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ОглавлениеIntroduction
The new struggle for democracy: how civil society fought back against state capture
In the classical texts, tyranny, as opposed to despotism, refers to a form of government that breaks its own rules. This is a useful starting point for discussing political developments in South Africa in the past ten years and the civil society response to it. The ANC government under Jacob Zuma became more and more tyrannical as it set itself up against the Constitution and the rule of law in an effort to capture the state.
In moves reminiscent of events in the 1980s, independent journalists, social movements, trade unions, legal aid centres, NGOs, the churches and some academics have helped mobilise South African society against state capture. A new and varied movement has arisen, bringing together awkward partnerships between ideologically disparate groups and people. What they have nonetheless shared is a broad support for the Constitution, for democracy and for a modern, professional administration, and they are all, broadly speaking, social democratic in orientation.
The publication of the Betrayal of the Promise report, on which this book is based, constituted a key moment, helping to provide this movement with a narrative and concepts for expressing a systemic perspective on state capture that helped its readers to, in the words of former Minister of Finance Pravin Gordhan, ‘join the dots’.1
The particular instance of so-called ‘state capture’ that we discuss in this book is part of a familiar and recurring pattern in the history of state formation in South Africa. It is, in fact, impossible to understand the evolution of South African politics and statecraft without understanding the deeper dynamics of what we refer to today as state capture. There is a clear and direct line of sight from the origins of the state in the Cape Colony, when it was ‘captured’ by the Dutch East India Company, through to the era of Cecil Rhodes and ‘Milner’s Kindergarten’ – the name popularly given to the young British civil servants who served under High Commissioner Alfred, Lord Milner – in post-Boer War South Africa.
The world that the first generations of mining magnates, the so-called Randlords, built on the Witwatersrand provided the foundation for the election victory of the National Party in 1948. The post-1948 state actively supported the build-up of Afrikaner capital in a process which effectively captured the state for decades, with the Electricity Supply Commission (Escom, now renamed Eskom) and the South African Railways (now renamed Transnet) at the very centre of that political project.
The corporate capture of the apartheid war- and sanctions-busting machine has been well documented, with arms manufacturer Armscor (renamed Denel after 1994) at its centre. Also well documented is the powerful role played by corporate South Africa during the transition, to ensure that a democratic state could do little to change the basic structure of the economy. This was a form of capture in that powerful elite interests subverted the broad vision of transformation that inspired the mass democratic movement that had brought down the apartheid state.
The most recent instance of state capture has galvanised a broad-based coalition of forces that share a commitment to building an uncaptured South African state. This is what our Constitution envisages. The choice must not be between different forms of capture, it must be between capture and no capture. In taking this stand we are going up against the defeatist view on both the left and right that ‘the state is always captured, so why the fuss?’
By focusing on this latest instance of state capture we hope to reinforce the movement for a democratic, uncaptured state, thereby ensuring that South Africans will in future regard all forms of state capture as totally unacceptable. Indeed, in our view, this is a precondition for inclusive development, despite the fact that there are very few examples of large-scale redistribution of wealth taking place within a democratic framework.
Turning against the Constitution
From about 2010 the South African government started to introduce measures to control the diffusion of information and tacitly regulate the press. In 2011, in the face of impressive opposition, a majority of members of Parliament representing the ruling ANC voted to pass the Protection of State Information Bill, which was especially controversial for giving government officials the right to classify as ‘top secret’ any government information deemed to be in the ‘national interest’.
As activists from the Right2Know Campaign argued over and over again, the definition of the ‘national interest’ in the Bill was so broad as to exclude virtually nothing from censorship.2 The Bill also criminalised ‘whistleblowing’ and investigative journalism by imposing heavy jail sentences on anybody holding ‘classified’ information. This resonated with the findings of a 2008 Ministerial Review Commission on Intelligence which had found that the mandate of the South African intelligence services was so broadly defined that ordinary democratic activity could be construed as a national security threat.3
Eventually, President Jacob Zuma refused to assent to the legislation, halting its passage into law, on the basis that it would fail at the Constitutional Court. It was, nonetheless, symptomatic of a wider trend.
During this period there were concerted efforts to create alternative media platforms more sympathetic to the ANC government. In this regard, a daily newspaper, The New Age, was launched in 2010. Owned by the controversial Gupta family (whose activities are discussed in detail in Chapter 4), it has an explicit mandate to present a positive image of the ANC. Today it claims that it provides positive news that is critically constructive. In 2013 the Guptas launched a 24-hour news channel, ANN7, with the same purpose. More recently, as the Zuma administration came under increasing pressure (see below), ANN7 became a more brazenly propaganda channel.
