zondo only this week expressed a deep frustration with just how derelict serving Cabinet Ministers have been in managing the Passenger Rail Agency of South Africa crisis that has cost the state hundreds of millions of rands.

Similarly, the Auditor General's Report, exposing a further R32 billion in irregular local government expenditure, points to an ongoing inability of the Ramaphosa administration to stem the rot in many of our municipalities. And, as if that was not enough, the ANC seemed keen - at least in Limpopo - to reinstate its local leaders named in the VBS scandal without thinking of the broader damage to its own dented credibility.

At a time when state resources are stretched to absolute capacity, a deadly combination of wasteful expenditure and an inability to restore accountability further mitigates against the correct operating environment for investor trust and credibility.

The 100 days of lockdown thus far will not be kind to an ANC that continues to tolerate such excess. South Africa's economy has moved closer to the knife-edge of debt default. There is little wiggle-room left for those who regard the State as their personal piggybank.

And there lies the state of the country in these extraordinary times. Covid-19 has perhaps fast-forwarded its decline at a speed few would've imagined. Observers had watched the weakening in every economic metric for the last few years noting significant - yet still incremental - drops in GDP, business confidence, competitiveness etc. Covid-19 has sped this all up at a pace that has left the ANC floundering.

The real impact of the last 100 days

Not a party to react quickly at the best of times - and still hamstrung by its own party resolutions and philosophical bickering - the ANC now finds itself under immense internal pressure.

The forces that many thought they could ride out through a combination of piecemeal and populist reforms have largely converged to halt this at warp speed. From mushrooming budget deficits to IMF loans to collapsing SOE's to inadequate and ailing infrastructure, its all come at once.

That's the real impact of the past 100 days.

The other side of this epoch-making event requires skill, ingenuity and compromises. Whilst many countries will want to increase the role of the state to build better healthcare and other social support institutions, South Africa's state simply doesn't have the skills and deep pockets to do it on its own. And it has squandered its own credibility over the last decade, making trust in an enhanced state even less compelling.

The ruling party will need to accept this basic fact and turn to the private sector for a much more holistic approach to problem-solving.

Covid-19 has therefore laid bare the brittle nature of the South African state. And, it has laid bare the deep inequality in our society born out of apartheid and added to by political disasters over the last decade.

Yet, it has provided an opportunity for a more pragmatic vision of the future and the co-operation that can help us navigate this complex period.

There are choices to be made. And Covid-19 has placed those choices fairly and squarely on the Ramaphosa administration.

Slow, insufficient piecemeal reforms without adequate accountability is not good enough in South Africa's post-Covid-19 environment. Appeasement of populists and the use of divisive rhetoric ruins attempts at securing a social compact and thereby retards the fight against inequality.

Fearless leadership reaching across the aisle is required. And that's the pressure that now exists thanks to this pandemic. Covid-19 has taken our health. But it has presented us with a chance to rebuild. Grasping this is our challenge.

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