Regulate, then retract, as populism rules
IT’S becoming increasingly difficult to take the government seriously. That is, if you ever did. While Trade and Industry Minister Rob Davies should be lauded for reversing changes to the new BBBEE codes, it is a mystery how an amendment that would have entrenched the principle of creating a new fat-cat elite over real empowerment found itself written into law in the first place.
Added to that, the decision this week to intervene at Sanral and implement “e-tolls lite” raises serious questions about the intellectual rigour applied to governance and policymaking.
These are not isolated incidents. The government is increasingly populist and as a result is sent back to the drawing board far too often to rethink clumsy policies.
Opposition to e-tolls has been less about paying a fee to use decent roads than about the expensive collection mechanism used to do it. The new state stance fails to address that. Resistance is probably the biggest popular tax revolt since Paul Kruger tried to toll Transvaal roads in the 1890s.
He failed then, and Deputy President Cyril Ramaphosa’s big-stick approach of withholding vehicle licences for non-payment of tolls is a gamble on whether local authorities can handle the added administrative complexity required of them. He may be forced into a U-turn like the Department of Trade and Industry, which quickly retracted proposals two years ago that would have put small businesses at the mercy of inspections by traffic cops and other malleable public officials.
There is a growing trend of the government issuing policy directives or publicly announcing its intention to embark on potentially damaging courses of action and being quickly obliged to backtrack. Thankfully, more often than not it steers itself away from disaster at the last minute. But it adds to policy uncertainty, and ratings agencies wield considerable influence in the boardrooms of investors allocating capital around the world.
It creates an impression of policy chaos and leads to persistent policy flip-flopping, which fuels uncertainty and does nothing to enhance the credibility of the state determined to put itself at the centre of the economy.
The department’s memorandum of understanding, signed with state stablemate SAA this week, is a case in point. The department is intent on creating a generation of black industrialists and has told SAA to buy from companies that are at least 51% black owned. Asked how many such companies existed, the department said it would help create them and train people to become suppliers. SAA committed half its R20-billion annual procurement budget to supporting black-controlled business by 2018.
Not to put too fine a point on it, but SAA hardly gets a gold star when it comes to procurement, with scandals affecting everything from bagwrapping and wine contracts to biscuit tenders, which a recent Treasury investigation found were severely flawed. The department’s directive also removes from SAA the power to choose products and services on the free-market principles of quality, price and delivery.
Policymaking is increasingly emotive rather than pragmatic.
The department said this week that black business had been “cheated and lied to” by white business for far too long and it was time to fix the problem. It may be right, but as a regulator, should it not prosecute those who flouted regulations rather than try to fix the problem with new rules?
Another issue is that departments are increasingly operating in silos and there is little sense of any co-ordination or strategic priority being applied to big-ticket projects.
Energy Minister Tina Joemat-Pettersson appears hellbent on nuclear procurement from July this year, with no indication how a multibillion-rand project will be funded. Rural Development Minister Gugile Nkwinti has mooted plans to limit land ownership to 5 000ha, apparently ignoring the fact that about 80% of our food is produced by about 100 commercial farmers using far larger tracts of land.
Health Minister Aaron Motsoaledi is pushing for a much-needed more equitable health system. It will carry a price tag that will make e-tolls look like chump change. Added to that, the cost of the civil service this year will balloon by at least 7%, a price tag bringing no guarantee of better service.
Government departments are seeking to throw billions at massive problems with no guarantee of success. It’s time to think carefully about a consolidated approach to fixing the country’s multiple problems.
Philosopher Will Spencer wrote: “All progress is incremental.” But he wasn’t facing a grumpy electorate at the local-government ballot box in less than 18 months.
Whitfield is an awardwinning business writer and broadcaster Comment on this: write to letters@businesstimes.co.za or SMS us at 33971 www.timeslive.co.za
Government departments are seeking to throw billions at massive problems with no guarantee of success