Will the GNU be positive for South Africa?

by Raymond Parsons: Professor at the NWU School of Business & Governance and a former special policy adviser to Busa.
After holding highly successful free, fair, and peaceful watershed elections on May 29, South Africa has now embarked on the formation of a Government of National Unity (GNU) to navigate an election outcome in which no single party achieved a majority. To manage the new political dynamics and provide stability, a GNU is now being formed.

High-growth economies typically build their prosperity on sturdy and stable political foundations. Obviously, the new GNU in SA cannot be there yet, as it is still at an interim stage. But the omens are now much more encouraging on the good governance front. And the GNU policy outlook is likely to tilt SA towards an investor-friendly stance driven more by considerations of efficiency, stability, and consistency.

In these changed political circumstances, the formation of a GNU at the national level and of Governments of Provincial Unity at certain provincial levels are, therefore, potentially positive developments for the SA economy. Against a political economy background in which much ground has been lost and economic vulnerability created, they offer a range of new opportunities that can strengthen SA’s future economic performance. Expectations must be tempered, as the range of opportunities will depend on the extent to which political and economic realities can, in practice, be reconciled.

The overriding SA challenges of unemployment, poverty and inequality remain to be tackled with renewed vigour and commitment. With the formation of a GNU, the balance of probabilities has clearly shifted in favour of a future national agenda that will expedite growth-linked reforms. Business should now respond in ways that help the GNU to eventually succeed through achieving demonstrable results.

The success of a GNU will ultimately be tested against the extent to which it has deliverables to show over time, including through cooperation with the private sector. The bar of responsiveness and accountability has been significantly raised. A basis has now been laid for the GNU to facilitate the creation of a ‘delivery state’ to serve its citizenry and business at various levels. Ideology apart, the dominant message of the recent election has been an instruction to deliver.

The GNU, therefore, provides a collective opportunity to expedite several existing growth-friendly but half-forged policies and projects to boost investor confidence and job-rich growth.

The GNU could also give further impetus to the existing key collaboration between government and business in the specifically high-priority areas of energy security, logistics, and dealing with crime and corruption.

With SA’s GDP growth presently limited to about 1%-1.5% p.a., the challenge for the GNU is to implement the right policies that will enable SA to break out of its ‘low growth trap’ without falling into a ‘debt trap’. If the GNU plays its cards well, it could enable SA to eventually achieve a bigger, stronger, and better economy.

The eventual role and composition of the GNU could, therefore, also strengthen the hand of the National Treasury in two ways: firstly, to reinforce the role of Operation Vulindlela in the implementation of infrastructure projects, and secondly, to control the public purse and ensure that SA keeps the ‘debt trap’ at bay. These often require tough decisions and policy trade-offs that need inclusive political support.

And, indeed, several of the solutions ‘lie hidden in plain sight’ – but require new momentum to secure urgent and effective implementation. The GNU should set itself timelines for key priority targets. Neither does the formation of a GNU and the inevitable settling-in period have to be too protracted. There are several existing plans upon which to draw, and ‘too many policy wheels do not need to be reinvented.

For example, the updated National Development Plan, which has enjoyed wide political support, could quickly help to identify further areas of socioeconomic agreement among the GNU participants. It will help to facilitate ‘sufficient consensus’ outcomes.

Of course, economic growth is not ‘a cure for all diseases, an end to all distress’. But SA’s recent economic experience has shown the extent to which it makes other aims – such as job creation and debt management – easier to attain and softens conflict among them. Growth is not everything, but without it, little can be achieved. It is a prize worth having to ameliorate SA’s socioeconomic challenges.

Optimism about GNU traction must nevertheless remain cautious. It is still early days for the new political dispensation to gain momentum. The contours of the GNU’s ‘statement of intent’ are still in outline and require to be concretised. Participants are on a steep learning curve in a sphere where several political pitfalls and risks still exist. Several different GNU scenarios may yet unfold as negotiations proceed.

For example, the allocation of posts within the new Cabinet (to be based on the principle of ‘broad proportionality’) – especially those in the ‘economic cluster' – still must be settled, and the choices must inspire confidence. And the proposed ‘national dialogue’ agenda must not delay what needs to be urgently implemented. A week may be a long time in politics, but five years is incredibly short in which to deliver.

Much also hinges on the degree of good faith and trust invested in the GNU by its participants in order to ensure sustainability. Collective governance must not break down into a tangle of broken promises. Expanded coalition governance in SA remains very new territory for the country's political economy. Extraordinary discipline and persistence will be required to defeat the cynics. Political leadership of a high order will be required for the stability and success of a GNU.

A stable GNU political environment, in tandem with policy certainty, is therefore the combination that will maximise business and investor confidence. And SA now needs a new burst of energy and effective leadership to generally do things differently and better. The country must urgently build a new national economic purpose that mobilises the nation and which a GNU must underpin.

Useful resources:
NWU Business School
At the NWU Business School, we strive to change the way our students think about business. We want our students to become managers/leaders in their own right.
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