Commitment devices are crucial to long-run stability for South Africa
The newly formed Government of National Unity faces significant challenges due to ideological persistence and cabinet bloat.
Cabinet positions for South Africa’s newly constituted Government of National Unity (GNU) have now been decided. What is clear is that the African National Congress (ANC), the majority partner (with 40% of the overall vote in the May 29 election), is still largely unwilling to let go of the ministries it deems crucial to its ideological commitments. Despite Jakkie Cilliers’ timeous warning to ‘leave our ideological preconceptions at the door’ and implement a programme for achieving economic reform, the majority party seems reluctant to pay heed.
By way of example, the Agriculture portfolio has been separated out from Land Reform. The former has been given to the Democratic Alliance (DA), the second major party in the GNU. The latter remains squarely within ANC control. This bloats the cabinet at the same time as failing to recognise that many land reform project failures are attributable to land reform recipients having received insufficient training in agriculture, or capital to make projects work in the long run.
The ANC's control over key ministries signals reluctance to shed ideological commitments, hindering economic reform efforts
Similarly, retaining the Ministry of Trade and Industry was the outcome of a predominantly ideological tussle. South Africa needs to move rapidly away from an industrial strategy that envisions the creation of a hundred black industrialists and instead focuses on making it easier for individuals of all kinds to start and grow businesses. These businesses should be able to easily employ (and fire) people. Part of the reason why the early Growth, Employment and Redistribution (GEAR) macroeconomic policy of the late 1990s was not as successful as it should have been (and it was certainly more successful than anything subsequent), was arguably because labour unions held too much power.
Similarly, the GNU needs a new minerals governance framework to reignite the struggling mining sector. Keeping mining under the same ANC minister that has overseen investment collapse does not send the right signals to the market, and risks South Africa maintaining sub-2% economic growth.
Breaking the narrow elite bargain between big labour, big business and big government is all important now. Talking of labour, the unions (such as the South African Democratic Teachers’ Union) are very upset about the DA having been given the basic education portfolio. But with the country’s literacy scores at an all-time low – a 2021 assessment revealed that 81% of South African Grade 4 children could not read to locate and retrieve explicit information – it is crucial to reform this sector. The ANC probably had to relinquish it after having held on so tightly to Trade and Industry, and Mining.
Despite the ideological persistence and cabinet bloating, it is nonetheless promising that the centre largely held. That the DA did not walk away is a good thing. They are playing with the big dogs now and will have to show serious big-match temperament. Markets have stabilised a little, with the Rand holding its value at around the same rate against the US Dollar as it traded on 29 May, and the stock market has rallied 2% since then. Ideally, a clear policy plan now needs to be developed and committed to.
Early wins will lock in a trajectory towards economic reform that strengthens the centre politically and crowds out extremists even more by 2029. If the Rand can hold its value and the US Fed eventually lowers interest rates, the economy can really get moving. The Treasury is also making the right noises about getting off the Financial Action Task Force’s grey list by mid-2025.
Broadly speaking, the GNU needs to commit to simultaneously improving government effectiveness and strengthening citizens’ power to hold governments to account (at every level). This will create an enabling environment for responsible businesses to flourish. There is no alternative to breaking the cycle of poverty and gangsterism that currently frays the social fabric.
There are three broad sets of challenges that must be addressed within the above framework. First, rising citizen dissatisfaction with democracy – reflected in declining voter turnout – is a significant risk to future stability that the GNU must tackle. Second, the GNU must arrest deteriorating state capacity to deliver services and create a stable policy environment to unlock economic growth potential. Third, the GNU needs to reposition South Africa as a responsible, consistent regional and global actor in a time of increasing global volatility.
As part of responding to the first challenge, the GNU needs to commit to rapidly reducing coalition instability at every level of government, especially now that coalitions are likely to be a semi-permanent feature of our politics. Political instability erodes governance quality. Parties typically fight for access to certain portfolios which may offer rent-seeking opportunities, or play ‘kingmaker’ to do the same. If these efforts fail, they often renege on the informal coalition arrangement. The upshot is that many metros and local governments have failed to pass budgets and deliver services for which citizens are paying.
Therefore, the GNU needs to commit to crafting legislation for coalition formation at the national and provincial levels. This would follow the example of the recently formulated Amendment Bill (to the Municipal Structures Act) introduced by the Department of Cooperative Governance and Traditional Affairs before the elections to govern coalition formation at the local government level. Beyond that, it needs to commit itself to a formalised agreement beyond the initial statement of intent released on 14 June 2024.
Stability through binding coalition agreements is essential for South Africa's Government of National Unity to achieve early wins and effective governance
Shortly after the elections, my former colleague Pranish Desai and I wrote that ‘given the need to set a suitable precedent for the coalitions era, we believe that having formalised and published agreements should be the paramount medium-to-long term objective of any post-election pacts.’ Why? Because a credible device is required to bind parties to their commitments, especially given how many have reneged on agreements at the local level. ‘In our view, publishing coalition agreements will reduce the incentives for kingmaker agents to sabotage shaky coalitions… Ultimately, public agreements require careful thought by all parties because they increase the cost of reneging, once published.’
Our constitution did not envisage one-party dominance, as transpired in South Africa from 1999 to 2024. The ANC’s significant drop to 40% of the vote has ushered in a far more competitive democracy in line with constitutional expectations. This is good, but it sits uncomfortably alongside growing citizen dissatisfaction with democracy. For the benefits of competition and a truly diverse GNU to materialise, some early wins will be necessary. Once the squabbling for positions is over, the adult work of establishing a policy agenda must begin. Formalising and publishing a coalition agreement informed by a negotiated policy agenda must be the next step.
As Jakkie Cilliers rightly points out, there is no shortage of solid evidence and advice. The key is for the partners of the GNU to sacrifice ideological pre-commitments and get on with the hard work, starting with a binding coalition agreement to lock in stability and early wins.
Image: Renette van der Merwe/Wikimedia Commons