The South African Broadcasting Corporation (SABC), the country’s public broadcaster, has an impressive reach. Public radio is the primary source of news and information for the vast majority of South Africans. In 2011 Hlaudi Motsoeneng, who had been employed at the SABC since 1995, was appointed acting SABC chief operating officer. In 2014 the public protector, an institution established in terms of Chapter 9 of South Africa’s Constitution to protect the rights of citizens against abuses by government, found that Motsoeneng had been illegally appointed. He had never finished school and was thus ineligible in terms of the criteria for the post. This notwithstanding, then Communications Minister Faith Muthambi approved his appointment in July 2014. Even after several courts confirmed the finding of the public protector, the executive of the SABC stood by Motsoeneng and when his appointment was finally set aside by the Supreme Court of Appeal, in September 2016, Muthambi intervened to secure him a senior, acting post.
It was not difficult to understand why. Under Motsoeneng the SABC had moved, effectively, to prohibit the reporting of news that was critical of government or was potentially embarrassing. The shift towards a more politicised newsroom at the SABC had started during the Thabo Mbeki administration when the then head of news, Snuki Zikalala, had blacklisted several political commentators who were critical of the government. What happened under Motsoeneng, however, looked more like ‘institutional capture’. The policy of the organisation was illegally changed to remove editorial discretion from senior journalists and to grant it instead to the chief operating officer, that is, to Motsoeneng himself. Critical or independent journalists were purged from the organisation.
These events took place in the context of an audacious political project unfolding in other parts of the state as well.
In December 2007, in Polokwane, a provincial town about three hours’ drive north of Johannesburg, accumulating tensions within the ruling ANC burst into the open. During the 52nd National Conference of the party Thabo Mbeki failed in his bid to secure a third term as the organisation’s president. Jacob Zuma was elected in his stead, coming to power on a wave of resentment of and grievances against the previous administration – not least for allegedly conspiring to destroy Zuma’s political career. In September 2008 the ANC ‘recalled’ Mbeki from his position as South Africa’s president. The national election that followed in 2009 saw Jacob Zuma become president of the country as well as of the ANC.
The Polokwane revolt in the ANC was informed by a conviction that economic transformation as pursued during the Mandela and Mbeki eras had produced an anomaly, if not a perversion: a small black elite beholden to white corporate elites, a vulnerable and over-indebted black middle class and a large African majority condemned to unemployment and dependent on welfare handouts to survive. The economic policies of the Mbeki period were widely slated as a self-imposed programme of structural adjustment inspired by neoliberal economic policies. In the wake of Polokwane, and especially after the 2009 election, a search began in earnest for a more ‘radical’ model of economic transformation. At the time, the Zuma presidency was applauded in ‘left-wing’ circles for promising a break with the ‘neoliberal’ policies of the Mbeki years.
The idea of using government’s procurement budget to realise social and economic outcomes is not new. It was the backbone of South Africa’s ‘developmental state’ in the 1930s and formed a key platform of the apartheid project, especially in relation to cultivating a class of Afrikaner (nationalist) capitalists.
From about 2011 sections of the ANC and ministers and officials in the Department of Trade and Industry (DTI), supported by elements of organised black business, began referring to ‘radical economic transformation’. This was the name given to an ambitious project to leverage the procurement budgets of SOEs to displace established white firms and create new, black-owned and -controlled industrial enterprises.
The two largest SOEs were Eskom (which generated and transmitted electricity across the country) and Transnet (which was responsible for the national bulk rail network). Here was a vision of economic transformation that was not contingent on the reform of ‘white businesses’ and did not depend on the goodwill of whites to invest in the economy, to employ black people and to treat them as equals. It is easy to see why this vision was profoundly compelling across a range of networks within and outside the ruling party.
From around 2011, however, the project of radical economic transformation increasingly began to set itself up against key state institutions and the constitutional framework. At stake was a critical reading of South Africa’s political economy and of the constraints that the transition imposed on economic transformation. This was an analysis emerging from within parts of government and the fringes of the ANC. It resonated closely with the neo-Fanonian readings of South Africa’s post-colonial situation that were widely discussed on university campuses, in the Black First Land First grouping and in ‘ultra-left’ critiques of South Africa’s ‘elite transition’.3 It was not the position of the ANC itself. The centrepiece of this critique was the National Treasury – the department of state responsible for government finances, including approval of departmental budgets and allocating monies from the fiscus.
