OSAGYEFO MAZWAI: Stage has been set for the aim of a better life for all

SA has dodged many bullets during the 30-year life of our young democracy, which is testament to South Africans’ proven resilience. The greatest test for us has been rising from the ruins of state capture.

We were also tested during the Covid-19 pandemic, the civil unrest of July 2021, unprecedented levels of load-shedding and a cost-of-living crisis, and through all of these challenges the SA people still stand tall.

This election has again tested the resolve of our people, and the next day or so will enlighten us on the quality of our political leadership. The next few weeks, months and years will reveal how seriously they take the will of the people. Preliminary evidence suggests that, as before, SA will again rise to the challenge. 

A few days ago I wrote in Business Day about what I believed the implications would be of a potential government formation that sought to abandon or undermine our constitutional democracy and the rule of law (“The way to form SA’s government is clear”, June 11). I highlighted that such a formation would bring economic instability and derail the overall democratic project that commenced unofficially in 1990 and officially in 1994.

Then my father wrote in the following day’s edition on the vision of the 1994 government and its pragmatic approach in forming a government of national unity (GNU) that included the National Party (“Stable, market-friendly alliance would help the most vulnerable,” June 12). He reminded us that the wounds of apartheid were still fresh and harshly felt, yet the leaders of the day had the wisdom and courage to take the road less travelled.

His point was in sharp contrast to the recent avalanche of social media misinformation that implies a formalised relationship between the ANC and the DA would be an abandonment of the national democratic revolution — it clearly wouldn’t be, because it has happened before.

Since the election we have read many articles about the so-called “doomsday coalition”, but perhaps it would be in our interests to change the narrative from what is likely to happen if the wrong decisions are made, to what might happen when the right decisions are made. The upside potential, which is incumbent upon politicians rising to the occasion and citizens understanding the difference, is as important a consideration as the downside risk. 

An ANC-DA-IFP GNU formation, possibly with other smaller parties, now appears a distinct possibility, indicating that SA could yet again choose the road less travelled. The first, and probably most immediate, implication of a “market-friendly” government formation is its potential to solve the cost-of-living crisis. The rand is likely to appreciate towards R17/$, and by my estimate — assuming the price of Brent crude remains stable at about $80/bbl — petrol prices should drop significantly over the coming months, putting downward pressure on producer and consumer prices.

The purchasing power of the rand will increase, and people will be able to afford more goods. As inflation is further contained, the SA Reserve Bank will have space to cut interest rates. Resolving the cost-of-living crisis will be good for the general populace, but particularly for low and middle-income consumers.

As the threat of expropriation without compensation recedes and property rights appear better protected, the risk premium attached to SA assets will similarly recede. Our borrowing costs will fall, and the state will have more disposable budget to spend on the delivery of services and funding of social support (including grants).

Business confidence will ramp up as economic policy certainty comes to the fore. Businesses will be incentivised to invest in the country, and this will be further catalysed by lower borrowing costs, driven by the Reserve Bank cutting interest rates and lower SA risk-premiums.

It doesn’t end there. The structural reform programme looks set to continue uninterrupted. We have seen evidence that this programme is gaining momentum, with load-shedding down significantly relative to last year and Transnet’s operations improving, among others.

On Eskom and Transnet, a better performance by these entities implies that the business environment will improve and the cost of doing business will fall as a result of a reduced need for expensive, diesel-powered generators and moving freight by road as opposed to trains. These are both disinflationary tailwinds that will also help resolve the cost-of-living crisis.

In this environment economic growth will accelerate, jobs will be created, tax revenues will rise and the state will be able to invest in infrastructure and fund government services. Our fiscal position will improve (as we have already seen from the last budget speech), and the economy will be able to grow at an even more rapid rate in the years to come. To be more precise: the economy should unequivocally be on a firmer footing.

Those forecasting that the ANC will take a bigger hit in the next election should it enter into a GNU with the DA should take time to reflect on the hypothesis. In May’s election the electorate punished the ANC for lack of service delivery, and I am confident that all partners of the GNU would be rewarded for making this decision if it results in robust economic growth, higher job creation and economic opportunity and improved service delivery. The ANC and GNU would also have set a firm foundation for governance into the future. 

If there ever were a time for the objectives of the national democratic revolution to be achieved, chief of which is creating a better life for all, the stage has been set for that. One just hopes the GNU is stable, participant parties hold each other accountable, services are delivered, the people of SA are empowered and a better life is created for all.  

Low-hanging fruit for the new government are the following: 

• Trim the cabinet to be fit for purpose; 
• The cabinet must be competent and beyond reproach; 
• Expeditiously release the 2-million to 5-million hectares of land to communities and facilitate collaboration between the private sector and beneficiary communities; 
• Make education a priority to put SA on a long-term, sustainable and improved economic path; 
• Place even more effort into the economic reform programme; 
• Reduce the red tape for businesses to operate in a conducive environment; 
• Implement growth-enhancing policies.

I must add a disclaimer that it is not all rainbows and sunshine. As mentioned above, the hypothesis set out in this piece depends on all partners in the GNU pulling their weight and putting the needs of SA at the centre.

• Mazwai is an investment strategist at Investec Wealth & Investment International .