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Here is something I wrote during the April general election – with a few minor edits. It is becoming increasingly relevant, as “the left” is backed into a corner and the Malema style populists seem to hold sway.

Bread and Circuses

Opinion polls indicate that the ruling African National Congress will shrug off five years of bitter leadership struggles and a sea of bad news to emerge from the election with a close to two-thirds majority.

But what it has cost for the ANC to turn the headwinds into tailwinds will be a hard price to pay.

The view divides neatly and sharply between the shorter term and the medium-to-longer term.

SHORT TERM

For some time South African political risk has been elevated due to a number of factors associated with the rise of a political faction around current ANC president and erstwhile country president, Jacob Zuma. The concerns have included:

  1. Corruption and racketeering charges against Jacob Zuma have raised questions about the probity of the candidate and his supporters as well as elevated a damaging conflict between the rule of law and the ruling party;
  2. The stability and predictability of macro-economic policy has been in question because of the centrality of the support of the Congress of South African Trade Unions and the South African Communist Party.

In the short-term, Zuma’s legal travails have disappeared because his defence team has convinced the National Prosecuting Authority to drop charges. Intelligence monitoring tapes produced by Zuma’s defence team clearly showed that the timing of the investigation and formulation of charges against Zuma were significantly influenced by supporters of Thabo Mbeki to the detriment of Zuma’s candidacy for president of the ANC and the country. While questions about the probity of Zuma will remain, the overhang of an instability provoking trial is now gone, as is the conflict between the ruling party and the justice system.

Additionally, the flow of information from key decision making forums within the African National Congress and ‘The Alliance’ (forums consisting of the ANC, Cosatu and the SACP) have started to indicate that a previously resurgent left wing is now facing headwinds on both policy and representivity fronts. The proposal for a ‘super cabinet’ that would essentially be a central planning commission has been significantly downgraded as have proposals to change monetary policy (away from inflation targeting) and to massively increase the already extensive social grant system. In addition, it appears increasingly unlikely that key communists and worker leaders will occupy the most important cabinet positions in the new government.

Thus, on the face of it and in the short term, South African politics and political risk should not remain a major concern in the aftermath of this week’s election. But delving deeper, and over a longer term – and perhaps with a longer investment horizon – I am not quite as sanguine.

LONGER TERM

While my general view of South Africa is improved by these positive outcomes, I believe it is prudent to flag one aspect, a potentially central aspect,  of risk in the longer term.

Under Thabo Mbeki and Nelson Mandela politics and leadership within the African National Congress and South Africa were exercised in a deliberately sober and cautious manner. Anti-populism and concerns to downplay any ‘cult of the personality’ were always high on the agenda.

These were hidden virtues that only become apparent now, in the moment of crescendo of the new ANC’s campaign of evangelical political razzmatazz focussed on the rural poor. Faced with opposition from the Congress of the People Party – formed in response to the purge of Mbeki from government and his supporters from the ANC leadership structures –  the ANC has thrust downwards and outwards for new areas of support.  While the ANC has not abandoned its urban, sophisticated working class support it has definitely set a ‘bread and circuses’ caravan amongst the unemployed and rural poor.

The combination of the ANC’s appeals to ethnic Zulus, various illiberal hints about the death penalty and gays, a strong push to be identified with the evangelical churches, a focus on tribal traditionalism epitomised by Zuma’s polygamy and traditional dress and the espousal – at a rhetorical level anyway – of economic populism is an all too familiar post-colonial African recipe. There has been a raft of implicitly and explicitly negative international news coverage about Jacob Zuma and the ANC’s election campaign – epitomised by this week’s “Africa’s next Big Man” cover story in The Economist. While some of the more virulent attacks on Zuma’s ethnic Zulu traditionalism are clearly racist or xenophobic a real and legitimate concern seems to permeate the coverage and market concerns: is this ethnic and economic populism newly espoused by the ANC different from that espoused thirty years ago in Congo and more recently in Zimbabwe?

