After having held highly successful free, fair and peaceful watershed elections on 29 May, 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.
Prof Raymond Parsons, economist from the North-West University (NWU) Business School, says high-growth economies typically build their prosperity on sturdy and stable political foundations.
“Obviously, the new GNU in South Africa 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 South Africa towards an investor-friendly stance driven more by considerations of efficiency, stability and consistency.”
Prof Parsons says in these changed political circumstances, the formation of a GNU at national level and of a Government of Provincial Unity in certain provinces is therefore a potentially positive development for the South African economy.
“Against a political economy background in which much ground has been lost and economic vulnerability created, these governments offer a range of new opportunities that can strengthen South Africa’s future economic performance. However, 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.”
He emphasises that the overriding South African 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 will help the GNU to eventually succeed by 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.”
According to Prof Parsons, the GNU 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 the government and business, specifically in the high-priority areas of energy security, logistics and dealing with crime and corruption.
“With South Africa’s GDP growth at present limited to about 1% to 1,5% p.a., the challenge for the GNU 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.”
Prof Parsons says the eventual role and composition of the GNU could 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 South Africa 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. The formation of a GNU and the inevitable settling-in period do not have to be too protracted either. There are several existing plans upon which to draw, and not too many policy wheels 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.”
Prof Parsons says economic growth is of course not a cure for all diseases; an end to all distress. But South Africa’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 South Africa’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.”
He explains that, 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 has to 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 South Africa 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.”
Prof Parsons concludes that a stable GNU political environment, in tandem with policy certainty, is the combination that will maximise business and investor confidence. “South Africa 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 that a GNU must underpin.”
