The Zuma years left us with a seriously weakened state, and an entrenched economic crisis. Finding our way out of the profound mess left by Zuma’s kleptocracy was never going to be easy. There seems to be some light at the end of the tunnel with the potential arrest of Ace Magashule and others inching closer.
But now that our own national crisis has intersected with the global crisis of the covid-19 pandemic everything has changed. There is some merit to the argument that the covid-19 crisis has simultaneously shown up the weaknesses within the ANC leadership and allowed Cyril Ramaphosa, and competent Ministers like Zweli Mkhize and Ebrahim Patel to shine.
Ace Magashule and the rest of the main figures aiming to restore the kleptocracy only appear in the public spotlight in the context of rampant corruption and looting; not in terms of aiding the country in difficult times. They have all looked extraordinarily weak in this time of crisis.
It certainly is possible that this crisis will leave Ramaphosa with sufficient political capital to be able to decisively outmanoeuvre the kleptocrats and finally remove the incompetent from his cabinet. But Ramaphosa doesn’t only have to manage the divisions between the corrupt and the non-corrupt and the competent and the incompetent. There is also an entrenched division within the ANC.
The covid-19 crisis has generated some issues of common cause around which the left and the neo-liberals in the ANC can unite. They all, for instance, supported the scientific logic behind the national shutdown. However, they do not and cannot agree on the way forward in terms of the economic crisis resulting from the Zuma years, a crisis is that is now suddenly and massively exacerbated by the covid-19 crisis.
The economic crisis is severe. Before covid-19 hit we had no meaningful economic growth for years, massive unemployment, which has hit African and coloured youth particularly hard, and retrenchments were escalating at a terrifying rate.
Major private and state companies, like Edcon and SAA, were facing collapse and some forms of demand for inclusion from below were threatening to destroy important industries and institutions. Armed gangs showing up at construction sites and demanding money were resulting in large projects being cancelled, and students demanding that universities meet their needs for welfare were putting important institutions at serious risk.
Now that Covid-19 has hit businesses; failure and retrenchments are going to exceed our wildest fears. Many companies have struggled to make payroll in recent months.
All of this will be compounded by our collapse, at the hands of the rating agencies, into ‘junk’ status and the consequent run on the rand. It’s almost certain that we will have to navigate our way through a deep and long recession, despite Ramaphosa’s recovery plan.
Ramaphosa’s backers in business, much of the media and important factions of academia and civil society will support a largely neoliberal response to the crisis in the form of austerity. Ramaphosa’s recent plan was thin on detail but neo -liberal leanings are also evident in a recent document of the Presidential Economic Advisory Council. It reads
“Employment programmes linked to infrastructure investment are preferable to the expansion of social grants, as such programmes offer work experience, transfer skills and capabilities and result in the expansion of community services and assets… [and] will increase the social wage for poor communities and facilitate inclusive growth and job creation.”
Some commentators in this camp have been actively pushing for an IMF bailout, which we know always come with conditions, and those conditionalities essentially mean that a state that takes money from the IMF effectively gives up its autonomy over basic economic and policy questions. This is despite the fact that we are sometimes reassured that conditionalities in the context of Covid may be less stringent.
For some of these commentators it would be preferable to have our economic policy determined in Washington rather than in Pretoria. In some cases there is a racist under current to this view.
South Africa’s recent $4.3-billion (R70-billion) loan from the IMF attracts an interest rate of 1.1%; and we face the prospect of a depreciated rand against foreign currencies. In this case repayment will be prohibitively high.
The pandemic hit as South Africa entered a recession and the government feared it could not afford to offset the effects of the coronavirus. Weak economic growth and a widening budget deficit have worsened the country’s debt trajectory and worn down the public purse.
The IMF has spoken of economic structural reforms and cutting the wage bill. We need to wait and see what policy measures may appear in the medium term budget policy statement. The IMF continues to warn against threats to debt sustainability and “generating destabilising effects such as inflation or financial repression”.
In addition to having received this hefty sum from the IMF, South Africa is also received $1-billion from BRICS New Development Bank and $288m from the African Development Bank. And the World Banks is likely to approve additional funding for SA.
However, there is not a strong and organised neo-liberal faction within the ANC. Ramaphosa himself has neo-liberal leanings, and his Finance Minister, Tito Mboweni, is strongly neo-liberal. But although Ramaphosa and Mboweni are powerful personalities within the ANC they are still personalities rather than an organised faction. The political reality is that Ramaphosa can’t hold power or govern effectively without the support of the left in the ANC, and the left is well organised into solid factions in the form of the SACP and Cosatu. As well as having numbers, and organisational strength it also has powerful personalities, such as Ebrahim Patel.
Mboweni has made it clear that he will continue to pursue loans from lending institutions. For the left, in South Africa and around the word, the IMF is a key weapon of contemporary imperialism that has been used to undo the national sovereignty achieved by the anti-colonial movements and subject the national interest of countries across the global South to the interests of Western capital.
Thabo Mbeki was widely criticised by factions of the left for his Gear and Nepad policies. His rejoinder was always that a pragmatic leftism should, as its first priority, avoid collapsing into a debt trap that would eventually result in the surrender of national autonomy to the IMF. Mbeki will be harshly judged by history for his catastrophic Aids denialism, and his appeasement of Robert Mugabe’s dictatorship. But any measured historian will have to give him credit for leaving our finances in such a healthy state.
But, of course, Zuma had no regard for the national interest, and complete contempt for the people of this country. The looting that was farcically misrepresented as ‘radical economic transformation’ by crude opportunists like Carl Niehaus has not only meant that millions remain without work, and that budgets for health, housing and education have been cut. It has also meant that the national autonomy for which so many struggled so bravely might, in the end, be surrendered to the IMF. This would be a political as well as an economic disaster. The left will be correct to do all that it can to keep us from the clutches of the IMF and the World Bank, which will potentially demand retrenchments of government workers and even more brutal cuts to social spending.
It is not impossible that an unexpected result of the Covid-19 crisis is that Ramaphosa will acquire the political strength to act against the kleptocrats, and the embarrassingly long list of incompetents in his cabinet. However, the Covid-19 crisis will not give him the power to act against the left. Before the crisis Ramaphosa was not able to govern without the support of Cosatu and the SACP. But as economic and social hardship worsen during the Covid-19 crisis the left will come under enormous pressure from its constituency to defend their interests. They will have no choice but to oppose austerity, and to fight tooth and nail against Mboweni’s overtures to lending institutions.
In order to ensure his political survival Ramaphosa will have to make some sort of accommodation with the left. In order to strengthen its own hand the left in the ANC will have to seek an alliance with the left outside of the ANC. Astute commentators will keep a close eye on these developments in the weeks and months to come.
Astute commentators will also understand that the balance of opinion among the commentariat is not the same thing as the balances of forces within the ANC.
Dr Imraan Buccus is senior research associate at ASRI, research fellow in the School of Social Sciences at UKZN and academic director of a university study abroad program on political transformation.