Economic prospects for this year hinge on policy

Posted in: i-Blog, Politics on January 22, 2019

By Intellidex staff

Government continually reinvents old policy and Peter Attard Montalto, Intellidex head of capital markets, says in last week’s Business Day column that it is now time to choose from the menu of policy options already on the table.

“Stop trying to invent new policy. Stop the never-ending hunt for a magical policy tree of new low-hanging fruit that are easy to implement at zero political cost. They don’t exist.”

Expanding on this view, Intellidex Chairman Stuart Theobald argues in this week’s Business Day column that “one of the tragedies of the Zuma era is that policy was demoted to an irrelevancy, with the contest focused entirely on who had access to power by controlling key institutions such as the South African Reserve Bank”.

Attard Montalto points out that finance minister Tito Mboweni is also aggrieved at recycling old policies. “His excoriation of circular policy debates on several occasions in the months before Christmas sounded almost radical for its uniqueness in the public discourse. He highlighted that policy was continually trying to reinvent itself when the same issues had been discussed and not implemented 15 or more years before.”

Attard Montalto discusses the latest ANC manifesto which, he says, shows there is no change of mind on Eskom and calls for nationalisation of the Reserve Bank. The policy vision of the utility being at the heart of the future of renewables in SA is despite all the evidence from renewable energy independent power producer procurement that exactly the opposite is working, he says. “This is exceptionally dangerous given the nationalisation debate that will reignite shortly, pressures as growth rebounds exceptionally slowly and the importance of the Bank as a bedrock of macro-stability. It seems like a risky move for the Ramaphosa faction to put this in the manifesto, for little upside.

Theobald says: “One of the most headline-grabbing features of the ANC’s election manifesto is the sentence on amending the mandate of the Reserve Bank. This is classic institutional contestation, with a fig leaf of policy intention over it. This was not about policy — it was about control, and that was clear to anyone who had seen the state capture machine in its institutional attack mode. As has often been pointed out, the Bank is an instrument of policy with very clear legislated responsibilities. No one has even attempted to make the case that the Bank’s ownership has any effect on the Bank’s ability to deliver on policy.”

Attard Montalto agrees with Theobald’s sentiment that the reinvention of policy “highlights the fact that during a consultative process on policy formation, factional interests can win out in subtle but important ways.”


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