The traditional logic of the ANC’s alliance with the South African Communist Party and the Congress of South African Trade Unions is the belief that they protect each other from the worst excesses of their individual character and constitution. The undesirability of a total victory of either the communists or organised labour is perhaps more obvious than that of the African National Congress. The multi-class and  multiethnic nature of the African National Congress national liberation movement has always made it vulnerable to populism and hijack by opportunists primarily interested in their own ability to accumulate wealth. The SACP and Cosatu have claimed the Polokwane victory as the moment they took back control of the revolution from the 1996 hijack by “monopoly capital in alliance with the comprador bourgeoisie” (translation: foreign investors and emerging black business). However, it seems to me that what actually happened at Polokwane was a victory of a rickety alliance between those left wing elements and aspects of aspirant and emergent domestic business who had somehow failed under Mandela and Mbeki to accumulate adequately and conservative Africanists within the ANC.

The left has profoundly miscalculated it’s strength in this alliance. They thought they were riding the other interests to victory, but I think they, in their turn, were being ridden by something altogether more unsettling.

This statement from the Young Communist League of South Africa (YCLSA) in the province of Gauteng calls on “parents to intensify efforts in teaching their children the dangers of learning from Julius” Malema.

Its worth a read – if for nothing else but to see how crazy things are getting between the left-wing of the ruling alliance and the crony capitalists.

Here the YCLSA accuses Julius Malema of being a “tender-preneur”, which is “a parasitic petty capitalist who relies on political proximity to different spheres of government and associated tenders” for their leg up in the world.

This is the real political divide in South Africa today. I think the lefties are on a hiding-to-nothing in the long term as I argue in various places but also here. I feel ambivalent about that. I hope they continue to curb some of the excesses of our rapidly evolving system of vampire capitalism from deep within the political wilderness they are returning to.

It’s getting a little like a tennis match. Eventually you can do well to watch the audience, heads swinging from-side-to-side to the sharp “pok” of the shots, to get a sense of how things are going.

As I was reading the article by Cronin, again from Umsebenzi Online, that came out today I groaned. It seemed the deputy secretary general of the SACP who also wears the hat of the deputy minister of Transport was going to kowtow to Malema’s racial bullying and appeals to authority, which in turn was a response to Cronin’s take on the ANC Youth League’s call for the nationalisation of mines that I cover here.

It was difficult to hold out through the comrade’s niceties, etiquette  and jargon – it’s exhausting at the best of times.

But lo! Just in time. If you can plough through the forelock tugging and coded jousting* to the end of paragraph seventeen:

If you disconnect a class analysis from a race analysis you run the danger of wittingly or unwittingly serving the interests of monopoly capital in SA and its comprador and parasitic allies – many of whom have been close to, or actually within our movement.

Well, no guessing which interests Cronin is suggesting Malema is serving – wittingly or unwittingly.

The long and the short of Cronin’s newest contribution is he still thinks that nationalisation of the mines (as he argued in his original critique) is a bad idea; but that more onerous and creative “beneficiation” obligations should be linked to the licences.

His argument is – as always – useful and rational.

My problem remains that the poles of the debate are being defined by the ANC Youth League president and the deputy secretary general of the South African Communist Party.

Hello? – as a 13 year old girl I know might say. Our mining sector has been shrinking for ten years while the equivalent sector internationally has been growing about 5% a year (in response to the so called Commodity Super-Cycle).

The communists and the crony-capitalist aspirants can only extract so much value (for their different, perhaps opposite, purposes) from the sector before investment flows to where the return is better.

Didn’t anyone ever tell them the parable of the goose and the golden egg?

There was this couple. They had a goose. It laid a single golden egg every day. After some years they became disatisfied and wanted more gold. So they cut the goose open to get at the motherload. But it was just a goose on the inside. So they starved to death … and then burned in purgatory forever. (Actually I added that last bit –  it was more a hope on my part.)

* I don’t know what I am doing sneering at Cronin’s writing style! Just read a collection of his poetry (like: Inside) and you will realise that Cronin is unique amongst the comrades in that he has a laconic and comely turn of phrase. My irritation was actually about the fact that I thought – incorrectly – that he had bowed to Malema’s populist and racist assault.

The harmful effects of BEE

John Kane Berman addresses the trade union Solidarity about their legal struggles against Black Economic Empowerment. John Kane Berman is CEO of the South African Institute of Race Relations. The institute has a solid history of liberal opposition to Apartheid as well as liberal opposition to the ANC. In this piece Berman is guided by Moeletsi Mbeki’s Architects of Poverty – see my  review here. Kane Berman’s article/speech is well worth a read. He is particularly persuasive about BEE being injurious to those it is supposed to benefit; that black people become dependent on the state while white people, previous beneficiaries of Apartheid, are forced to fend for themselves and thereby develop their own creativity and entrepreneurship. I am not sure I buy his dismissal of the whole edifice of redress, but this is feisty and iconoclastic, and therefore interesting. (click on headline for original article).

