PETER ATTARD MONTALTO: Show us a proper road map, Mr President

Posted in: Economics, i-Blog, South Africa on August 31, 2020


SA’s wheels will just spin in the mud if it produces plans without specifics such as costs, responsibilities and timelines.

This column was first published in Business Day. 

As soon as the border is open, I plan to have a long holiday in some of my favourite spots in SA’s nine provinces. Maybe I will check out what the fuss is about in Nkandla. I know where I want to go, what I want to do and when, how much it will cost — and who is responsible for making it happen.

I am sure we all made plans in lockdown we didn’t keep. “Learn Mandarin” comes to mind. The plans were non-specific, uncosted, amorphous, too big to handle and involved slipped schedules.

Does President Cyril Ramaphosa know how to plan?

This is a very serious question at the heart of the current malaise as SA slips towards the fiscal cliff edge. He has given very little hint that he does — though there are occasional forays of loyalists in the media saying there is a 10-year (two-term) “governance masterclass” arc of a plan, without any real evidence for it. One wonders how easy it is to plan without, for instance, an energy adviser in one’s office.

Businesses know they live or die by their ability to plan supply off forecast demand, to plan workforces and investment. A fascinating cycle of board meetings occurs annually, particularly in about September and October, in which the biggest companies discuss and sign off on the following year’s budgets, investment decisions and levels of risk appetite.

These types of meetings for 2021 are about to start. What will they say? Does the government even know that decisions that will dictate 2021 are already being made, while load-shedding and political navelgazing are ongoing?

The government has generally been exceptionally poor at planning.

The National Planning Commission does less planning than broad strategic direction research — excellent though it is, particularly recent papers on state-owned enterprises (SOEs) and the digital future (which are well worth reading). The failure of the National Development Plant (NDP) was to not shift it from the good initial plan into a timelined and budgeted work plan.

Government plans lack specificity, and with it the ability to hold ministers and directors-general to account.

There have been rare exceptions. Former finance minister Malusi Gigaba’s 14-point plan in 2017 was unique in laying out a specific timeline for implementation, though it was quickly abandoned.

Similarly, the Eskom road map by public enterprises minister Pravin Gordhan lays out actual goals with dated timelines. These have allowed the energy industry to hold Eskom to account recently for pushing back and then dragging forward, under pressure, dates for its unbundling to take place.

Ramaphosa’s 10-point plan for the economy in 2018 has been long forgotten because there was no detail, costing, timelines or delineated responsibilities. These are the key conditions.

Plans ultimately gain credibility and buy-in, and are accepted in corporate board planning meetings, only if these key conditions are met. They are not currently met regarding the economy, so markets, companies and investors do not give the government the benefit of the doubt.

It is equally true for corruption. That is why the bar was set so high for the past weekend’s ANC national executive committee meeting. Only if real and solid measures regarding ANC membership (and various issues such as wages and pensions that go with them) are withdrawn will the bar be cleared.

So we turn to discussions among Nedlac social partners about a recovery and reform programme. Is it a recovery plan to sit in a room with big labour, big government, big civil society and big business armed with large Velcro words to stick on the wall? If we say “infrastructure”, everyone will clap in agreement and can “compact” that this is all a jolly good idea. But so what?

What is the mindset on the issue of state versus private enterprise? What is the specificity of who will do what within the government, in business, development banks, banks and asset managers? What are the specific funding, tendering and project design modalities?

All these questions won’t generate much bonhomie but are challenging and might require challenging decisions and the expenditure of political capital to break through. The “agreement” — much trumpeted in the media — between social partners on “plans” has been a chimera.

If there is no specificity, costing, timelines or delineated responsibilities, the process will generate much spin and PR but it will flop.

Now is the test for whether Ramaphosa had some type of plan all along. A plan that meets the conditions will raise eyebrows and give him the benefit of the doubt as political capital will be seen to be deployed. Interest rates will fall and capital will flow.

A well-made plan will cause skills and capacity to be deployed across sectors (yes, some real Thuma Mina).

(The capacity issue is there but is for consideration on another day.)

Everyone is tired of plans because real ones are so rare. That can be changed, but it won’t be easy. Momentum, or the lack of it, will be key after the weekend, combined with the right people (such as a new energy minister) and real leadership — all to help the economy not just recover to its previous, slightly slower, grind towards real crisis but to properly diverge to somewhere new and exciting.

• Attard Montalto is head of capital markets research at Intellidex.

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