There was one major reason why the National Treasury was a red flag to the project of radical economic transformation: its constitutional mandate placed it on the very sharp horns of a dilemma. In South Africa the terms of public procurement are not defined simply in statutes (subject to legislative revision) but are inscribed in the ground law of the country. South Africa’s constitutional drafters were prescient, perhaps, about the significance that procurement would assume in the political life of the country after apartheid. The National Treasury, itself a creature of the Constitution, had to try to reconcile black economic empowerment (BEE) with considerations of fair value for the fiscus and for citizens.
When the National Treasury was seen to stall moves to extend the logic of BEE to the SOEs, it came under fierce attack. Indeed, the more the Treasury insisted that government entities proceed in a way that was ‘fair, equitable, transparent, competitive and cost-effective’, as set down in the Constitution, the more controversial it became.5 Furthermore, the Treasury was in favour of a conservative fiscal policy, which meant restraining public expenditure relative to gross domestic product rather than running up the deficit. Critics argued that this constrained the state’s ability to address the triple challenge of poverty, unemployment and inequality.
As the Zuma administration radicalised and tended towards illegality and straightforward criminality, so it became dependent on managing increasingly complex relations, many of them involving people engaged in unlawful activities. At this time the Zuma administration made moves to establish control over key state institutions, especially those involved in criminal investigations and prosecution: SARS, the Directorate for Priority Crime Investigation (known as the ‘Hawks’) and the National Prosecuting Authority (NPA). In all these proceedings there was the shadow of South Africa’s intelligence services, including the involvement of apartheid-era intelligence officers.
To construct what we call the ‘shadow state’, two imperatives came into play. Firstly, as the Zuma-centred political project tended towards illegality it was driven into the shadows, with the concomitant risk of the loss of political control. Hence, some form of management system was needed to keep it on course. Secondly, it became necessary to shut down certain investigations and immunise or protect key people from prosecution.
Taken together, the events occurring at SARS and those involving the Hawks (as well as the NPA) suggest that as the Zuma administration became radicalised, and resorted increasingly to unlawful means to pursue its agenda of radical economic transformation, so it was driven to ‘capture’ and weaken key state institutions. In this way, the political project of the Zuma administration has come at a very heavy price for the capability, integrity and stability of the South African state. This book describes and analyses the primary dynamics of this process.
Civil society reinvigorated
For a long time there was very little organised opposition to these events, but the South African media had largely managed to fend off moves to introduce formal censorship and there was still a legacy of brave, independent investigative journalism. Largely through the efforts of several such journalists, many of them associated with the amaBhungane Centre for Investigative Journalism, stories broke regularly about the corruption of government officials.
The public protector’s State of Capture report did a great deal to create public outrage, but the political response was strangely muted.6 Within the ANC some individuals raised concerns, but, as an organisation, the ANC reliably rallied behind its president. This began to change when then Minister of Finance Nhlanhla Nene was unexpectedly dismissed in December 2015. Financial markets reacted strongly and the South African currency, the rand, plummeted in value.
These events triggered a political response as thousands marched in the streets to protest ‘state capture’. Yet the phenomenon remained largely a middle-class one. It was not very difficult for those around the Zuma administration to present such opposition as either the work of political forces opposed to radical change or as working in the service of a foreign agenda.
This began to change after the dismissal in 2017 of the new finance minister, Pravin Gordhan, and his deputy, Mcebisi Jonas – both of whom are highly respected technocrats but also savvy politicians. Opposition to the Zuma administration grew, including from within the ANC.
The problem with the resistance until then, however, was that its analysis of what was going on was superficial. It ultimately fell back on the assumption that the president and his allies were corrupt and motivated by self-interest, or that they were kingpins of a vast network of patronage. Apart from the obvious flaws of such an analysis – it resonated with all sorts of racist clichés about African leaders – it obscured the political project that was at work.
In May 2017 we and several colleagues published a report called Betrayal of the Promise: How South Africa Is Being Stolen. We had worked quietly and quickly to gather as much information as possible that was in the public domain in order to ‘join the dots’, so to speak. The highlights of the argument we made in that report have been referred to above. The centrepiece of the analysis was the way in which the Zuma–Gupta political project turned against the Constitution, the law and South Africa’s democratic processes and institutions.