It is, inescapably, time for a little weekend editorialising.

Yesterday I summarised the main content of Jeremy Cronin’s criticism of  the ANC Youth League’s “nationalise the mines!” call. In as far as it is possible I summarised Julius Malema’s response to Cronin – his comments consisted primarily of  racial abuse and pompous meandering. This morning I woke filled with the urgent need to write something more and to use a tone that was ever so slightly sharper.

There are three conclusions or indicators that seem to me to shine (or rather ‘gleam balefully’) through this exchange.

1. The Zuma government and ANC are dangerously weak at the centre

Debate and the free flow of ideas is almost always a good thing.

But this isn’t debate or the free flow of ideas. Malema is not putting forward an argument. There are no ideas flowing freely between Cronin and Malema.  Malema is (essentially) racially abusing someone who has entered into the  ‘healthy public debate’ originally called for by the ANC Youth League. And there is no centre of leadership that seems able to repudiate this, to put some kind of limitation on Malema. Where is Jacob Zuma? Where is Blade Nzimande? Where is Gwede Mantashe? Why shouldn’t foreign investors,  fund managers,  and ordinary citizens not conclude that Malema represents the “real ANC”? He is ex-officio on the NEC and the NWC; he is clearly a powerful and influential ANC politician in his own right – as I argue here; he appears to have been blessed and anointed by Jacob Zuma on several occasions?

It is becoming inescapable: the reason for the level and tone of bullying racial abuse that passes for “debate” about race, nationalisation, black management in the parastatals – you name it – is that there are NO guiding ideas coming from the centre. At this level it is becoming clear that, indeed, the centre cannot hold.

2. Race to the finish

Jeremy Cronin is not some Jimmy-white-racist off the street that Malema should feel safe to abuse and dismiss. Cronin is a revered ANC and SACP leader, poet, intellectual, ex-political prisoner. If Malema can dismiss him as a “white Messiah” a “reactionary” and a racist – with the implicit support of the whole edifice of Zuma’s government and the ANC – why would any white South African, or white non-South African for that matter, believe that they might have something to offer up to the country, to the debate, to the future?

The “race card” played with such impunity by ANC and government leaders – and other important South Africans – is becoming a bizarre obscenity that has long undermined any legitimate attempt to combat racism. Crying wolf about racism means that we no-longer recognise it when we see it. It is becoming much safer to assume that the cry “racism” is an attempt to throw off pursuit or criticism.

3. Malema is a looter and Cronin an imperfect builder

It appears (to me anyway) that Malema represents those who hope to leverage their “race” (using the imperative for affirmative action, black economic empowerment and transformation more generally) and the general dominance of the ANC in government, to loot the state and ransack the economy.

The Eskom/Bobby Godsell/Jacob Maroga debacle, which I cover here exposed the Black Management Forum and the ANC Youth League as being on the side of crony capitalism and Cosatu as being on the side of development and the effective use of state assets. The clash between Malema and Cronin emphasises the point even more clearly. Everything that Malema argues (or rather bombastically threatens) implies that he claims to speak for “black people” as “black people” – with all the attendant historical disadvantage and current entitlement to redress.  Everything that Cronin says is about perfecting a developmental strategy to address poverty and unemployment.

Now a difficulty for me here is that I think Cronin’s premise is wrong and in any other situation I would rather argue about his implicit hostility to business and markets. However, my argument with Cronin is one about strategies and tactics – and I would have no quibble with the end goal of rolling-back poverty, inequality and unemployment and the creation of a better society.

Malema, on the other hand, wants nothing more than his and his cronies turn at the trough.  There is no evidence or reference to social goals in Malema’s bombast; there is only a threatening racial antagonism, a chauvinistic racial solidarity and a bullying demand to be given more of the assets of this state and economy to dispose of in consumption.

Late yesterday the  South African Communist Party came out in defence of its deputy secretary-general and it is probably appropriate to let them have the last word (and I will try not to quibble with the details):

20 November 2009

The SACP wishes to condemn in the strongest possible terms the insults that the President of the ANC Youth League hurled at our Deputy General Secretary, Cde Jeremy Cronin. We find it very strange and politically dishonest that whilst on the one hand the ANCYL calls for a debate on the question of nationalization yet, on the other hand, it throws insults on those who are taking up the debate.

