Accountability needs to start at the top for Ramaphosa’s plan to succeed

In the last twelve years, the SA government has shown virtually no ability to achieve tangible progress. Timelines are typically missed. Reforms are delayed. Confidence has been systemically eroded. As a result, there is little belief that delivery will follow President Ramaphosa’s Economic Reconstruction and Recovery Plan.

Oct 16, 2020

4 Minutes

Nazmeera Moola
In the last twelve years, the SA government has shown virtually no ability to achieve tangible progress. Timelines are typically missed. Reforms are delayed. Confidence has been systemically eroded. As a result, there is little belief that delivery will follow President Ramaphosa’s Economic Reconstruction and Recovery Plan.

Listening to President Ramaphosa’s Economic Reconstruction and Recovery Plan, I was left with mixed feelings. The President said all the right things. The plan contains a set of laudable goals, including ensuring energy security, reducing the cost of doing business, employment stimulus, support for the South African manufacturing base, expediting tourist visas, increasing private participation in ports and release of high-speed spectrum.

The good news is that there is broad based agreement on these goals amongst business, labour and government. The contentious issue of public sector wages was not mentioned.

There was even some acknowledgement that perhaps government’s execution capacity was constrained. Government will be centralising the procurement of widely used items in the National Treasury. The President also announced that there would be a monitoring capacity created as a joint initiative of the Presidency and the National Treasury. Labelled Operation Vulindlela, its purpose is to ensure the rapid implementation of the initiatives he had announced and that “those responsible for their implementation are held accountable.”

The President went on to say that, “To oversee this, a National Economic Recovery Council comprising relevant members of Cabinet will provide political oversight and enable rapid decision making.”

This is the key: rapid decision making and tangible progress relative to a timeline. In the last twelve years, the South African government has shown virtually no ability to achieve this. Timelines are typically missed. Reforms are delayed. Confidence has been systemically eroded. As a result, there is little belief that delivery will follow this announcement.

To reverse this degradation, tangible progress in a relatively short period of time is needed. Let’s start with South Africa’s most pressing issue: energy insecurity.

The Ministry of Minerals and Energy (DMRE) is already well behind the planned schedule to bring new power on to the grid laid out in 2019 Integrated Resources Plan. The required Ministerial Determination for the procurement of new power was at least eight months late. To an outsider, the policy process in the DME appears broken. Expecting a department notorious for stalling to do something different appears optimistic.

However, there can be dramatic shifts with the right leadership. Historically, Eskom was extremely resistant to change. Earlier in the day I listened to the Minister of Public Enterprises, Pravin Gordhan, and the Group CEO of Eskom, André de Ruyter, outline their view that the solution to South Africa’s energy security involved the following:

  • South Africa to build around 25 GW to 34 GW of new electricity production plant over the next decade.
  • The bulk of this should come from renewables, as wind and solar now provide the lowest cost option for South Africa.
  • As Eskom will not be able to fund this quantum of a build, local and global private sector players will be needed to provide this.
  • A separate Systems Operator and Independent Transmission entity are vital to generate confidence for investment. Eskom has already begun to divisionalise, appointing MDs and separate boards for generation, transmission and distribution respectively. They are aiming for functional separation by March 2021 and legal separation of transmission by December 2021, with legal separation of generation and distribution by December 2022.

This plan is completely aligned with President Ramaphosa’s speech. The main risk to this timetable is not Eskom. The risk is slippage in the implementation of required legislative and regulatory changes. Essentially, to keep this on track a host of government departments are required to do their job.

Their ability to do this is questionable. As Minister of Public Administration Senzo Mchunu recently noted in an answer to parliament, 684 313 public servants were absent from work between June 1st and mid-August on full pay. More than a fifth of all public servants (213 291 people) were on sick leave at some point during those 11 weeks. (Perhaps the government should consider pay deductions from those 684 313 employees to pay for the three month extension of government grants?).

If Operation Vulindlela publishes a roadmap and holds public office bearers to account for delivery against the roadmap, it will be a massive success. South Africa is desperate for delivery. Holding the public service accountable for delivery will boost private sector confidence, resulting in rising investment, higher growth, many more jobs and significantly lower borrowing costs for the government.

Therefore, the President needs to be ready to fire those Ministers who do not deliver against this plan. Accountability needs to start at the top.

Authored by

Nazmeera Moola
Head of SA Investments

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