New South African government’s biggest challenge

The success of South Africa’s new government hinges on its ability to deliver results on the country’s biggest issues – unemployment, poverty, and inequality – while maintaining stability and avoiding political pitfalls.

According to Professor Raymond Parsons of the NWU School of Business and Governance, the new government faces a steep learning curve.

After a landmark election on 29 May, South  Africa has formed a Government of National Unity (GNU) to navigate an election outcome in which no single party achieved a majority. 

The ANC lost its majority for the first time in 30 years, leading it to partner with opposition parties, including the DA, IFP and PA, to form a GNU coalition.

Parsons explained that 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,” he said. 

He said the GNU policy outlook will likely tilt South Africa towards an investor-friendly stance driven more by efficiency, stability, and consistency.

Therefore, he said that in these changed political circumstances, forming a GNU at the national level and of Governments of Provincial Unity at certain provincial levels are potentially positive developments for the local 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 South Africa’s future economic performance,” he said. 

However, he warned that expectations must be tempered, as the range of opportunities will depend on how political and economic realities can be reconciled in practice.

“The overriding South African challenges of unemployment, poverty and inequality remain to be tackled with renewed vigour and commitment,” he said. 

“With the formation of a GNU, the balance of probabilities has 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.”

Parsons explained that 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, and 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,” he said.

“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 South Africa’s GDP growth presently limited to about 1% to 1.5%, he said the GNU’s challenge is to implement the right policies that will enable South Africa to break out of its ‘low growth trap’ without falling into a ‘debt trap’. 

“If the GNU plays its cards well, it could enable South Africa to eventually achieve a bigger, stronger, and better economy,” he said.

In addition, the eventual role and composition of the GNU could strengthen the National Treasury.

This can be done in two ways: first, to reinforce Operation Vulindlela’s role in implementing infrastructure projects, and second, to control the public purse and ensure that South Africa keeps the ‘debt trap’ at bay. 

“These often require tough decisions and policy trade-offs that need inclusive political support,” he explained.

Nevertheless, Parsons said optimism about the new GNU traction must 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,” he said. 

“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, he said the allocation of posts within the new Cabinet – especially those in the ‘economic cluster’ – still must be settled, and the choices must inspire confidence. 

In addition, 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,” the professor said. 

“Collective governance must not break down into a tangle of broken promises. Expanded coalition governance in South Africa remains a 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.”