As the SACP we shall not sink to this level of political and intellectual dishonesty, but instead we call upon the President of the ANCYL, or anyone for that matter, to engage the issues raised by Cde Cronin in a principled and comradely manner, without resorting to the Mbeki era type of insults against the leaders of our Party.

For the record, we invited the ANCYL to participate at our political school last month, to, amongst others, debate this matter of nationalization, but did not take up the invitation. We wish to further invite the ANCYL to feel free to respond in any of our publications to debate this and other matters, in a principled manner.

Issued by the SACP

Malesela Maleka
SACP Spokesperson – 082 226 1802

And from me (Nic) have a good weekend and thank you for your patience.

Jeremy Cronin argues in the SACP’s Umsebenzi Online that Julius Malema’s “off-the-wall sound-bites” give the impression that he is making up policy about nationalising mines “on the hoof” and “individualistically”. Jeremy then goes on to examine – and ultimately dismiss – Malema’s call for nationalisation of the mines. I examine his reasons below … but first:

Malema shot back, repudiating Jeremy Cronin’s statement as “openly reactionary, clothed in quasi-Marxist rhetoric, with potential to make a sorry and sad reflection of the true character of the South African Communist Party’s ideological steadfastness”. Catch that here as I fear it might be in the process of being removed from Julius’ official  Blog.

First Jeremy Cronin. He argues in his famously calm and persuasive manner that nationalisation doesn’t necessarily mean NATIONALISATION. Yes the call is rooted in the relevant paragraph of the Freedom Charter:

The People Shall Share in the Country’s Wealth!

    The national wealth of our country, the heritage of South Africans, shall be restored to the people;The mineral wealth beneath the soil, the Banks and monopoly industry shall be transferred to the ownership of the people as a whole;

Putting aside (my personal) question marks about the authenticity of the authoritative or democratic status of the Freedom Charter –  Jeremy Cronin says it is important to understand that the above paragraph was written in nationalisation’s heyday, including when “the apartheid regime was consolidating an extensive state-owned sector.”

For Cronin the Freedom Charter is most important in its assertion that “the people”, not “the government” shall govern.

Thus Cronin supports the idea that “the people” get the full benefit of the economic resources (not that there be a

narrow bureaucratic take-over by the state apparatus and the ruling party’s “deployees”

His choice words here clearly hints (in my opinion) that he thinks this is the version of nationalisation that Julius Malema is working towards.

The state owning important aspects of the economy says nothing, for Cronin, about whose interests are being served:

Hitler’s Nazi Germany, Mussolini’s fascist Italy, and Verwoerd’s apartheid South Africa all had extensive state ownership of key sectors of the economy.

So for Cronin the 2002 Mineral and Petroleum Resources Development Act has already gone some way to fulfilling the Freedom Charter’s objectives by explicitly stating:

that “South Africa’s mineral and petroleum resources belong to the nation and that the State is the custodian thereof ….  In other words, it is the “nation” (with the state as custodian) and not the mining companies that have legal ownership of the mineral resources beneath our soil.

Cronin argues nationalising:

mining houses in the current global and national recession might have the unintended consequence of simply bailing out indebted private capital, especially BEE mining interests

And further that:

Many of our gold mines in particular are increasingly depleted and unviable. Some reach costly depths of four kilometres below the surface. Recently the global gold price has bounced back, but it is telling that, unlike in the past, our gold output actually dropped by some 9% in the same period. Our gold mines are simply no longer able to respond dynamically to gold price rises.

Cronin (while making it clear he thinks “the people owe the mining houses absolutely nothing”) argues that the Bill of Rights sanctions expropriation but requires compensation at a price agreed by both parties or determined by the courts.

The bottom-line for Cronin is that nationalisation would do nothing to further the “national democratic struggle”. Rather it

would land the state with the burden of managing down many mining sectors in decline … burden the state with the responsibility for dealing with the massive (and historically ignored) cost of “externalities” – the grievous destruction that a century of robber-baron mining has inflicted on our environment. In the current conjuncture, nationalising the mining sector at this point would also probably unintentionally bale-out private capital, in a sector that is facing many challenges of sustainability. The problems of liquidity and indebtedness for BEE mining share-holders are particularly acute.

