The most frequently-asked political question in SA over the past two years is this: what will it take for the president to move boldly on the economic and political reforms necessary to lift the country out of its 10 wasted years?
There has been no answer. The trauma of SA’s downgrade to junk status and the Covid-19 pandemic should serve as the cold shower the president has needed to make bold decisions.
Over the past 12 years of decline many argued that SA needed to get to the very edge of self-destruction before its leaders would wake up and change course. Yet, as the looting and the mismanagement deepened, no-one in our ruling elite would listen — or act. After the dreadful Jacob Zuma was kicked out of office by the ANC in February 2018 his successor, President Cyril Ramaphosa, dragged his heels in instituting urgently needed economic reforms despite the goodwill he was gifted with. He consulted, and consulted, and promised action. None came despite dire warnings from his finance minister Tito Mboweni, business leaders and civil society that we were facing disaster.
Instead of loosening trade union Cosatu’s grip on the ANC, he claimed he was building consensus. That led to zero action on moderating the rampant public sector wage bill. Instead of moving with haste to quash the toxic Zuma faction within his party, he allowed party secretary-general Ace Magashule to openly run a parallel organisation that threatened the Reserve Bank’s independence and advocated for policy that came straight out of Julius Malema’s playbook.
Now we are here. I do not know what value destruction SA-style looks like, but this surely is it. Moody’s finally did the inevitable last week and cut its sovereign credit rating to sub-investment grade. SA now has a junk rating from all three major ratings agencies. You can’t blame Moody’s. SA’s government debt to GDP is going to balloon like my waistline during this lockdown. Unemployment will leap to horrendous levels.
The ball is now firmly in Cyril’s court — and he knows what he needs to do
Mboweni seems to appreciate, as he has always done, the deep trouble we are in. In his statement after the downgrade, he said: "To say we are not concerned and trembling in our boots about what might be in the coming weeks and months is an understatement."
The Moody’s action came on the same day that SA entered its first 21-day lockdown (there may be an extension, for those who believe that this may be a one-off) to try to arrest the spread of the Covid-19 pandemic. The devastation of the pandemic is already well known — and terrifying.
"We’re about to see a dizzying decline in economic activity," Mark Zandi, chief economist at Moody’s Analytics, told Vox. "There’s no analogue to it in the modern era."
Every country across the globe faces this new reality. Some will come out of it sparkling. Others will not. In which category will we fall? Will we continue our snail-like pace, our failure to seize the day? Will Ramaphosa and his team fall back to their old ways — no bold action and their hands tied by their allies in Cosatu and their comrades in the Magashule faction?
Mboweni told journalists on Sunday that when he told Ramaphosa about Moody’s looming downgrade the president said that SA needed to now move more boldly on structural reforms.
"I said: ‘Hallelujah’," said Mboweni.
Some of us have heard Ramaphosa say this before. We also exclaimed with a hundred ‘hallelujahs’. We have been disappointed, even if we remain hopeful. The ball is now firmly in Ramaphosa’s court. The days of people writing about what he "should do" are over now. He knows what he needs to do: institute the necessary economic reforms, move boldly to end the toxicity of the likes of Magashule in the ANC, and set the country to work on a vigorous reconstruction and development programme. He has a fantastic governor and team at the Reserve Bank, a fine finance minister and a limping but vigorous National Treasury.
Crucially, Ramaphosa has an adoring country behind him. We have seen him act like a leader throughout this Covid-19 crisis. He needs to act just as decisively on the economic and political front.
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