Volume 1 No 8 (2004)


CONOMIC POLICY is one of the most contested policies in South Africa. At the heart of this contestation lie concerns about economic policy making – in other words, the process informing the government’s economic policy. When Minister Trevor Manuel recently presented the Medium Term Budget Policy Statement to Parliament, he reiterated what he (and many of his colleagues) has stated many times before: the government has had to make tough choices, but it has absolutely made the correct choices in terms of economic policy. This sentiment also comes through very strongly in the Ten Year Review that was released by the Presidency last year (which, rather euphemistically, is called a ‘discussion document’). This stance raises fundamental questions about the nature of the democratic order and the role of the state (particularly the elected arm of state) in the development process. Given entrenched inequalities and systemic poverty, we certainly expect the state to be assertive and give leadership on complex issues. And yes, we need the state to rise above sector and stakeholder interests to see the bigger picture and have a long term perspective. And there is no doubt that it is part of the state’s responsibility to consider the effective and efficient use of limited resources. But is it sufficient to have a benevolent, rational state making tough decisions in the interest of “the people”? How can we assume that there is only one correct path (strategy, policy) to realise the vision of an equitable, sustainable and thriving society? In fact, what certainty is there that there is only one vision for South Africa – the one embraced by the government? Of course, such challenging questions can (and should) be asked equally of civil society organisations claiming to represent the interests of ‘the poor’, ‘the landless’, ‘youth’, ‘women’, and so on. Can such organisations rightfully claim to ‘speak truth to power’ (a term coined by Aaron Wildavsky)? Ten years into democracy, it seems, we are still figuring out what democracy really means.

In Thought Matters, William Gumede gives a critical reflection on the nature of economic policy making in South Africa and particularly to what extent it adheres to democratic norms of political participation. William is Research Fellow at the Graduate School of Public & Development Management, Witwatersrand University, and a PhD Candidate at the London School of Economics. His book Thabo Mbeki and the Battle for the Soul of the African National Congress (Struik New Holland) is due out soon.


Policy-making and Democracy, by William M Gumede

The policy-making process, located at the interface between the political system and the national economy, is likely to play a pivotal role in the quality and substance of South Africa’s democracy. Indeed, a key priority is to formulate policy conducive to favourable economic outcomes and to manage political conflict over policy. However, increasingly alarms bells are ringing that policies in South Africa are often cobbled together in ‘informal’ processes outside democratic institutions and public scrutiny.

The struggle in many new democracies has been to reconcile effective policy formulation with democratic norms of political participation. Indeed, typically pressures brought to bear on newly democratised countries – for open economies and sound finance – increasingly meant that governments are restricting key economic policies to experts and insulating key public institutions, such as central banks, fiscal authorities and finance ministries from democratic scrutiny. The ‘ideal’ politician in many newly democratised was the ‘technocrat’ or, as described by Williamson, the ‘technopol’. National authorities increasingly become more responsive to financial markets than to their fledgling democratic institutions, such as legislatures, and to their citizens.

But the core issues of economic policy reform – fiscal stability, debt repayment, privatization, and liberalization – often require hard choices as they affect social groups, communities and institutions differently. It is never obvious that there is only one right way of approaching these issues or that technocrats are better placed than anyone else to make the right choices.

The particular patterns of public decision-making that emerge within formal constitutional parameters not only affect the sustainability of democracy, they also help to define the quality of democracy. In a recent study of the democratic transition in five Andean countries (Bolivia, Columbia, Peru, Ecuador and Venezuela), Franscisco Gutierrez Sarin shows how early optimism for democracy gave way to a general weakening of democratic institutions. He argues that although none of them has slipped into open dictatorships, all these countries have seen a gradual installation of a strong presidential executive, “over which controls have been weakened; weaker parliamentary organisations; and traditional parties supplanted by anti-political outsiders.” If citizens believe that newly democratic institutions are being ignored or downgraded in the making of decisions in their lives, they may seek solutions outside of these institutions. This may in the end have negative consequences for political stability and economic development on the whole.

Policy-making in South Africa
This raises challenging questions regarding the policy-making process in South Africa. In 1997, a government-commissioned review of the provinces, written by the then national Director-General of Public Service and Administration Paseka Ncholo, identified ‘top-down’ policy thinking in national government departments as a major problem. It concluded national government departments ‘give orders’ and see their role as ‘controlling’ policy. Rod Alence’s 1997 study on economic policy-making for the Human Sciences Research Council (HSRC) was equally damning. The report worryingly concluded that parliament had ‘consistently low influence’ in policy-making. Many interviewees predicted an escalation of resistance to existing government policies and modes of policy-making from within ‘civil society’ and the ranks of the ruling ANC alliance.

Since 1999, the restructured Presidency has increasingly taken on a more dominant role in the policy-making process in post-apartheid SA. The style of the President, seen by his strategists and himself as that of a CEO running SA Limited, has significant implications for policy-making, and for opening up policy-making to the democratic process. As CEO, Mbeki tightly controls policy-making processes in Cabinet, government and the ANC.