Malema’s angry response

Charmingly, Malema ends off his response with the comment:

We also do not need the permission of white political messiahs to think.

And before that closing paragraph there are oceans of vacuous rhetoric and bombastic bullying  you have to fight your way through to find an argument with which to engage.

Cronin is, according to Malema: White, reactionary, “counter progress”, not reflecting the views of the SACP, misunderstanding the Freedom Charter, “very sad”, guilty of isolating Malema from “the organisation” and he “reaches reactionary conclusions”.

I have picked Malema’s statement apart with some care and there is absolutely no content (that answers Cronin) except for bullying and vague appeals to authoritative historical ANC figures. This quote is a good summary of everything Julius Malema had to say:

It is sad that previously, those who look like us were considered intellectually inferior by the white supremacists, and today Comrade Jeremy reflects the same sentiment, even before he interacts with the views of the ANC YL.

Right near the end of his rambling abuse, Malema says (as if he has imperfectly copied it from somewhere else):

Part of the models we are considering as an approach to Nationalisation of Mines is the Botswana model where De Beers is a 50% partnership with the Botswana government and still pays royalties and tax.

Well that doesn’t sound too stupid (if you ignore the grammar) , but we will have to wait and see.

Conclusion

The great nationalisation debate is alive and well. Unfortunately the exchange examined here is between our most sensible communist and the exasperatingly gung-ho ANC Youth League leader – these are hardly realistic poles in the debate.

We will continue to focus on nationalisation and the state of the debate in the Ruling Alliance. But meanwhile, what is interesting in the exchange between Cronin and Malema is that both made it abundantly clear, that while they are not happy with the constraints, there would be no circumstances in which either would propose a solution that lies outside of  The Constitution and The Bill of Rights. How adult is that?

My impression is that the ruling ANC government thinks of corruption as one of the three biggest challenges we face – the other two being unemployment and effective social delivery.

I don’t think I could usually be accused of giving them too much benefit of the doubt, but I recognise the above statement is more about what I hope for than what is demonstrated by what this government says and does.

However, yesterday the government established a high profile commission on corruption just after Transparency International released its annual index.

In Transparency’s index, the 4 least corrupt countries are New Zeeland, Denmark, Singapore and Sweden and the most corrupt are Sudan, Myanmar, Afghanistan with our very own Somalia at the bottom of the log.

South Africa ranked 55 of 180 countries – so it could have been worse, but it could have been better.

Below is a screen-shot of where we come on the tables; but for the original report click on the image.

Just to make things easier, herewith the statement on the Summit released a few minutes ago:

Statement on the Alliance Summit

13-15 November 2009, Esselen Park, Ekurhuleni

The African National Congress, South African Communist Party, Congress of South African Trade Unions and the South African National Civic Organisation gathered at the Alliance Summit, in Esselen Park, Ekurhuleni.

The focus of the Summit was to review the implementation of the Programme of Action that emanated from our shared electoral platform in the 2009 Election Manifesto. The alliance thanked millions of our people for the confidence they have shown in the ANC led alliance and returning the ANC to government in the elections held in April 2009. Summit also reconfirmed the resolutions of the last Alliance Summit held in May 2008 and the Alliance Economic Summit held in October 2008.

The Summit took place in the midst of the global economic crisis, which has had a profound impact on the workers and the poor majority of our people: nearly a million jobs have been lost in the formal sector in the course of this year. There have been company closures, mass layoffs and deepening indebtedness for many South Africans.

Against this background, in the coming period we shall be working together as the Alliance on the following key programmatic areas:

Economy development: All Alliance partners reaffirmed the commitment to ensuring the vigorous implementation of the NEDLAC Framework Agreement on South Africa Response to the Global Economic Crisis. The Summit agreed that there is a need to link our short-term counter-cyclical response with our long term objectives of transforming the structure of the economy and moving to a different growth path. We support Government’s infrastructure investment programme as key component of South Africa’s response to the crisis.

The scale and scope of industrial policy needs to be increased, and funding needs to be increased commensurately. The summit agreed that the Alliance Task Team on macro-economic policy must remain seized with reviewing and broadening the mandate of the Reserve Bank.

National Planning Commission: The Alliance agreed with the broad thrust of the Alliance discussion document on the Green Paper on National Strategic Planning. In particular we agreed that there is a need for the National Planning Commission (NPC) located in the Presidency, which will be chaired by the Minister in the Presidency for the NPC and whose main responsibility will be to ensure an integrated strategic planning across government.

