For many years, various time series and events have moved in lockstep. The SARB leading indicator topped out in 2011 after its revival from the 2009 recession plunge, thereafter hesitantly drifting, but with an accelerating slide. The RMB/BER business confidence index, after initially also reviving, got stuck halfway ‘normal recovery’ levels short of 50, from 2010 being in a sidewards drift with a downside bias.

Total vehicle sales peaked in September 2014 at 60780 units, thereafter starting a collapse that steadily accelerated (reaching 48740 last month). Private fixed investment in recent years steadily lost growth momentum, this past year turning negative. GDP growth peaked prematurely in early 2011, having barely recovered from the 2009 recession, thereafter starting a sideways drift with an accelerating downward bias, some of it globally instigated, and also by Mother Nature, but not wholly. There has been an accelerating move among businesses this past decade to increase their presence globally, and for households to invest overseas.

These trends & events seemed to go critical from December 2015 as Nenegate badly shifted perceptions as to our political state of play and our economic sliding as a consequence. Into the breech stepped a previous finance minister with good fiscal credentials, Pravin Gordhan. His main aim became to stabilise the national finances, in particularly to prevent a credit downgrading to junk, by itself making any economic revival yet more challenging.

If this has been the context, Treasury and its finance minister came up with a very specific approach, entering 2016 seemingly with guns blazing. The fiscals would be delivered this year, satisfying the rating agencies (and markets), and specific issues were identified that could bolster rating agencies and private business confidence. A Team SA of government, union and business people was put together to aggressively sell these messages, locally & abroad. We could and would deliver as a country.

Despite active political sabotage during the year from higher authority, by October Treasury had probably delivered the minimum fiscals, if with severe doubts expressed by many commentators regarding sustainability because the growth ingredient was found to be inadequately addressed.

In early 2016, a growth agenda of sorts had been identified. In order to get SA growth to stabilise, obviously the global growth and commodity condition had to stabilise (it duly did). In addition, we might assume to recover from drought from 2017 (the omens aren't all bad at present, though the repeated heatwaves upcountry are disconcerting).

But in addition to these key non-controllables, we would attempt labour market reform (a secret strike ballot & national minimum wage to get more peace on the organised labour front), achieve greater certainty in mining through less regulatory disruption and departmental interference, and reform many poorly performing SOEs to get better governance compliance and less uncontrolled finances threatening the national debt rating.

These were certainly things to be achieved in order to assure better performance in the public, labour and mining sectors. They were marked as such by the rating agencies and also seen as a critical part of restoring the growth process, as would be achieving the stabilisation of electricity supply (duly achieved during 2016) inviting more electricity demand and economic activity (perhaps less obvious due to much higher tariff levels than before and widespread evasive, defensive private action during earlier troubles).

The impression was gained these Team SA objectives were set in conjunction with organised labour and private business representatives. Ergo, these were the agendas to be achieved, confidence would be boosted, and growth eventually lifted, safeguarding the fiscal sustainability and the future credit rating.

This sounds good, but may not be the entire story.

One doesn't necessarily question the selected national reform goals. But one may question whether for thousands of businesses and hundreds of thousands of middle class households this was the entire story? If not, carefully reconsider.

The collapsing new car sales of recent years are blamed on many things, not excluding very high new car prices (up 17% since early 2015), higher interest rates (up 2% since 2014), and bank lending criteria apparently tightening quite considerable. But it is apparently anxiety levels about the future that are most prominent when it comes to a new car purchase at present, inviting a relentless extension of the replacement cycle.

Not every middle class household seems convinced the country is heading in the right direction, for which reason many of them have been heading for the hills. What is ailing them won't be addressed by the Team SA agenda. Short of a clear political message, their doubts look like remaining very real. On this score, is it only personnel change that is the issue, or does it go (much) wider?

Private business appears similarly agitated. Privately, one gets to hear all kinds of views, but publicly these aren't owed up too? Fear of rocking boats and severe victimization, personally and business-wise, is a powerful motivator to remain quiet and get on with business. An accelerating globalisation and falloff in local hiring and fixed investment growth tells its own story as to how perceptions and priorities have been shifting.

Since Nenegate, more business leaders have found their voice, this accelerating greatly in late 3Q16 and into 4Q16 after the local elections and renewed attacks on the minister of finance, suggesting unfinished political business of the highest order.

But instead of coming with detailed public views as to how their local operations are disrupted or otherwise interfered with, giving them insufficient confidence to commit to more fixed investment (and this being the single biggest factor in preventing growth revival), and wanting these issues to be addressed urgently, we have instead some individuals speaking out openly, a few more supporting the minister of finance in his political battles (with a signature), and giving the impression that if the Team SA agenda is fulfilled all will be fine.

This is a travesty of what is really going on. One captain of industry tried last week, publicly engaging the minister of finance and getting him to understand & acknowledge that more is at issue regarding government policy behaviour that needs to be addressed if business confidence & growth is to revive. And this tellingly not going into details. And the minister in his usual fashion happily stonewalling such questioning as a representative of his government. And at best appealing for us to read between the political lines (which we do, but not getting much there?).

What is specifically not on the table is a wide ranging questioning of government policy. It isn't seriously considered by government, while private business will not push the issue. So quite a macabre dance, having to figure for yourself what is going on here on a very elaborately decorated national dance floor. Like from afar witnessing quietly squabbling dancing partners but not being close enough to hear what's it all about…

The parties are miles apart, frankly. The only place where policy is really being questioned is by political parties in parliament. And as long as they haven't a majority, there is the laying down of policy prescriptions by a majority party not apparently inclined to change direction.

Even if, yes, the minister of finance sees evidence of movement. But why only him, and not confirmed from private business sources? Indeed, the very opposite as the minor altercation last week highlighted ever so gently from both sides. One understands the need to keep national focus, deliver agreed agendas if at all possible, and not politicize anything unduly.

But also from very early on in this engagement of many years one encounters a steely government determination to set policy as deemed fit, with everyone else supposedly falling into line.

Sure, and others globalising or otherwise financially migrating away at the speed of the light, and similarly not to be deflected.

The bottom line is a simple one. Government is convinced of its right to rule and its broader policy foundations, even if acknowledging that some things could do with reform, and this ending up as the Gordhan agenda.

Business and middle class households are left to choose how they wish to respond. As their votes may be powerless, they do so with their feet. Though not giving up with their pleading for more understanding. Perhaps this will be forthcoming from new political leadership (and continuing economic failure). The present elite cadre doesn't seem interested, having its own uncompromising ideological & traditionalist convictions, shaped by distant historical processes, here & overseas, set in granite & not to be tinkered with. Or so it seems.

All this follows its own logic, except it doesn't get discussed in public. As if an absolute no-no (though the original National Development Plan, now ignored, comes closest in laying down functional guidelines).

That shows the real extent of our national immaturity, our great convictions, their untested bases, and the destructive nature of our many superficial engagements. That what cannot be discussed, can only sink you. That applies as much to extreme populism, as sensible mainstream beefs. 

Cees Bruggemans

Bruggemans & Associates, Consulting Economists 

Website www.bruggemans.co.za

Email  economics@bruggemans.co.za

Twitter  @ceesbruggemans

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