‘Neoliberal policy trajectory threatens the ANC’s legitimacy’

By Reneva Fourie

September marks one hundred days since the Government of National Unity (GNU) was established. Following the ANC’s disappointing electoral performance, it entered into a multi-party governing partnership with political parties that mainly support pro-business economic policies.

It is still too early to assess the impact of this decision, but there are signs that we might be following the same troubled path as countries that have adopted a neoliberal economic approach and are now battling social unrest.

All parties have agreed to a Statement of Intent, which outlines the basic principles of the GNU, its key priorities, and operational details. The agreement was initially signed on June 14 by the ANC and DA, paving the way for Mr Ramaphosa’s re-election as president.

By his inauguration, eight more political parties had signed the agreement. Three of the political parties in the GNU were previous signatories of the now-defunct Multi-Party Charter (MPC) and are strongly pro-business.

Although their representation in the executive may seem small compared to the ANC, they hold strategic positions in essential portfolios that are responsible for our macro- and micro economy, as well as food security.

Business conglomerates utilised every avenue to ensure an electoral outcome that would further their interests. As the election drew near, it became increasingly difficult for the government to secure loans, and state-owned companies like Transnet and Eskom struggled to obtain funding from the capital markets, thereby affecting the state’s functionality.

They provided substantial campaign funding to the DA and its other partners in the former MPC, as well as some of the country’s most prominent media outlets. When the MPC failed to garner enough votes to unseat the ANC, the business community strongly advocated for a GNU.

Now, business is reaping the rewards of its efforts. The rand has surged by an estimated 5.8 per cent against the US dollar, government bonds are delivering exceptional returns, and the benchmark stock index has hit record highs.

Capitec Bank, founded by DA financier Michiel Le Roux, has raised its earnings forecast for the six months ending in August, projecting a substantial 35 to 37 percent increase in headline earnings per share. Not only does big business have a government that will protect its interests, but it is also accumulating massive wealth and financial redistribution in its favour through the stock market.

The prospects for the majority of South Africans, however, are less favourable. South Africans are enjoying the results of pre-GNU efforts to fight corruption and stabilise electricity, and there is an undoubted increasing urgency to tackle crime. However, the cost of living remains exceptionally high.

The estimated cost of a moderate healthy food basket, including staple foods, proteins, fruits, and vegetables, amounts to R5,277.30 per month. With more than eight million South Africans unemployed, this is out of reach for most.

Furthermore, austerity measures are already adversely affecting pro-poor policies and reducing the state’s capability. The pre-GNU government had leaned towards a neoliberal economic trajectory; however, its impact was cushioned through a social security network.

Now, the social security network is being eroded. For example, the National Health Insurance (NHI), designed to provide all South Africans with equal access to quality, affordable healthcare, is under threat despite the president enacting its enabling legislation.

Similarly, the full enactment of the Basic Education Laws Amendment (BELA) Bill, which strives to guarantee equal access to quality schools for all children, standardise curricula, and improve school management, is facing delays. Then, despite education being a critical service, the Western Cape government intends to dismiss more than 2,000 teachers. Furthermore, several essential government posts remain vacant.

The deteriorating circumstances of many South Africans are a potential disaster in the making. Lessons from Europe confirm that mercantilist economic policies through wage restraint and market-oriented structural reforms have resulted in economic stagnation, increased poverty, and higher unemployment rates.

The consequence has been new populist movements characterised by anti-establishment, hyper-nationalism or ethnoculturalism, and right-wing values.

There are clear signs that South Africa is heading in the same direction. There was a rise in ethnocultural approaches to the past general election, with some political parties using racist or ethnic rhetoric.

While illegal migration and crime have to be better managed, the intolerance of some South Africans towards other African refugees and immigrants is rising as they compete for the shrinking resources available to the impoverished. There have also been incidents of violent protests, including attacks on foreign nationals.

The neoliberal policy trajectory also threatens the ANC’s legitimacy within society. Over the past thirty years, the ANC has sought to balance the interests of business and its core constituency, primarily consisting of the middle and working classes. However, in recent years, it has increasingly prioritised the interests of capital, thus neglecting its base and losing electoral support.

This loss is concerning and is likely to continue for two reasons. The DA’s effective communication machinery meticulously promotes the performance of their representatives in the executive, elevating them above those from other political parties.

Additionally, the ANC’s accommodation of neoliberal economic stances is straining its relationship with its alliance partners, especially the SACP and COSATU, who represent the interests of workers and poor communities. The ANC must consider these factors and address the concerns of its constituents and long-standing allies if it wishes to remain true to its historical mandate.

Furthermore, the pro-business economic policies advanced by the GNU raise concerns about the direction of the country’s economic and social welfare. There is a growing worry that pursuing neoliberal economic policies may increase inequality – we already are among the highest in the world – and social unrest, mirroring the experiences of countries that have faced similar paths.

It is crucial for the government to carefully consider the long-term implications of its economic strategies and prioritise policies that benefit the broader population to avoid exacerbating the existing hardships faced by many South Africans.

* Dr Reneva Fourie is a policy analyst specialising in governance, development and security

** The views expressed in this article do not necessarily reflect the views of IOL or Independent Media