Towards energy security and sustainability: The summit recognised the importance of energy security in order to advance the developmental agenda of the country. The summit also noted with concern that the successive tariff increase requests through the multi year price determination by Eskom will negatively impact on society, the economy and jobs. The summit therefore supported efforts to have the tariff increases minimised.

The summit also agreed that we will ensure that government-led energy policies place greater emphasis on sustainable and renewable technologies and the creation of green jobs. We also agreed that our energy mix must contribute to our international obligations to promote a cleaner environment and mitigate the effects of climate change. The alliance will conduct a campaign for energy efficiencies and to promote the use of alternative energy sources in society.

Rural development: The Summit agreed to work towards a comprehensive approach to rural development which will focus on the following: food security, transformation of the apartheid spatial reality, expansion of provision of social and economic infrastructure, the plight of farm dwellers and farm workers and systematic promotion of co-operatives.

Education: The Summit reaffirmed education as a key priority of our movement. A mass campaign for basic education, public sector workers will play a role in this campaign. The ANC-led Alliance will launch a quality education and teaching for all – to be launched before Alliance Education Transformation Summit next year. The Campaign will mobilize our communities, the parents, the learners, the teachers and government education of officials. This will include the enforcement of “non-negotiables” agreed to at the previous Alliance Education Summit.

With regard to our approach to higher education and training the Summit agreed to continue with a process to realign and build capacity for FET colleges and align the SETA’s to produce skills to meet our developmental objectives. We support the call and will participate dynamically in government led summits on Higher Education and Skills development to be convened in 2010.

Health: The transformation of the national health system will require strategic leadership through the Alliance to mobilize society around a social compact for health care transformation. Central to the implementation of the Ten-Point Plan for health care transformation is organization and mobilization of our people.

In the period ahead we will, working together with government and SANAC, mount a campaign for HIV and AIDS prevention and treatment, which includes campaign for HIV/AIDS Testing and Counseling, involving mobilization of our society.

We will also mount an ANC-led Alliance campaign on NHI – which will involve public education, and engagements with various sectors of society around the vision and the principles of NHI. This campaign will also emphasise improvement in the quality of health care in our health institutions.

Local government: The Summit supports the development of Local Government’s “Turn Around Strategy Framework”, led and driven by the ANC led Alliance and implemented by Government at all levels, through the full involvement of communities. The intentions of the Turn Around Strategy are to deliver quality, affordable and reliable services to South Africans. An Alliance Summit on Local Government will be held early next year, to focus on service delivery.

ANC Centenary Preparations The Summit noted the centenary celebrations of the ANC and we affirmed our support for the preparations towards 2012, which will not be just ANC-led Alliance celebrations but for our people as a whole.

2010 Soccer World Cup Next year our country will host one of the biggest sporting event in the world, the FIFA Soccer World Cup. We call on all South Africans to rally behind Bafana Bafana, our National Team.

We wish all South Africans a happy and safe festive seasons and a prosperous new year. We call on those who will be on the road to exercise extreme caution to minimize road carnage.

Issued by:
African National Congress
South African Communist Party
Congress of South African Trade Unions
South African National Civic Organisation

Enquiries:
Jackson Mthembu (ANC National Spokesperson) 0823708401
Malesela Maleka (SACP Spokesperson) 0822261802
Patrick Craven (COSATU Spokesperson) 0828217456
Dumisani Mthalane (SANCO Spokesperson) 0797647257

The Alliance Summit on the weekend has significantly reduced confusion about policy and risk – although monetary policy is still under review.

Background

  1. “The Alliance”  met at Esselen Park, Ekurhuleni  this weekend.
  2. This meeting consisted of the the African National Congress (ANC), the South African Communist Party (SACP), the Congress of South African Trade Unions (COSATU), and the South African National Civic Association (SANCO).
  3. According to a joint communique press release the summit was to be “attended by the ANC National Executive Committee, led by its President, cde Jacob Zuma, the Central Committee of the SACP, led by its General Secretary, cde Blade Nzimande, the Central Executive Committee of COSATU, led by its General Secretary, cde Zwelinzima Vavi, and lastly, SANCO National Executive Committee, led by its President cde Ruth Bhengu.”

