Time to seize the reform nettle is now – IRR

South Africa is on the edge and now is the time for reform.

The Institute of Race Relations (IRR) says the postponement of the tabling of the national budget is an opportunity for reform which cannot be missed.

Says Marius Roodt, IRR analyst and writer: “It is often at moments of crisis that political realities make it possible for governments to reform. South Africa is now at that moment where the reality of the situation means that the opportunity for reform is better than ever.”

Roodt continues: “India managed to begin dismantling the so-called ‘Licence Raj’ – the system of heavy state control and regulation in the economy − in the early 1990s, when it faced a fiscal crisis. This crisis allowed then-finance minister Manmohan Singh to begin removing the barriers which were holding India back. And today India is one of the fastest-growing economies in the world and can boast having lifted hundreds of millions of people out of poverty.”

Roodt says that the reforms in South Africa in the early 1990s are similar.

“Global geopolitics changed with the fall of the Soviet Union but the apartheid state was also facing something of a fiscal crisis. These factors gave President FW de Klerk the space to begin implementing reforms to dismantle apartheid,” says Roodt.

A similar situation exists now, says Roodt. South Africa is clearly very close to running out of money, and solutions used previously, such as borrowing more or raising taxes – whether on consumption or income – are not feasible.

“The only way South Africa can get out of its current predicament, without eventually having to turn to the International Monetary Fund, is through rapid economic growth. And the only way to do that is to jettison policies which continue to stifle South Africa’s potential,” says Roodt.

“Policies which only serve to retard growth and deter investment must be put on the scrapheap. Policies like black economic empowerment, while well-meaning, have done little to grow the country’s economy and have not helped the vast majority of black South Africans. True empowerment will come from rapid economic growth, not from racial diktats from Pretoria,” says Roodt.

Legislation that weakens property rights, such as the Expropriation Act and the National Health Insurance Act, must also be scrapped, says Roodt.

“These two pieces of legislation, among others, make the investment case for South Africa much weaker. And whether we like it or not – as President Cyril Ramaphosa is so fond of saying these days – we need this investment for South Africa to grow,” Roodt says.

The Government of National Unity (GNU) should not be allowed to give the ANC the political cover it needs to avoid reform, says Roodt.

“Reform in this country may well offend the ideological sensibilities of some within the ANC and its partners in the tripartite alliance, and it will cut off the party’s patronage taps. But the ANC is no longer the only governing party in the country; being compelled to take into account the views of other parties could help neuter the arguments of those opposed to reform within the party,” says Roodt.

Roodt concludes: “South Africa is on the brink and the country needs to ‘adapt or die,’ to use a South African political phrase from the 1980s. The government can either ‘adapt’ and seize the nettle of reform and start putting the country onto a path of sustainable economic growth or ‘die,’ and keep doing things as they’ve been done for the past fifteen years, and let South Africa slide further into mediocrity and decay.”

Media contact: Marius Roodt Head of Campaigns Tel: 082 779 7035 Email: marius@irr.org.za

Media enquiries: Michael Morris Tel: 066 302 1968 Email: michael@irr.org.za