Racial edicts in the form of the current empowerment regime have been presented as a non-negotiable by President Ramaphosa. This despite some clearly expressed concerns by investors, writes Terence Corrigan.
At the time of writing, President Cyril Ramaphosa is in
London, delivering a speech at a summit hosted by the Financial Times. Themed “Africa in Motion”, it aims to interrogate
how people on the continent – leaders in politics and business, innovators and
ordinary Africans – are tackling the problems they face.
In his weekly letter, President Ramaphosa framed this as an
opportunity to push the work that government is doing to secure the economic
growth and expanding job opportunities that are necessary to beat poverty and
elevate living standards.
As the president wrote: “As we have all recognised, if
we are to create jobs and reduce poverty, we need to grow our economy at a much
faster pace. For that, we need much more investment, from both local and
international business. We are using every available opportunity to reach out
to investors to talk about the great business potential both in South Africa
and across the African continent.”
In turn, this demands doing things better, and more
innovatively. It requires an environment in which the conduct of business is
easy and rewarding – here, the president dwells on the moderate improvement of
South Africa’s ranking in the World Economic Forum’s latest Global
In other words, South Africa’s future as a prosperous,
opportunity-rich country, a “destination of choice”, calls for “far-reaching
reforms”. This while declaiming the imperative of an “inclusive”
It’s unclear, though, what this means. Desperately in need
of investment though it is, South Africa is crawling along without an economic
policy. The attempt by the Treasury to introduce some direction here has pretty
much been gutted by the ruling African National Congress (ANC). Privatisation
of the country’s ravenous state-owned enterprises is off the table. Changes to
the labour regulatory regime to give small firms some breathing room has been
passed off to the National Economic Development and Labour Council – where the
notion will be quietly disposed of.
Far from reform, this sounds like fetid continuity.
Of equal concern are a number of policies that have been
placed on the table. For the better part of two years, the ANC has loudly announced
its intention to introduce a policy of expropriation without compensation.
Little else is so dissuasive to investment than a threat to property rights,
and so it is in this case. Even President Ramaphosa’s investment envoys have
warned about the damaging effect this is having on South Africa’s prospects.
More recently, it has become apparent that government is eyeing
the country’s pension funds as a way to keep its SOEs afloat. This represents a
continuation of the logic of expropriation without compensation, the seizure by
the state of private assets to compensate for the damage it has presided over.
As the president phrased it: “We are facing a situation where our
financial resources have been depleted and our developmental needs are
enormous. In other places, pension funds are being used to generate
And, as the president talks about the importance of making
the country more conducive to doing business, amendments are mooted to the
country’s employment equity legislation. What is envisaged is targets for each
sector, with “consequences” for failing to reach them.
According to Labour Minister Thulas Nxesi, since the
current system has not delivered what government intended from it, the time has
come for prescription and punishment. “We are now going to be hard. We are
very clear, those who do not comply must face the music” he said.
Indeed, Nxesi is not alone in pushing for this. Racial
edicts in the form of the current empowerment regime have been presented as a
non-negotiable, including by President Ramaphosa himself. This despite some
clearly expressed concerns by businesspeople and investors.
It’s important to understand the full import of all this.
In the teeth of a desperate economic crisis, such policy as exists is to double
down on some of government’s most damaging commitments – and pledging to
introduce others. This stands to undermine whatever traction it might gain on
conference podiums. And it ensures that, in practice, the economy will remain
Corrigan is a project manager at the Institute of Race Relations.
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