The Civil Engineering Contractor January 2019 | Page 3

COMMENT Eamonn Ryan - editor [email protected] M ight South Africa’s own economic revolution be in motion already? Might we be about to emulate the economic miracles of China and India? We saw some strange signals towards the end of 2018: a flood of foreign and local investment, and even hints at the previously taboo subject of privatisation. Yet, this is essentially the same government that a year ago unblinkingly oversaw the wholesale looting of public money. It is almost dizzying how many major policy shifts we are witnessing, but perhaps the most encouraging was Finance Minister Tito Mboweni’s maiden Medium- Term Budget Policy statement in which he said that the government had taken a conscious decision to reconfigure the state-owned enterprises (SOEs). Ahead of his statement, he held a press meeting in which he went out of his way to describe the example of the failing Swissair, which the Swiss government thereafter sold. The analogy to South African Airways wasn’t lost on anyone. And even if it was lost, Mboweni went on to spell things out: “Our current challenges with SOEs require us to demolish the walls that exist between the private and public sectors.” Most SOEs have weak balance sheets, and Mboweni suggested that proposed restructuring would include private equity partners and selling some of the parastatals. That is an abrupt U-turn. South Africa’s investment summit in October 2018, led by President Cyril Ramaphosa, could be an important step forward in reviving economic growth in South Africa. Ramaphosa has seemingly firmly nailed his colours to the mast in committing his administration to the market economy, where obstacles to private investment would be removed as far as possible. Ramaphosa, who became a successful entrepreneur after he left parliament in the mid-1990s, has now signalled that he wants to build trust between government and business, even white-owned businesses. This won’t be easy. There are elements in the ANC that still reject capitalism and others who want to continue using the term ‘white monopoly capitalism’ as a social battering ram. Ramaphosa’s biggest challenge is that after the misadventure of the Zuma years, this country has entirely lost credibility. To get an idea of this, try read the comments section on an article about South Africa in a conservative online British newspaper like the Daily Mail. Ramaphosa and his advisors will be asking, what can we do to rebuild our credibility fast? Unfortunately, that probably requires getting the election behind us ahead of schedule. It may not even require big policy reforms — significant incremental shifts would most likely be sufficient to engender confidence, and what is an economy about other than confidence? If one were to look at the success stories of China and India, milestones were Witnessing an amazing government U-turn October 2018 may have been a defining moment in South Africa’s economic trajectory. really small policy shifts towards business-friendly policies, which straightened out the previous distortions of communistic social engineering. Most of Ramaphosa’s message was aimed at reassuring business folk about how safe their investments and property are; about an independent judiciary; and the rule of law. Nonetheless, there were some inviolable policies: land reform and transformation would both continue. The most telling signal was an apparently off-the-cuff remark he made at an after-conference dinner to scorn the concept of ‘white monopoly capital’: “We have become accustomed to … treating our entrepreneurs and business people [badly] and called them all sorts of names. We’ve treated them like enemies and … [called them] white monopoly capital — that must end today.” CEC January 2019 | 1