Essentially, we were able to show that the struggle today was between those who sought change within the framework of the Constitution and those who were ready to jettison the terms of the transition to democracy. The report proved to be hugely influential in South Africa, and we think it has played an important role in galvanising political opposition to state capture from constituencies beyond the middle classes. It marked an inflection point in two ways. In the first place, it provided a new vocabulary for understanding political dynamics that was readily taken up in the media and especially among social movements and political organisations, even those allied to the ANC. Terms like ‘shadow state’, ‘silent coup’ and ‘repurposing institutions’ have become part of the everyday language of political discussion about South Africa. Secondly, in concert with a range of university-based institutes and NGOs, the report has been influential in galvanising a new kind of political activism in South Africa – one that focuses on defending honourable civil servants and building progressive state administrations.
The launch of the report on 25 May 2017 was covered live by one of the major national television channels, eNCA. It was all over the radio and there were numerous interviews with the authors. The print media gave the report extensive coverage. It was front-page news in most of South Africa’s major daily and weekly publications, and it was the lead story in the Sunday newspapers. City Press, for example, South Africa’s second-largest weekly paper, reported carefully on the report’s argument and on the new terminology it introduced. It also generated numerous opinion pieces in various papers.
The weekend after our report came out an enormous trove of emails, which became known as the #GuptaLeaks, began to trickle into the public domain. The emails have provided, and continue to provide, rich confirmation of our argument. We had discussed the emergence of a ‘shadow state’, and how political power was seeping away from constitutional bodies. Apart from furnishing evidence of further illegal rent seeking, the leaked emails provide details of Gupta associates’ involvement in the day-to-day administration of key government departments – writing speeches, commenting on proposals, suggesting regulations. That is, they are witness to the evolving, silent coup d’état that was taking place.
The reception of our report among political parties was no less spectacular, especially within parts of the ANC and within the SACP. The SACP and the ANC have been long-standing historical allies (since at least the 1950s) and, together with the Congress of South African Trade Unions (Cosatu), form the Tripartite Alliance, the united front that spearheaded resistance to apartheid and that today makes up the political coalition that forms the government of the country. The rise to power of Jacob Zuma is, in part, credited to the SACP and to the unwavering support given to him at the time by its general secretary, Blade Nzimande.
While the SACP had become increasingly critical of the ANC and, especially, of its president, tensions merely smouldered. The report seems to have been the match that set them on fire. The weekend after the launch Blade Nzimande came out strongly to endorse the argument, using the report’s terms and concepts. He has continued to do so.
Most dramatically, the country’s largest-circulation daily newspaper, The Star, reported:
Due to the damning report, pressure mounted on Nzimande to break his silence on the alleged looting of the public purse by the Guptas. During his party’s 14th national congress this week, Nzimande assured his supporters that his relationship with Zuma had broken down irreparably due to the Guptas’ influence on the incumbent.7
When we were invited to present the report to the SACP’s 14th National Congress, the details were received in hushed silence. Apart from the nearly 2 000 delegates, many Cabinet ministers and senior political figures attended. The ANC’s deputy secretary general, Jessie Duarte, was heard complaining bitterly to a party official that the SACP had organised a ‘hostile’ congress.
Since then the SACP has come out officially against state capture and has supported efforts in the ANC to remove the president. In a surprise Cabinet reshuffle in October 2017 Blade Nzimande was dropped from the Cabinet. Then, on Wednesday, 29 November, for the first time in its history the SACP contested a local government election as an independent party against the ANC. This was an unprecedented development that signalled the end of the historical alliance between the two movements.
If this marks the most dramatic consequence of the report, the study has been useful in galvanising action across civil society too. It was widely taken up by some of South Africa’s major trade unions. Since at least 1985 the largest unions in South Africa have been affiliated to Cosatu. In April 2017 several Cosatu affiliates left Cosatu to form a new body, the South African Federation of Trade Unions, with Cosatu’s former general secretary, Zwelinzima Vavi, as its general secretary. They were joined by the massive National Union of Metalworkers of South Africa, which, three years earlier, had been expelled from Cosatu for its increasingly robust criticism of the union leadership and of the ANC.
When he was still general secretary of Cosatu, Vavi had said that under Jacob Zuma South Africa was headed for a ‘predator state’.8 Whereas this criticism had previously rested on accusations of corruption in the ANC, after May 2017 there was growing appreciation of the relationship between corruption and a disregard for the Constitution and the rule of law.