Rumours

The big rumour was that Gwede Mantashe  attempted to achieve acceptance that “The Alliance” and not “The ANC” should be the centre of policy making – I doubt this, but it is what the Sunday papers were saying.  The same rumour claims that Julius Malema led the charge of ANC traditionalists against this sacrilege ….. difficult to tell if it is true (Mantashe said the story was cooked up) but it gives an interesting twist to the ongoing rehabilitation of the ANC Youth League president.

Reports

  1. Cosatu and the SACP lost the battle around Trevor Manuel and the NPC. The National Planning Commission, located in the presidency and headed by Trevor Manuel but also consisting of a panel of independent experts and charged with the responsibility for integrated strategic planning across government is now a fait accompli. This is how Trevor Manuel conceived of his mandate in the Green Paper and it seems Trevor Manuel and the ANC have won the day against Cosatu and SACP criticism.
  2. There was a strong indication that the ANC had agreed to re-examine the South African Reserve Bank mandate. Mantashe  announced after the summit that they had discussed “how best the Reserve Bank should talk to the development priorities of the state …. The summit agreed that the alliance task team on macroeconomic policy must remain seized with reviewing and broadening the mandate of the Reserve Bank.” This is carefully phrased and is unlikely to panic the markets – but risks remain and financial markets and sovereign risk agencies will be watching this space.
  3. The summit clearly opposed the electricity hikes proposed by Eskom: “We are totally uncomfortable with the 45 percent increase. The summit also noted with concern that the successive tariff increase requests through the multi-year price determination by Eskom will negatively impact on society, the economy and jobs. The summit therefore supported efforts to have the tariff increases minimised,” said Gwede Mantashe in the post Summit interview.  This is likely to be popular with almost every constituency – except for those who believe that Eskom is best left to manage its own affairs …. not a significant demographic at this stage of proceedings.

The bottom line

The ANC has usefully asserted its authority.

The idea that “The Alliance” could or should determine details of government policy was becoming deeply disturbing and untenable. This is not only because of the policies espoused by Cosatu and the SACP are generally seen by investors and businesses as hostile, but also because there appeared to be no centre to policy making, and therefore no predictability – and therefore a serious risk overhang.

In an environment where policy making has no centre we started to hear the worst and most self-interested voices raised bombastically and claiming authority. The Alliance Summit went some way towards increasing investors ability to dismiss the noise.

Something very interesting on the sideline of the resignation of Bobby Godsell as chairman of the Eskom board and the non-resignation of Jacob Maroga as CEO.

If a situation is impossibly confusing, or your view is obscured for some reason, then look around and check where others are looking – look at the stances they adopt.

The Black Management Forum and the ANC Youth League have lined up to accuse Godsell and the Eskom board of racism; the state-owned enterprises have become a  “slaughterhouse” for black professionals bemoans the BMF.

On the other hand, and to its enormous credit, you have Cosatu (in the person of Zwelinzima Vavi) defending Godsell and the attempts (Godsell has led) to make Eskom equal to the task of providing South Africa with adequate and sustainable power.

Cosatu versus the BMF and the ANCYL? It’s not often that organisations reflect their ideology and class interests so precisely.

This situation  looks very much like the industrial working class versus crony capitalist wannabes.

Cosatu is still  controlled by the interests of workers employed in the real economy of minerals extraction, power generation and manufacturing (although these interests compete with those of public sector workers who often have different imperatives). The Black Management Forum and the ANC Youth League are political formations whose only interest is in ”leveraging’ preferential access to the state for the purpose of the advancement of its members.

Zwelinzima Vavi must be deeply concerned about economic growth – it is the imperative placed on him by the position he occupies. The imperative of the BMF (and to some degree, the ANCYL) is to maximise the advantage its their members derive from BBBEE and employment equity laws – and from their proximity to political power.

I think this fault line is fundamental to where we are heading and struggles here will constantly alter and trim our direction. I also think, in this instance, Cosatu is on the side of the angels; standing, as it often does, against the alarming spread of vampire capitalism in this country.

PREPARE YOURSELF

Take a deep breath, put your shoulders back and look  through the frenzy.

