Time lag is key for Ramaphosa’s stimulus
25 Sep 2018 CURRENT AFFAIRS
By Mpumelelo Mkhabela
Last week, President Cyril Ramaphosa revealed details about the government’s R50 billion stimulus package.
Key features of Ramaphosa’s stimulus
It can be divided into three. The first part contains the practical, doable things. For example, reviewing the visa regime to allow tourists to visit South Africa easily; tabling a new mining charter that ensures investor confidence and take South Africa out of the ruinous years of the Jacob Zuma presidency where the granting of mining rights was once frozen by Mosebenzi Zwane, and filling critical vacancies in public hospitals. The second part are the long-term measures. For example, the intention to reduce administered prices and implementing a proper land reform strategy. The third part is the idealistic one where the president articulated what he believes should guide relations between business and government on the one hand and business and labour on the other. He wants a business to have confidence in the government. He has no absolute control over.
The challenges facing Ramaphosa’s stimulus
The biggest challenge for Ramaphosa is the time it will take for investors to respond. Ramaphosa’s stimulus package was announced as a response to a recession – an economic contraction for two consecutive quarters. So, the issue now is how quick can economic players respond to the stimulus so that we can get out of the recession. The time lag is absolutely crucial. Unfortunately, he can’t narrow the time lag because he has no control over it. Although business has reacted positively, at least rhetorically, what is required is a practical response. Yet, many businesses still wonder whether Ramaphosa will be able to implement his ideas given the fractures in the governing party.
On whether Ramaphosa’s stimulus is not just repackaging of existing policies
To a certain extent it is, but the difference is that Jacob Zuma suffered from cognitive dissonance. Sometimes he would say the right things, but often the right things would be in conflict with his personal interests and those of the Guptas. Eventually, his personal interests would trump the national interests. Ramaphosa has to prove that what he says is something he can implement. The difficulty, of course, is that he would still, in some respect, rely on some of the people who served under Zuma to execute the reprioritisation of R50 billion expenditure.
On whether former President Thabo Mbeki’s views on land matter
Mbeki’s views do carry weight as they contribute to the ongoing public debate about the expropriation of land without compensation. The ANC has been seen to be following the EFF’s policy. But, increasingly, there is a distinction between the EFF and the ANC. In his stimulus package, Ramaphosa made it clear that the ANC would not nationalise land. Nationalisation is the policy of the EFF. He sees a situation where people, not the state, own private land. Mbeki is right that, by adopting the blacks vs whites narrative, as Zuma has suggested on the land question, the ANC is veering off its nonracial roots.
Mpumelelo Mkhabela spoke to David O’Sullivan, LISTEN to the full interview:
Image via GCIS