This is a significant development, especially because, for many involved, there is sympathy for the argument that the 1996 Constitution was the result of an ‘elite pact’ that came at the expense of workers and the poor. As will become evident below, this had made possible new kinds of unexpected and even awkward political alliances.
The SACC, the largest ecumenical association of Christian churches in the country, was already active in the struggle against corruption. It had convened confessionals for compromised politicians and officials and others with information about corruption to ‘unburden themselves’. The SACC hosted a national public event to announce its commitment to opposing state capture a week before we released our report. Many originally believed that Betrayal of the Promise was a church document.
We had consulted with the SACC, but our report was compiled completely independently of the ‘unburdening panel’. The problem the SACC had was that all those who ‘unburdened’ did so on condition that their testimony remained confidential. This made it impossible for the SACC to use the information to compile its own report. However, when the SACC read our report it said our analysis accorded exactly with the first-hand testimony it had received from church members across the country, including very high-level officials and politicians.
The church mobilised religious opposition to the Zuma administration. The SACC position was taken up by a group of ‘veterans and stalwarts’ of the ANC, who addressed an open letter to the secretary general of the organisation, explaining:
Our hearts are broken as we watch some in the leadership of our movement … abrogate to themselves the power of the State to serve their own self-interests rather than the interests of the people of South Africa.9
In July 2017 the largest gathering of civil society organisations came together under the umbrella of the Future South Africa coalition to fight state capture and to rebuild state integrity.
Business associations were also mobilised. The firing of Nhlanhla Nene galvanised the ‘Young Turks’ in Business Leadership South Africa (BLSA), who had ousted the old guard collected around the likes of Anglo American’s Bobby Godsell. They activated public action by chief executive officers, issued press statements that were openly critical of government and raised funds to support various anti-state capture campaigns, including a public relations campaign to counter the infamous Bell Pottinger campaign funded by the Guptas. Other business coalitions were also activated and a new bilateral dynamic opened up between business and the trade union movement. The BLSA attended an indaba on state capture hosted by the SACP.
Two features of this coalition are notable. The first is that, though it comprises many of the people and the kinds of organisations that advanced the anti-apartheid struggle in the 1980s and 1990s, and in this sense marks a revival of an older civil society, it is not exclusively made up of such groupings. Organised business formations have shared a platform with radical trade unionists and avowedly liberal associations.
The second notable feature is that civil society activists in South Africa have, for the first time, taken up issues of state building and, even more surprisingly, of public administration. For the first time there is appreciation of the fact that the immediate victims of tyranny in South Africa have been honest civil servants committed to a public service ethos. The move towards tyranny has, first and foremost, been a political war waged within and for state administrations. This fact goes some way towards explaining why journalists and activists have not been subject to the kind of repression seen elsewhere.
Civil society tactics
All these initiatives taken together saw the re-emergence in 2017 of powerful coalitions of civil society groupings, often bringing together new and unexpected partners. Working separately, and occasionally together, they have used four effective tactics.
Litigation
The growing lawlessness of the government has made litigation an often powerful tool. The High Courts have overwhelmingly safeguarded their independence, and civil society groupings have used them to successfully challenge illegal government decisions and appointments – ranging from challenging the president’s appointments of heads of key state institutions (such as the state prosecuting authority and the police) to reinstating criminal charges against Zuma himself, to upholding the independence of state organs, to insisting on the force of law of constitutional principles and to further developing the jurisprudence on public law.
Social mobilisation
Some civil society groupings have successfully drawn people onto the streets in fairly large numbers. Especially important is the fact that they have constituted new and diverse publics willing to speak out against state abuse of power and national resources.
Political mobilisation
Especially impressive has been the ability of activists to build energetic and diverse political coalitions, drawing senior figures in the ANC itself into alliances with a broad range of other organisations.
Unsettling hegemony
The shift to tyranny in South Africa has been accompanied by political arguments about the nature of South Africa’s transition from apartheid to democracy, and about the Constitution. Essentially, the Zuma government was able to justify growing criminality as a necessary instrument for radical change, and to depict opponents as acolytes of ‘white monopoly capitalism’. Reports like Betrayal of the Promise played a key role in unsettling these claims and providing a new language of resistance.
Another country?
