Professor Alan Hirsch, NSI research fellow and leader of the Migration Governance Reform project (MIGRA), has written an insightful opinion article published on News24 on June 17. Readers are encouraged to explore his compelling analysis on the News24 website and also read the full text provided below.

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As long as it catches the mice, by Alan Hirsch *

On Thursday last week, in preparing South Africa for a new pragmatic coalition government, African National Congress secretary general Fikile Mbalula was quoted as saying ‘it doesn’t matter if the cat is black or white’.  Many people will have recognised the echo of the words of Chinese economic reformer Deng Xaioping. His words are usually translated as ‘It doesn’t matter if a cat is black or white, as long as it catches mice’. 

Nearly thirty years after the Chinese communist revolution Secretary General Deng led gradual and pragmatic reforms of communist China, starting with Special Economic Zones to experiment with industrial and trade reform and allowing private businesses under the control of municipalities. Today China is an economic superpower.

Thirty years after South Africa’s democratic transition, the new regime that has emerged has already been labelled as pragmatic and labels itself in that way too, as in Mbalula’s reference to Deng’s famous quote. The Democratic Alliance, a party slightly to the right of centre which aligns itself with liberal parties globally, is the main partner to the ANC. The ANC having shorn itself of left- and right-wing populists, is a social democratic party in all but name. 

This is a pivotal moment for South Africa. Much depends on whether the ANC-DA partnership rises to the occasion to work together in the interests of the country.

Though President Ramaphosa has led significant reforms since coming to power in 2018, corruption remains widespread in national, provincial and local government departments. The economy is virtually stagnant, unemployment is exceptionally high, and the rand is weak due to low levels of business confidence.

Will the new axis of power be able to address these challenges effectively and will South Africa enjoy the outcomes of reforms relatively quickly? 

There is a binary choice. Either the policies of the new government are the outcome of a series of trades—’you keep this policy if we can keep that policy’—or it is a coherent package of reforms which make sense economically and politically.

What might the trade-off issues be? Black economic empowerment is one example. Clearly the government’s BEE policies have achieved relatively little in building a dynamic black business class and they have frequently been captured or used as a mask for opportunism. The DA does not like BEE at all. One of its ugliest internal conflicts was over this matter, and the ‘colour-blind’ liberals won. The ANC cannot abandon this policy. So, will the outcome be a grudging concession to one or the other party or will the thinkers of the two parties work together, drawing in experts, for an effective, innovative reform of the BEE policy?

Another example is the National Health Insurance program, a hugely ambitious program of the ANC to improve health care, especially for the poor. Will this go ahead in its current form as a concession to the ANC, or will they be kicked down the road yet again? Neither of these outcomes is desirable—it would be far better if the policy experts of the two parties, plus other specialists actually worked through the options together, and arrived at agreement on the best way forward for NHI to reduce inequalities in the health sector. 

A third example could be industrial policy—the DA thinks the ANC is too interventionist in industrial policy. And, however well-meant, industrial policies have not been successful in rebuilding sectors that never recovered after sanctions were lifted and trade tariffs were reformed. A coherent approach to rebuilding industries, and building new industries is critically needed, but will the process be horse trading or genuine reforms? An effective industrial policy must draw in the business community and organised unions, without giving either veto power. 

Another issue—should State Owned Enterprises be sharply trimmed as the DA would or preserved as some in the ANC prefer? Some solutions are creeping through in current policies on electricity and transport but there are numerous agencies and parts of or whole SOEs which could be dissolved or sold. Changes in regime are the only time to effect such changes in institutions which can develop extraordinary resilience against restructuring, however irrelevant or redundant they are. 

There are too many other examples to even catalogue, let alone describe. The key question is: Can the new axis work together constructively to arrive at and implement effective policies or will it rule through a division of favours? 

If the latter, the risks are huge. Both parties lost votes in the recent elections. The potential for right and left-wing populism to grow is clear in the success of the MK Party and the Patriotic Alliance and in the continued popularity of the Economic Freedom Fighters. This government probably has one chance to get it right.

* Professor Alan Hirsch spent 18 years in senior economic policy roles in government resigning as deputy director general of the Presidency in 2012. He founded and led the Nelson Mandela School of Public Governance at UCT and is a research fellow at the New South Institute and SOAS.