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Hope is well and good but effective policy reforms will save the day

- Imraan Valodia

Ramaphosa’s rise has sparked optimism, but work must be done to tackle inequality and grow the economy.

South African politics is never dull, but 2017 and the lead-up to the ANC conference in December was particularly complex. While 2018 looks set to be no different at some level (note, for example, the intrigue over the recall of President Jacob Zuma), it is important to recognise that there has been a qualitative shift in our political mood and economic outlook.

In a matter of a few weeks Cyril Ramaphosa has shifted the focus from despair to hope — perhaps not yet optimism, but hope at the very least. His actions on a number of fronts — Eskom, the Hawks, the messaging at the World Economic Forum — have created a level of hope and some confidence that we can handle challenges that seemed intractable just a few weeks ago.

While hope and confidence are welcome, it is also important not to see Ramaphosa as the messiah who can solve all our problems. The reality is that while a lot can be tackled in the short term, our challenges require a long-term structural shift in the way the economy operates.

We are still a country of glaring inequality, among the worst in the world. We still have too few people earning too much money and far too many people living in poverty. We also have too few people in stable, secure employment and too many people desperately seeking any work that will put food on the table. And far too many people who have completely given up all hope of finding employment.

We still have too few pupils at schools that offer the highest quality education and far too many crammed into overcrowded classrooms with too few teachers and not enough resources. We have too few people being treated (or over-treated) by a high-cost, private medical system while most people rely on an underfunded and underresourced public healthcare system.

These are all long-term tasks that cannot, of course, be tackled in a few months. But dealing with some short-term challenges will create the space and framework for managing the long-term inequality challenges.

From an economic perspective Ramaphosa should focus on these areas:

Public finance policy. Corruption, poor governance and policy neglect have meant we are going to have to find big pots of money for education, energy, water and healthcare, to name a few. We need to think about where that money is going to come from; what tools we have and what tools we need to build to generate this revenue. Getting a better handle on tax policy (the Davis tax committee has already done excellent work in this regard), tackling the challenges at the South African Revenue Service (SARS) and more effective management of government expenditure are absolute priorities.

We cannot afford to have so much of our public funds spent on policy that is made on a whim, as was the case when Zuma announced his plans for higher education. The policy of free higher education for low-income students is correct, but how is it possible that this could be announced without a clear idea of how it would be funded? We also cannot afford to have the key institution that raises government revenue, SARS, in constant crisis. A revenue collection authority that loses its credibility will impede our ability to deal with the inequality challenge. Our economy is stuck in a low-growth trap, with the benefits of growth accruing disproportionately to the wealthy. Policies such as a national minimum wage, introduced in a responsible manner, have the potential to change this pattern of growth. We need more action of this kind. Changing the pattern of ownership to curb dominance by very large companies is another way to handle this problem.

Energy. If we are looking for an upturn in investment and international confidence in SA, the business community needs to be ready to grow: this applies to already established businesses as well as the small business and entrepreneurial sector.

If we are reaching the point where we are ready to look at beneficiation and the development of downstream industries, we must make sure we have the capacity to enable this. Our energy demands will increase and we absolutely cannot afford to go back to the 2008 crisis of blackouts and inadequate capacity. Hopefully the nuclear debate is finally off the table and we can now look at a suite of energy sources focused on the renewables sector.

Part of tackling the inequality crisis in our country must be tackling the inequalities in social services, health, education and the like. For the first 25 years of our democracy policy has focused mainly on access. We need to shift the focus to handle the challenges of inequality and at the same time tackle the poor quality of social service delivery.

The progressive business community has been growing stronger over the years. This community has recognised the damage high wage inequality does. The levels of executive salaries in many parts of business are not only immoral but also unsustainable. Changing this practice is relatively easy.

Other social partners also need to demonstrate their willingness to think about the long-term sustainability of the economy so we can reach consensus and achieve a long-term perspective to tackle inequality.

The decisive manner in which the Eskom challenge has been dealt with has been refreshing. Many other state-owned enterprises (SOEs) have been lurching from one disaster to the next. We need clear policy on every SOE.

It is more of a long-term issue, but the so-called fourth industrial revolution is already having an effect on our economy, establishing our options and determining the way forward. A lot of the narrative on the fourth industrial revolution is being shaped by a view that we can do nothing to stem its impact. That is a very naïve view of the world. We may not be able to stop the technological revolution but we have a lot of power over shaping how it affects us, and how we can fully realise the benefits and manage the costs. We need clear thinking and a clear strategy on this issue.

Over the next five-year period it is incumbent on all of us to ensure whatever policy decisions are made are aimed at pulling those at the very bottom up and, at the same time, ensuring those at the top do not get a disproportionate share of economic growth. We need to deliver high-quality, affordable services that open doors for the marginalised. Our strategic objective must always be to create an inclusive society.

The future of SA requires a comprehensive moral recalibration, which starts with outlining a society that strives to be more equitable.

Imraan Valodia is the Dean of the Faculty of Commerce, Law and Management at Wits University. This article was originally published on