From 16 to 20 December 2017 members of the ANC gathered in Johannesburg for the movement’s 54th National Conference, at which a new president of the organisation would be elected. Cyril Ramaphosa, the then deputy president of South Africa, defeated Nkosazana Dlamini-Zuma, a candidate strongly affiliated to the networks of tyranny.
The result, however, did not represent a straightforward victory for Ramaphosa and his faction. Former key allies of Jacob Zuma now occupy three of the top six positions in the organisation. In the broader National Executive Committee (NEC), consisting of 80 people, Ramaphosa’s supporters comprise 41 members. What distinguishes Ramaphosa from Dlamini-Zuma, apart from questions of policy, is that he is more of a constitutionalist – after all, he was one of the key architects of the Constitution. We will have to see whether he is able to stamp his authority on the party. What is certain, though, is that he and the ANC now operate in a different country, one that is less naïve about risks to democracy and development.
There is fire in the belly of a rejuvenated civil society. The courts have stood by the Constitution, and parts of the media have played heroic roles. In various state administrations and across government numerous officials and public servants have quietly resisted tyranny. Parliament has discovered its authority. In all of this civil society organisations have played a leading role. The publication of the Betrayal of the Promise report was a key moment in this process, and reveals the constructively critical role that academics can – and must – play to build frameworks of meaning that help societal actors to make better sense of what is going on.
That said, the challenges that lie ahead cannot be underestimated. Just because the kingpin, Jacob Zuma, has been removed from his position of power at the apex of the structure that holds the constitutional and shadow states together does not mean that the criminal networks have disappeared.
Undoubtedly the power elite centred on the Gupta–Zuma nexus has been critically weakened as a result of Zuma’s departure. However, these networks are effective because they are remarkably resilient. They can adapt and morph to meet new circumstances. Much will depend on the effectiveness of the Judicial Commission of Inquiry into State Capture, which will have the right to refer matters to the prosecuting authorities.10
However, this assumes that prosecuting authorities are able to act. Actions taken by both the NPA and its Asset Forfeiture Unit against Gupta-linked companies in early 2018 are a healthy sign. Much will depend on whether Cyril Ramaphosa is prepared to act against members of the NEC of the ANC, including those in the so-called ‘Top Six’ such as Ace Magashule, the secretary general, who have been staunch Zuma supporters and have been implicated in shadow-state networks.
Economic policy will be the greatest challenge facing the government. Rebuilding the state will be no less important. The South African state, unlike the states of South-East Asia (the ‘developmental states’), is relatively new, just over a century old. Moreover, for large parts of the 20th century the administrative structure of the country was broken up by the apartheid government. So, by the end of the apartheid era there were 14 separate and parallel administrations, each with its own government and government departments in the Bantustans, together with the racialised administrations of the tricameral system at the national level. For this reason, the ANC’s tendency has been to maximise political control of government administrations. This made sense in the early days of the transition when apartheid-era public servants were thought to be incapable of implementing the government’s Reconstruction and Development Programme (RDP) initiated shortly after the first democratic election of 1994, and, worse, of being a potential source of counter-revolution.
Hence, far-reaching steps were taken to locate key administrative power within the executive arm of government. At the same time, in the name of the ‘new public management’ movement that became popular internationally and in South Africa (via the public management schools) during the 1990s, much of government’s work has been effectively outsourced to private companies, consultants and contractors.
This combination of politicisation of public administrations and of outsourcing has given state capture its particular form – from manipulating government appointments to directing tenders to selected beneficiaries. Moving beyond the logic of state capture, therefore, requires that we rethink some of the design features of government. How do we professionalise administrations, protect public servants and officials from undue political interference, and bring transparency and reason to public procurement?
It is arguable that South Africa has never had a national consensus on economic policy. The closest it came was the original RDP. However, this was replaced by the Growth, Employment and Redistribution (Gear) policy in 1996 – a policy that was imposed by the then minister of finance with minimal consultation. This policy was later upgraded and renamed the Accelerated and Shared Growth Initiative for South Africa (ASGISA), and included a reference to ‘binding constraints’.
In the early 2000s, as the debt-financed consumer boom reached its limits, public-sector funding of national infrastructure emerged as a substitute strategy for growing the economy, underpinning the adoption of ‘developmental state’ discourse from 2002 onwards. It was followed by the New Growth Path, and the National Development Plan (NDP).11 The former was driven mainly by the DTI, but with little funding for its central tenet, which was industrial policy. The latter emphasised the need for ‘flexible labour markets’, an approach vehemently opposed by Cosatu and the SACP.
