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Not enough funds to ‘fix' SA as election looms

Friday March 22 2019

Cyril Ramaphosa

South Africa's President Cyril Ramaphosa. FILE | NATION MEDIA GROUP 

CHRIS ERASMUS
By CHRIS ERASMUS
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The difficulties facing South African President Cyril Ramaphosa as he tries to “fix” South Africa “post-Zuma”, and at the same time prepare for and contest an important elections in early May, were underlined by a very constrained budget, as presented in parliament this week.

The budget in itself is largely domestically-focused and not that interesting to outsiders.

But what is interesting is that, despite warnings from ratings agencies about South Africa approaching an accumulated “debt trap” at nearly 60 percent of Gross Domestic Product owed in sovereign debt and under-written debts of national utilities like troubled national power-producer Eskom, the budget will still run over revenues by some US$17.35 billion at current exchange rates.

This means South Africa is in effect borrowing about US$100 million per working day of the year, just to get by.

That is a huge gamble — Moody's still holds South Africa on an investment grade (albeit the lowest before “junk” status) but avoiding another downgrade is critical to the cost of interest on the national debt.

'CONSERVATIVE APPROACH'

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It is also vital to the ability of Ramaphosa’s administration to spend money on job-creating infrastructure, housing for the poor, and improved service delivery at municipal and regional levels — all important issues for the ruling African National Congress's (ANC’s) historic constituency — which is already severely constrained.

To have some short-term popularity, a much more expenditure-oriented budget may have been expected, though the cost would certainly have had to be paid post-elections for that.

Instead, Ramaphosa and Finance Minister Tito Mboweni have opted for a “conservative” approach focused on cutting government expenditure, especially with respect to the bloated public service, which has blown out in 10 years from 30,000 to 47,000 employees.

UNHAPPY UNIONS

The unions are, to say the least, not happy.

This is bad news for the ANC which traditionally has had an enormous bloc of support from unions in the form of the Congress of SA Trade Unions (COSATU), one of its key allies.

Now, with some elements in the SA Communist Party — the third leg in the so-called “tripartite alliance” which jointly rules SA with the ANC at its head — joining with angry unionists who feel Ramaphosa is “selling them out”, the ANC has a tough battle ahead just to get its own constituencies to come out and vote.

Worse than that is the fact the ANC has, since coming out of the apartheid era 29 years ago, relied heavily on the grassroots organisational strength of COSATU to mobilise at local level across the country, hold rallies and marches and bring out the voters on voting day.

ANC PROMISES

Much of that strength has dwindled away under the combined impacts of falling union membership of COSATU, the emergence of a new more radical national federation of unions which will not back the ANC at the polls and the weakening of the political bonds which hold the ruling alliance together.

Also, there is widespread disenchantment with the ANC because of 25 years of non-racial rule that has yet to deliver on many of the promises to voters of a quarter of a century ago when the ANC came to power.

A substantial stay-away of former of potential ANC voters is likely to make a big difference in the poll results.

'BETTER LIFE'

Much of the ANC’s renewed appeal to ordinary South Africans has rested on the person of Ramaphosa himself, along with his ability to re-inspire his party’s restive and wavering support base that he and his party can deliver on its promises of a better life for all.

But with a much-constrained budget that looks to left-leaning critics more like a sop to Western bankers and ratings agencies than the “radical economic transformation” offered by former President Jacob Zuma and his faction in the ruling party, the Ramaphosa government has had little to no room for manoeuvre.

It is a painful pill to swallow but Ramaphosa and his ANC have no choice if they are not going to sacrifice the country to short-term electioneering.

What is not clear is if “Joe and Jane Average” on the streets will appreciate the wisdom and necessity of what has been done with respect to how the Ramaphosa administration is planning on working SA out of its Zuma-induced debt crisis.

It may be that Ramaphosa and his team have done the right thing by the country, but that they will likely be paying for it come election day on May 8, just over two months away.