Also, with the start of the Mbeki Presidency, new centres of influence on policy-making – outside the elected representative system – have been established. Key among them are the presidential working groups: big business, black business, trade union, agriculture, international investment advisory council, and international IT council. Significant policies had their genesis or were fleshed out in these presidential groups and were presented to Parliament and the public as fait accompli.

In democracies, parliaments are expected to provide platforms for articulating citizens’ choices, scrutinising government policies, and providing legitimacy for policy outcomes – even if they prove to be wrong. Instead, South Africa’s Parliament has been increasingly sidelined from policymaking. Indeed, it is increasingly labelled a ‘lame-duck’ and a ‘rubber-stamp’.

The following are some examples of key policies insulated from democratic decision-making:

  • The New Partnership for Africa’s Development (Nepad) – the Mbeki-led attempt to lead a renewal in Africa’s social, economic and development fortunes – was not discussed widely. It has run into a wall of opposition from civil society groups within South Africa and elsewhere on the continent.
  • Neither was trade policy broadly canvassed. For example, Parliament was never involved in the decision to lift South Africa’s tariff barriers faster than even the Word Trade Organisation (WTO) demands – causing widespread economic pain.
  • The agriculture presidential working group put together a strategic plan that aimed to contribute to growth and make a dent in rural poverty within the next three years. The agriculture department, AgriSA and the National African Farmers' Union, drafted the plan and set up a permanent joint committee to implement it as the new strategic plan for SA farming. The fact that only “an elite few” had been consulting in drawing up the agriculture and land reform blueprints sparked widespread condemnation.
  • The Growth and Development Summit, scheduled in mid 2003, and one of the democracy’s major economic events, was agreed upon at a joint sitting of the big business, black business, trade union and agriculture working groups. The summit aimed to cobble together a consensus between business, labour and government, similar to the post-second war Western European pacts in the Netherlands or Ireland, which agreed on a common development path for the country. However, Parliament was not consulted and many groups in society – including opposition parties – felt excluded.
  • In 1998, the Presidential Jobs Summit, aimed at cutting high unemployment levels, faltered on the back of complaints that only a few people were included in drawing up the policies.
  • Another significant new policy making forum – outside democratic institutions – was the Millennium Labour Council (MLC), formed in 2000 by organised business and labour to reach agreements over contentious labour policies. In 2001, trade unions and organised business leaders agreed on key labour legislation in secluded negotiations at the MLC.
  • Government’s Black Economic Empowerment (BEE), aimed at bringing blacks into the commanding heights of the economy, was never broadly canvassed. As a result, it was opposed from potential beneficiaries, who accused it of being elitist and only benefiting the well-connected few, while in white circles it was viewed with deep suspicion. However, BEE has been a case where sufficient public disquiet forced government to rethink and take it to the drawing board to refine policies to make it much broader. For example, the draft Minerals and Energy Bill, shrouded in secrecy, was leaked in 2002, slashing the share prices of many local mining companies. The whole BEE policy process was rethought, although not sufficiently and broadly enough. Trade union groups have started to galvanise opposition to BEE, with some groups even trying to block BEE transactions in court.
  • In contrast, labour policy is a key example of a policy that has been broadly consulted. While some government and business figures would like to dismantle many of the basic workplace rights which they claim create an inflexible labour market – though many reports have shown the contrary – actual changes have been minor, despite indignant responses from the trade union movement. A compromise was put together between government, business and labour, and the result is a much more harmonious labour market than previously, and with much less labour disputes and industrial action.

This tendency to centralise policy-making in the Presidency has been justified by arguing that more centralised policy co-ordination and monitoring would smooth implementation of policies. The oft-repeated saying is: government must govern, whilst the dominant argument in government circles since 1999 has been based on ‘delivery’. The implication is – wrongly - that consultation would slow down the policy-making and implementation process. As Steven Friedman argues, it holds by implication that citizens place a purely instrumental value on democracy, or ‘delivering’ goods and services can secure that loyalty to citizens. Indeed, the implication is that if some democratic intangibles, such as the right to influence policy, must be compromised in the process, the gains in citizen confidence will far outweigh any democratic losses. This reflects an implied believe that there is a trade off between material improvement and democratic quality. This goes against the grain of data from developing countries compiled among others by Dani Rodrik that democracy is not only compatible with growth and poverty reduction, but may be crucial to both. The challenge lies not in ‘delivering’, at the expense of democratic participation, but in broadening democratic participation. Indeed, in South Africa, inclusive policy-making might be ‘a pre-condition of economic growth and sustainable development.

Tentative conclusions
Making economic policy ‘sacrosanct’ meant that government’s centrepiece market-friendly Growth, Employment and Redistribution Strategy (GEAR) does not have the same kind of grassroots ‘ownership’ the RDP had. Gear is now seen, rightly or wrongly as ‘against’ the ‘people’. This often feeds into people’s anxiety that they do not feel part of the new democratic deal. The debate on policy-making has often descended into a ritual of labelling and name-calling. Moreover, crucial economic, social and development debates are often conducted via the extremes of ‘us’ against ‘them’. From the government’s perspective, if you are not on the side of the government economic reforms, you are likely to be labelled ‘ultra-left’. From the opposite perspective, if you do not wholeheartedly share their criticism of government policy, you are likely to be coined a ‘sell-out’ or in the pockets of ‘big business’.