Despite promises given to the Tripartite Alliance partners by the NDP Commission that the rather weak economic chapter of the NDP would be revisited, this never happened. We now have the ‘radical economic transformation’ and ‘inclusive growth’ frameworks, both of which lack any systematic articulation.
During the Mbeki era economic policy tended to emphasise market-oriented strategies coupled to a BEE approach that linked emerging black business to contracts and deals with white business. As we argue in this book, the real economy was being transformed by three forces that undermined investments in the productive economy, namely, financialisation, the shareholder value movement and BEE.
Financialisation was about stimulating economic growth via consumer spending, funded by the expansion of access to debt, by the growing middle class and by the increasingly desperate working class. Shareholder value was about unbundling the conglomerates and increasing returns to shareholders. This resulted in a greater proportion of wealth accruing to shareholders than to labour during the post-1994 era. And finally, BEE resulted in the transfer of wealth from white to black shareholders and managers. Together, financialisation, shareholder value and BEE undermined what South Africa needed most – an increase in investment in the productive economy.
During the Zuma era the focus shifted to the procurement spend of the SOEs as the primary vehicle for building a black industrial class. This had two consequences. Firstly, it reinforced a questionable assumption that capital-intensive investments in large-scale infrastructure lead to the type of growth and development that is needed. Capital-intensive investments, however, have a poor rand-to-job ratio. Secondly, it prepared the way for state capture as the shadow-state networks came to broker the deal-making process.
It is clear that what is needed during the post-Zuma era is an investment-led, job- and livelihood-creating growth strategy that is focused on the building of an inclusive and sustainable economy. What this means in practice needs to be carefully worked out in the course of 2018 and beyond.
It may well entail fiscal expansion beyond what National Treasury has traditionally been comfortable with, and it may require the Reserve Bank to go beyond a narrow focus on inflation when it comes to setting monetary policy. If high interest payments can be offset by the benefits of accelerated and more inclusive growth, a more equitable economy may well be affordable in the medium term. However, everything will depend on whether it will be possible to clean up state administration, re-establish the SOEs as viable public corporations and discipline the private sector, which is focused on short-term capital gains and mechanisms for accelerated investments outside South Africa.
Notes and references
1Bhorat, H, M Buthelezi, I Chipkin, S Duma, L Mondi, C Peter, M Qobo, M Swilling & H Friedenstein. 2017. Betrayal of the Promise: How South Africa Is Being Stolen. Johannesburg: Public Affairs Research Institute.
2The Right2Know Campaign is a movement that campaigns for freedom of expression and access to information in South Africa. See http://www.r2k.org.za/about/.
3Ministerial Review Commission on Intelligence. 2008. ‘Intelligence in a constitutional democracy’. Available at: cdn.mg.co.za/uploads/final-report-september-2008-615.pdf.
4Black First Land First defines itself as ‘a pan-Africanist and revolutionary socialist political party in South Africa’. See https://blf.org.za/.
5Republic of South Africa. 1996. The Constitution of the Republic of South Africa: Section 217 (1), (2). Pretoria: Republic of South Africa.
6Public Protector South Africa. 2016. State of Capture. Available at: http://cdn.24.co.za/files/Cms/General/d/4666/3f63a8b78d2b495d88f10ed060997f76.pdf.
7Available at: www.iol.co.za/news/special-features/the-zuma-era/nzimande-dismayed-by-looted-40bn-10300509.
8Available at: https://www.news24.com/SouthAfrica/Politics/Political-hyenas-in-feeding-frenzy-20100826.
10The appointment of a Judicial Commission of Inquiry into State Capture was announced by Jacob Zuma in January 2018, following a lengthy legal process challenging the recommendations of the public protector that such a commission should be established. See https://www.timeslive.co.za/politics/2018-01-09-zuma-appoints-commission-of-inquiry-into-state-capture/; https://www.timeslive.co.za/politics/2018-01-25-in-full-state-capture-inquiry-to-probe-guptas-zuma-and-ministers/.
11Department of Economic Development. 2011. The New Growth Path. Pretoria: Department of Economic Development; National Planning Commission. 2012. National Development Plan 2030: Our future – make it work. Available at: http://www.gov.za/sites/www.gov.za/files/Executive%20Summary-NDP%202030%20-%20Our%20future%20-%20make%20it%20work.pdf.
