Government’s failure to communicate makes perceived risks look real

The government is willing to listen and take good advice but needs to work on communication strategy

Is SA a microwave society, where the delivery of basic services must be done instantaneously to be deemed successful? Or has service delivery just been so slow that patience has run thin, such that any sign of missing promised deadlines prompts society to protest? Or could it be that society is so fractured and demoralised that little progress is viewed as no progress at all?

It seems to me that there is truth in all three of these: that society thrives on instant gratification, the delivery of basic services has been too slow, and slow progress no longer receives any acknowledgment. So, often progress is missed because the government’s communication strategy is nonexistent or is poor at best and requires a facelift.

Let me demonstrate with two examples since the Covid-19 pandemic turned our lives upside down. First, during the initial 21 days of level 5 lockdown, where almost all sectors of the economy and nonessential services where closed, parts of the mining sector remained open. With the subsequent relaxation of lockdown restrictions more of the mining sector was opened, at times with pushback from those rightly concerned about mining workers’ health. This was helped by the mining sector having deep experience dealing with safety issues, many of which the public hardly know about.

It was the right decision to keep the sector open, and it enabled the mining sector to quickly rebound with the surge in commodity prices that ensued from the second quarter into the third quarter of 2020. Closure of the sector would require a long period to restart mining activity, because mining isn’t like other sectors where you find things the way you left them when they are not attended to for long periods. The 2012 platinum sector strike, which lasted about seven weeks, provided an indication of potential losses.

Second, the mineral resources & energy minister forged ahead trying to find ways to shape the future of the mining sector and how it will contribute to the economic recovery beyond Covid-19, among other measures by inviting a group of private sector economists, myself included, to contribute and stress test their ideas. With the government so often accused of not giving the private sector a hearing, the move from minister Gwede Mantashe gave me hope that there is a willingness to listen and take good advice whenever it is available. Even with all health protocols observed, the risk taken by the participants was worth it, because there has been progress in thought, decision-making and execution. Unfortunately, the government's communication has been poor in highlighting this.

The second example where poor government communication paves the way to the erosion of confidence is spectrum allocation, which has been delayed as regulator Icasa was taken to court on the process and lost. Most fellow economists and the investor community were disappointed, and rightly so, as this was a litmus test for whether the government can stick to its timelines.

While the delay in spectrum auctioning does not bode well for building confidence, this interpretation is not complete and misses a crucial aspect that is important for investors: unfair or procedurally flawed decisions by either government or any regulator can be taken on judicial review and the matter will be adjudicated fairly.

This demonstrates that the legal framework is strong enough to protect investors, one of the factors the investor community has always said is important for investment. Granted, the correct procedure could have been followed the first time, but the government missed an opportunity to show that this demonstrates the strength of the law.  

The two examples I have highlighted show impatience with economic reforms, bad decision-making to prevent delays on the part of the regulator, missing or a failure to acknowledge progress when it exists, and government failure to communicate and set the narrative. Economic policy narratives drive investor sentiment, which ultimately drives actual investor behaviour. The government must rewire its communication apparatus to help investors differentiate between perceived and real risks.