In South Africa, because of the high levels of inequality and unequal access to key public forums, important opinions are easily shutout because those holding such opinions are too poor to influence party leaders or access institutions such as the media or Parliament. They or their opinions are not part of the national consensus. In other cases, the media or public institutions are reluctant to bring their issues to the front, for fear of being seen as promoting the ‘ultra-left’. In the end, the new ‘marginalised’ feel it appealing to use extreme actions to get their voices heard, risking even further alienation from the centres of power.

Moreover, the alarm bells are sounding at that fact that major policies in the new democracy are increasingly drawn up by the select few. It is now a widespread perception that parliament is simply ignored on economic policy, that it has become a rubberstamp. Policies are decided elsewhere. Public and civil society participation in policy-making has been greatly reduced. Not surprisingly, such policies have been fiercely resisted at grassroots level, making their implementation at times very costly.

Disgruntled citizens, feeling alienated from the policy-making processes, are increasingly using illegal methods to make their voices heard. There has been a rise in civil society protests in South Africa. Many, feeling excluded from the insulated policy-making processes, have taken their grievances to the streets. Post-apartheid’s most visible social movement, the Treatment Action Campaign (TAC), has embarked on civil disobedience to pressure government to make AIDS drugs available to sufferers. Other new mushrooming social movements prefer to use illegal methods to fight the debilitating effects – retrenchments, increase service tariffs - of privatisation policies. For example, members of the Soweto Electricity Crisis Committee (SECC), illegally switch on the electricity of township dwellers who have seen their power cut because of non-payment, following rates increases set out in GEAR.

High voter turnouts in South African elections tend to mask increasingly disillusionment with the political process. The youth are increasingly staying away from voting. Furthermore, overall voter turnout has slipped from 89 percent in 1994 to 76 percent in 2004. Though it still shames voter turnout in most developed countries, it reflects increasing disenchantment among the poor in the political process. Ahead of the 2004 elections the Landless Peoples Movement called on people not to vote.

Obviously, the dangers of ethnic mobilisation by those who feel alienated by the political process are ever present. Race still remains a significant social cleavage in South Africa. Disillusionment in the political process could easily be used by unscrupulous politicians to mobilise the disgruntled on the basis that they are excluded from decision-making because of their ‘race’.

HANK YOU for responding to our request for feedback on issues raised in Isandla Development Communiqués. Here are some of the responses and questions that we have received:

I found Hein Marais's piece on current thinking and practice with respect to AIDS thought provoking - it has stimulated many questions regarding interventions that have been undertaken within the SA context.” (Nomvula Dlamini)

“Thank you for the existence and work of Isandla Institute. I do find the topics generally very interesting and topical. The great value is actually finding a space where these topics are seriously addressed and I look forward to updates, or progress reports, on issues a year later. Regarding the housing issue and perhaps someone could educate me on the following questions: Why has the ANC government built housing that is unfit for humans – I refer to the one room brick shacks that do not leave any room for expansion, vegetable gardens, outdoor sitting area, and communal outdoor spaces for children, young and older adult populations. I am not expecting the built environment to provide complete six room houses but at least good space planning and question the non-provision of adequate space for human living. Secondly, has the Ministry of Housing looked at housing and community planning learnings and successes in other countries? It seems not if we look at some of the anti-social, anti-human horror ‘housing developments’ since 1994.” (Shirley Arnold)

Send your feedback to admin@isandla.org.za.

new Dark Roast Occasional Paper (No. 19), written by Edgar Pieterse, can be accessed on our website. In this paper, Edgar concerns himself with the persistent problems of segregation and fragmentation characterising urban South Africa. He argues that these urban crises cannot be overcome by technical policy solutions, as the past decade has shown. Instead, what are called for are imaginative and practicable ideas about how South African cities can find locally-specific pathways out of fragmentation and inequality. Edgar argues that such homebru alternatives can only be developed by what he calls ‘reflexive epistemic communities’ – in other words, knowledge-generating collectives that generate new symbols, new imaginings and new political practices.

CORE has recently released the publication Evolving Democratic Governance in South Africa, by Phiroshaw Camay and Anne J. Gordon. Focusing on processes, institutions and events which have had a direct impact on governance, including five in-depth case studies, the study explores the extent to which citizens, civil society organisations and government have fully exercised both their rights and obligations so as to entrench democratic governance in the ten years since 1994. The book concludes that much has been accomplished since 1994, but the challenges that remain are significant and must be tackled. Many relevant practical recommendations aimed at entrenching sound governance are put forward. The publication costs R150.00 (VAT + postage incl.). Copies can be ordered from Florence Thinane at corejhb@wn.apc.org.


Contact details
Acting Director: Jacqui Boulle
PO Box 12263 Mill Street
Cape Town, 8001
Website: www.isandla.org.za.

Editorial collective: Edgar Pieterse, Katharine McKenzie
and Mirjam van Donk