The dictionary defines an economy as “any practical adjustment, organization or administration of affairs or resources, especially of industrial or financial affairs of the state.” “Economic determinism” declares that “all human activities, particularly political and social institutions, have their ultimate origin in economic conditions and motivation”.
It is the South African economy that is the Achilles heel of the ruling African National Congress (ANC), an economy that has drawn the ire of the rating agencies and the wealthy business class who in the eighties met the ANC in distant lands and were assured that their assets would remain untouched. But the promises were hollow: ANC government intransigence and corruption became so endemic, and the arrogance so flagrant that the economy has morphed from strength to frailty, while the rating agencies have made flying visits to inspect the intransigence at close range. Muted intolerance within the business sector has now turned to stridency: the rand lost around 37% to the dollar over the past 18 months, and dropped nearly 10% overnight after the president’s arbitrary firing of the finance minister in December 2015. The currency recovered but confidence was jolted.
South Africa’s president usually displays a flippant attitude to economic matters. He appears to view the country’s fiscus as his private piggy bank, to be dipped into at whim. The public outrage at the use of state funds to dolly up his private residence in Kwa Zulu Natal culminated in a Constitutional Court judgment condemning the president (and Parliament for supporting him) for ignoring the Public Protector’s recommendations that he pay back the money that was wantonly spent, which instruction he had blithely ignored. Instead of stepping down after the judgment, he apologized and declared that his “approach” had been wrong. Impeachment proceedings were defeated when a secret vote was refused by Parliament’s (ANC) Speaker and many in his own party who had so passionately called for his resignation were cowed into submission “in order to keep the party united”. There are further rumblings and many have smelt blood in the water, but whether Zuma leaves or not, the SA economy continues to totter.
The country now enters deep economic waters. There are serious economic fault lines, most of which are intractable. Economies consist of people and their activities and the South African situation is no different. But it has its peculiarities – its first-world component sits uneasily next to a third world morass where virtually anything goes. At the heart of the success of any economy is the standard of the norms and values of the participants, and it is a lack of integrity and accountability of, in particular, the government and, in general, many others that is ravaging the SA economy.
Norms and values
Let us examine myriad examples of the warped norms undermining South Africa’s economic strength. A fish rots from the head, and this succinct analogy applies to the continued survival of a corrupt presidency and its party. The arrival on the scene of a family of Indian businessmen – the Guptas – who proceeded to enrich themselves and their mentors within ruling circles, elicited no censure from the governing party, let alone the president. This family’s wealth was irresistible to those looking out for themselves while occupying high office, and the Guptas’ brazen efforts to manipulate the composition of the country’s cabinet were only exposed when some within the ruling party refused to take up their seductive proposals. The family’s takeover by proxy of many of South Africa’s state enterprises was referred to as the “capture” of the SA economy by observers.
In particular, the president’s family’s financial connections with this Indian family were shown to be many and varied, and purposely complex. When the president’s son’s exotic lifestyle was exposed by the press, Mr. Zuma told an audience in East London that he was “grateful to the Guptas because they had given Duduzane (his son) a “chance in life” as he struggled to find work! A chance in life? Struggled to find work? President Zuma said this, in public, with a straight face while his son, aged 28, was reported in the Sowetan newspaper (28.2.11) to be living in a R4 million home in Johannesburg’s exclusive suburb of Saxonwold where he had full use of a fleet of cars including a R2 million Porsche. He complained a month later that he would have been “further along” in the riches game if his name had not been Zuma. He declared he would have taken the “tenderpreneur route” and “there would have been plundering”. In 2015, the High Court in Pretoria found that President Zuma’s nephew Khulubuse Zuma (and Nelson Mandela’s grandson) who took over a mine with Black Empowerment funds, had stripped it bare, leaving thousands of workers unpaid. “They could not care at all about the damage they caused” said the presiding judge.
A few years later, this same gentleman was reported to be sitting on a R100 billion oil fortune in the Democratic Republic of the Congo (DRC) “which he allegedly obtained with the help of his uncle President Jacob Zuma.” (City Press 18.5.2014). It has now been reported that Khulubuse is connected to a company mentioned in the recent secret funds expose referred to as the Panama Papers. It appears that the Guptas have fled the country after SA’s banking system refused to service the family’s bank accounts, but the damage has been done.
And so it goes on. This frame of mind, this attitude is symptomatic of many South Africans operating within the SA economy. Their goal is to enjoy the benefits of the hard work of others and, yes, to plunder. They contribute nothing to the country, they create nothing. They are consumers, not producers. In many instances, they destroy everything they touch and they have no shame about their way of life. On another level, around 18 million citizens live on welfare. It is a fact that young girls purposely conceive children so they can collect the welfare payment. There is huge fraud with dead people’s relatives collecting the deceased’s cheque for years because no death certificates have been issued.
