OSAGYEFO MAZWAI: The way to form SA’s government is clear

In the wake of our most anticipated election since 1994, SA finds itself in a precarious position. ANC president Cyril Ramaphosa’s announcement that the party’s national executive committee would seek to form a government of national unity (GNU) was welcome, but significant uncertainty and risks remain around its composition. 

It has been disappointing to see democracy-undermining misinformation campaigns being waged on social media platforms, seeking to create the impression that the formation of any coalition or GNU that is supported by “the market” (that is, the private sector) is a project of “white monopoly capital”, and that “the market” has an imperialist agenda that is to the detriment of broader society. 

It is true that “the market” has a capitalist mindset, but it is the same market that created jobs and opportunity under an underperforming government and underwhelming economy in recent years. “The market” seeks primarily to create shareholder value, but this inevitably includes economic growth, the creation of jobs and a better life for all.

This must be underpinned by economic policy certainty, which largely entails stability around ownership and property rights. It is the resulting business confidence that leads to companies investing in the economy and attracting foreign portfolio and direct investment, which is essential for economic growth and job creation. 

There is another misinformation campaign that suggests the election outcome, and especially the rise of the MK party, was a vote for “leftist” economic policy. If that were the case, in aggregate the parties representing those ideals would have received a clear majority and mandate to implement these policies. Yet the results of the May 29 poll suggest this was more of a protest vote against left-leaning ANC policies.

To arrest its electoral decline, the ANC must choose coalition or GNU partners with an uncompromising commitment to service delivery. The idea that a formalised relationship between the ANC and DA is an abandonment of the principles of the national democratic revolution (NDR) is unfounded. The NDR was principally committed to improving the lives of all South Africans, black people in particular. But it was equally uncompromising on the need for a constitutional democracy.

The improvement of people’s lives is fundamentally premised on service delivery. It is incomprehensible that education — the principal weapon identified by the heroes of the liberation struggle — is in the state that it is. It was well understood that education increases the competitiveness of people (a key mechanism for self-determination) and is the ultimate leveller of opportunity.

Other misinformation relates to an apparent need to overhaul the constitution, which is alleged to be subverting the overall economic emancipation project. Yet the achievement of the objectives of the NDR has not been impeded or subverted by the constitution, but rather by the lack of service delivery.  

Land question

On the land question, the way forward has long been clear. The state has 2.5-million hectares of arable land that must be released for distribution as part of a model that includes collaboration between the private sector and recipient communities to build, operate, train and transfer, so that ownership is ultimately in black hands. Land reform can be carried out without undermining the constitution.  

The reality is that international investors will flee from SA if a “market-unfriendly” GNU structure emerges, with the prospect of a lawless society with no property rights (the policy position of the “left-leaning” parties). In this scenario, SA’s borrowing costs would rocket as a result of credit rating downgrades, leading to reduced available funds for the government to deliver services and fund grants.

The rand would almost certainly depreciate sharply against the dollar, to at least R23/$ as money and investments are pulled from the country. Inflation would similarly skyrocket as the purchasing power of the rand falls.

In that environment, recipients of social grants would no longer be able to afford to buy the same basket of basic goods they could before. And because of the currency and inflation dynamic, SA would struggle to import the fertiliser that feeds our crops and the fuel that moves our goods and powers the economy. That is when people will take to the streets, as they did in Venezuela under the regime of Hugo Chavez in the aftermath of the “socialist revolution”.

We go down that route at our peril. If the underlying objective of the government that is formed in the coming days is to expropriate key components of the economy, one thing is certain: there will not be much left to expropriate. 

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