How to fix South Africa

Roy Havemann, author of 'How to Fix (unf*ck) a Country: Six things to reboot South Africa', discusses the six solutions that will solve South Africa's stagnation

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Roy Havemann has consulted to the Presidency, Treasury, Eskom, Transnet, SANRAL and a number of private companies. He was previously at the National Treasury and the Western Cape Treasury.

1. Why now? Why you?

We are at a critical point – it is not clear what will happen in the elections later this month. We may end up with a coalition with the ANC losing substantial vote share. Whatever happens, I think we need to keep on with a clear plan of action that would work under almost any political configuration.

‘Why me?’ Well, I enjoy writing very much and enjoyed the process. I am also fortunate to have spent a number of years working at the heart of government. This has given me a sense of what works when – and I propose that we should focus on a limited number of high impact interventions, rather than a laundry list of things.

2. You propose interventions in six areas: Eskom, Education, Environment, Exports, Equality and Ethics (Ernest Vincent Wright would not have approved). Why these six?

Wow, Wright provides a great counterpoint to my approach! As I point out in the book, this is not a comprehensive economic plan. These are the six that, to my mind, must be dealt with urgently. Eskom because it is collapsing our economy, education because millions of children are not able to read or write for meaning, the environment because of the impact climate change is having, exports because of how terribly our ports are doing, equality because South Africa has huge disparities and Ethics because corruption is a cancer that has eaten our resources.

3. This is a short book. Was that a request from the editor? What ideas did you want to include but couldn’t?

Yes, the book was a bit longer, and during the writing process, we made a conscious decision to slim it down. This was part of making the book very accessible – keeping only the top things and making sure that it retained a chatty style with anecdotes. The one big thing the book doesn’t include is water – this is in part because the water crisis has really become substantially worse between when the book was accepted for publication (early 2023) and the date it came out (2024). The other big thing it doesn’t include is safety – this is certainly constraining growth, but is closely linked to the inequality and poverty problem.

4. How do your proposals compare to election manifestos?

In short, my six areas are roughly between the ANC’s manifesto (which still tends towards a strong role for the state in areas like industrial policy and financial sector policy) and the DA’s manifesto (which proposes large-scale private sector involvement even in natural monopolies such as water). I have very little in common with the EFF proposals.

5. Economists know what needs to be done to grow South Africa, but most of it is not possible due to politics or, even if these ideas were politically popular, state capacity. How can your policy proposals circumvent the political and state capacity constraints?

Yes, the sheer government machinery and obsession with consultation on every piece of policy makes policy a slow and tedious process. This is in part, I think, because the ruling party is a very ‘big tent’, containing leftists that favour state-led development and conservatives that are more in favour of private sector involvement and a relatively open economy. Of course, in 2009, with the election of Jacob Zuma, the state became more corrupt and the focus turned away from getting anything done towards state capture. So no policies were taken forward at any great speed. Indeed, as I highlight in the book, energy reform moved ahead, and then stopped when Eskom was captured.

6. Although short, the book offers valuable insights into South African history. What aspects of our history do we forget or need to know more about to address current economic challenges?

I am a strong proponent of what I guess is the historical macroeconomist school, or perhaps what could be described as the comparative historical macroeconomist school, which that we can learn a lot from understanding the history of other countries – what has worked for them and how they have responded to challenges similar to our own.

I also think that understanding our own history is critical for policy – in part because it provides context; but also because it gives us lessons of what we have done right, what we have done wrong and what the effects of those things have been. To illustrate this, I use a quote from Mao Zedong who said:

Now, there are two different attitudes towards learning from others. One is the dogmatic attitude of transplanting everything, whether or not it is suited to our conditions. This is no good. The other attitude is to use our heads and learn those things that suit our conditions, that is, to absorb whatever experience is useful to us. That is the attitude we should adopt.

7. You’ve spent most of your career in government, both at a national and provincial level. Tito Mboweni wrote the foreword. Is this book aimed at your former colleagues in government?

Actually not! It is aimed at people outside the Treasury – the book articulates a very Treasury view of a broadly mixed economy with a strong role for private sector participation. Indeed, the starting point for the book comes from the economic policy proposals released by the Treasury, all the way back in 2018, which have (very) slowly inched forward. The big difference from that paper is the role of education (which I highlight) and a lot of simplification of some of the big issues, e.g. logistics reform is presented under exports when it is a much bigger topic.

8. How can ethics help us grow rich?

There are a few channels through which I think ethics can support economic success. The obvious channel is that corruption diverts resources from where they should go. (There is also literature that says the opposite, but I am not sure it is applicable in the South African case). Also, I discuss institutions in the Elements of Economic Success chapter. Institutions are ‘the humanly devised constraints that structure political, economic, and social interaction’ – when our economic interactions become increasingly broken due to a breakdown in trust, it raises transaction costs. Ethics are a very important part of building institutions with trust.

9. You’re now at an economic consultancy, which means you travel a lot, speaking to international investors. How has the international perception of South Africa changed? Is there anything the new government can do immediately to have international investors take note?

I think international investors are watching the slow-moving economic reform programme with interest but also with some scepticism. The electricity reforms are finally kicking in, slowly but surely improving the very basics of economic growth all these years later. But now we are heading for a water crisis, which is exhausting investors (in some ways).

10. You have a Substack blog: Havemania. What can subscribers expect to find in their mail if they sign up?

The book is a quick, lean and mean summary of some big ideas to get growth going. The blog will give away the ‘director’s cut’ – the bigger version complete with links to some of the background reading that was used in my research for the book. The idea is to create a resource where some of these ideas can be discussed and debated to make the book ‘alive’.

‘How to fix South Africa’ was first published on Our Long Walk. The image was created with Midjourney v6.