Survival
In some sectors of the economy, survival is the most that can be hoped for. A company like ASA Metals for example is in “business rescue”. As a chrome producer, its market has been severely curtailed by the world’s recession. But then there are the local scourges. A Chinese company, it has clearly learnt the hard way about investing in South Africa. It has suffered a unprotected strike that cost the company R187 million ,community unrest surrounding the mine with roads blockaded and access to the company’s property affected, and lengthy government–ordered safety stoppages which cost R156 million in revenue loss. But what is interesting is what has happened within the mine’s surrounds. “Mining officials from a number of mines in the area spoke of communities fracturing into self-serving groups which were then hijacked by individuals seeking to benefit themselves at the expense of the broader community, resulting in unrealistic demands that the company could not meet, with protests becoming increasingly violent”.(Business Day 18.3.2016)
Glencore, one of the world’s largest diversified natural resource companies, recently laid criminal charges against the trade union AMCU after offices and trucks were torched. This was the tenth such incident since employees laid down tools last month. The trade unions clearly have no respect for foreign companies who have put their money into South Africa because the country is rich in mineral resources. The union rabble appreciates nothing. Compare this attitude to the Japanese, a nation which has no natural resources, endures earthquakes and tsunamis and consists of a series of geographically unstable islands. Yet it is a world economic power. But it has the people – diligent, disciplined and hardworking who would never dream of torching a foreign company’s premises, let alone go on strike for weeks on end, demanding what they are certainly not worth.
While South Africa burns, the president issues statements about perceived racism, and he tells his gullible supporters that the land “stolen” by the whites will be returned to them.
Our water sources are so polluted that economists declare either the water supply must be privatized (read given to competent people, as in normal countries) or South Africans will die of thirst. Currently the Department of Water Affairs and Sanitation pumps 100 megaliters of polluted saltwater daily into the Witwatersrand’s water system. In the next three months, this figure will increase to more than 180 megaliters per day. This water eventually lands up in the Vaal River system and accounts for more than 20% of that system’s pollution. The rest comes from sewage structures that have collapsed because of lack of maintenance. Around 40% of the country’s population and 60% of South Africa’s economic activity is dependent on the Vaal river system.
Those whose culture never provided for a planned tomorrow are in charge of this country’s water. The full potential of our economy is hobbled by this lack of planning and lackadaisical attitude to detail. It is laziness in the extreme, even criminal neglect, which doesn’t seem to worry the ruling classes at all. This is further evidence of how human behaviour can make or break an economy. Can one imagine the Germans allowing their water systems to reach such a state?
Just over twenty years ago, South Africa was a functioning state with a reasonably strong economy and a solid and operative infrastructure, taking into account the existence of a burgeoning non-productive sector of the population at the time. Now the country is like a stale marzipan cake – the surface is firm and attractive but cut into it and the inside crumbles. Everything is falling apart. Our once proud post office is on its last legs. Fully functioning traffic lights are a thing of the past. There are 2,135 traffic lights in Johannesburg but the Johannesburg Roads Agency (JRA) has only one technician for every 170 traffic lights. So much time and money is lost when these lights fail. The economy suffers. No one in authority thinks to send out point officers to direct the traffic, as would happen in normal societies. There is little sense of responsibility or accountability within the ANC-appointed civil service. The JRA spends on average nearly R400 000 a month fixing vandalized traffic lights. The copper in robots is being phased out due to theft. Before the coming to power of the ANC, did this happen? These are new crimes, as are hundreds of others, from cash in transit heists, the hijacking of buildings, the storming and robbing of shopping malls, the forging of passports and identity documents, bribery, corruption and nepotism, the claiming and illegal occupation of productive farmland, the destruction of farms already redistributed, theft from state institutions, the leaking of school tests, the burning and trashing of universities, and numerous cases of ignoring court orders. The list is endless.
No economy can survive such ransacking. It’s a free for all. A probe has been launched into the leave taken by the commanding officer of a Johannesburg police station – since February 2014, he has taken 156 days. The economy cannot survive a government which refused to declare the recent drought a disaster when the weather proved it to be one of the worst droughts in memory. Millions of liters of water and tons of animal feed were provided to ordinary citizens and to farmers by members of the public who stepped in to avoid serious disaster. The government appears oblivious to the country’s looming food insecurity, a direct result of farmers unable to save their cattle and crops.
South Africa cannot survive the sabotage of boreholes in country towns, where the diesel that powers the pumps is stolen. (What happened to the thieves?) It cannot survive the exodus of teachers, nurses and doctors: last year 17 752 SA teachers were working abroad. The Organization of Economic Development (OECD) says South Africa is losing 11 000 skilled workers per year to overseas employment in sectors such as mining, protection services, sales, building and extraction.
The country’s rail commuter services are in a serious state of decline caused by “decades of under-investment, outdated technology, the loss of critical skills and deferred maintenance”. (Business Day 23.3.16). Former officials of the Land Bank spent R24 million – so desperately needed for agriculture – on cars, homes and farms for themselves. Where is the oversight? Who is auditing the bank in time to prevent this?
South Africa will be lucky to avoid junk status by the rating agencies. The masses will continue to believe the ANC’s nonsense about creating millions of jobs when it is the private sector that provides most new employment. For the last twenty years the ANC’s supporters get a free T-shirt and some takeaway food at pre-election rallies, but there are few jobs. This is our tragedy. Based on current growth, it is estimated that by 2030, for the age group 0 – 24, there will be 91 blacks, 7 coloureds, one Asian and one white in every group of 100 youngsters. (Stats SA).
It is a pity that the billionaire businessmen now crying foul about the economy didn’t speak up sooner! The rot set in many moons ago. The pattern was evident and the mindset has always been predictable. There is not one element within the economy which the ANC can say it improved. There was never any “moral high ground” that has now been lost under Zuma. It didn’t ever exist. The ANC came to power through terror and violence, and its integrity is non-existent. Replacing Zuma with someone else from the ANC is like changing the deck chairs on the Titanic.
Only a completely new government can turn things around. A meritocracy of honest people is desperately needed. We must hope for that.