Reading the Democratic Alliance’s Diane Kohler Barnard pour scorn on the “rotund” and “Idi Amin-like” Julius Malema I couldn’t help but think that she is leaving herself as few choices as J.M. Coetzee leaves his fictional characters.julius-malema

Julius Malema is a powerful contender for future ANC leadership – and is already a powerful politician. I think his rise to lead the ANC and possibly the country may be unstoppable. I fear that Barnard’s feisty and admirable rhetoric leaves her, and those she represents, no paths upon which she might ride her high horse back, when this is all over.

Barnard, recounting how Malema allegedly attempted to bully his way through a traffic violation with : “Don’t you know who I am?” arrogance, says:

[Julius Malema is] the man who believes there is one law for South African citizens, yet another law for him. He is the man who will slap a neighbour who has the temerity to ask that the music at his housewarming be turned down at 3 in the morning. He is the man who Julius Malemahas turned hate-speech into an art form […]

Barnard’s anger is palpable as she sneeringly reminds us that Malema has said he would fire Thabo Mbeki and any ANC parliamentarian “should he get the urge”

Malema’s ego and contempt for the law the rest of us must respect, is unparalleled […] Is this, to quote the President, someone you honestly believe is a ‘leader in the making – worthy of inheriting the ANC”?

Well, is he “a leader in the making”? Is he “worthy of inheriting the ANC?”

The answer to the first question is: “yes” – more about that below.

The answer to the second question is irrelevant. Could we agree what this historical artefact: “the ANC”  is; could we agree on what its characteristics and values are? Could anyone make this judgement call?

Frankly,  history can give a fig whether you or I think Julius Malema is worthy of inheriting the ANC – or, quite frankly, whether the ANC is worthy of  inheriting Julius Malema.

This is not about what you or I think or believe or hope for; it is also not about what Diane Kohler Barnard and the Democratic Alliance and those they represent hope for and hope to accomplish.

This is not, unfortunately,  about how things aught to be, or about what is fair and just in the moral universe.

This is about how things are; this is history as a raging torrent.

A de facto leader

Assuming “leader” is neither complimentary nor derogatory  – the word can be either or neither – it is clear that Malema more than fits the common sense meaning of the term.

  • Malema has been hot-housed as a boy in ANC training institutions and groomed for leadership after  joining the organisation at the point of its unbanning in about 1990;
  • He has led the two key feeder organisations, the Congress of South African Students and the ANC Youth League;
  • He has become the crucial port of call for politicians and individuals hoping to build support for any initiative that requires ANC support;
  • He personally played an important role in the rise to dominance of the faction that backed Zuma for president;
  • He is the only ANC politician – aside from Jacob Zuma – who has a significant and deliverable mass base; both numerous and militant;
  • His rhetoric (in my opinion) is closer to the views of the core constituency of the ANC than the publicly expressed views of any other South African politician;
  • His name/face recognition is almost unparalleled.

Julius Malema was born in the Northern Transvaal (Limpopo Province) and raised, like Jacob Zuma, by a single mother who worked as a domestic worker. This is the hard school of South African life and these kinds of  credentials are still highly valued in the ANC.

In the last few weeks Julius Malema has come over all statesmanlike:

  • He acknowledged Thabo Mbeki’s key leadership role – of the ANC and the country;
  • He declared the rector of the University of the Free State “one of our own” – thereby helping to defuse growing racial conflict on that campus.

This is deliberate marketing, evolving the brand [firebrand to Dollar Brand …] while the news media, opposition politics and certain dinner table discussions remain obsessed with each new Malema gaff or his latest confrontational tirade.

It is striking how similar the Julius Malema story is to the Jacob Zuma story.

The human need is to normalise the inevitable or the inescapable present. Three years ago media and dinner table sentiment about Jacob Zuma was almost identical to the sentiment held by the same groups of people about Julius Malema today.

The central dilemma in J.M. Coetzee’s Disgrace.

Is accepting – and trying to get your head around – the present and future leadership role of Julius Malema the moral equivalent of  the choices made by J.M Coetzee’s Lucy, the daughter of main character David Lurie in the 1999 novel Disgrace? Lucy (who is white) is raped and ends up seeking and receiving protection (and more) from Petrus (who is black) who is closely associated with those who raped her in the first place. Even if you have not read Disgrace I think you can understand the dilemma.

Is Julius Malema the Great Defiler – of our constitution, of the bill of rights and of our hopes for non-racialism?

No more than that previous rape accused, Jacob Zuma.

It sometimes feels that Julius Malema is deliberately teasing; upping the ante to cause his opponents to shriek ever louder and sound ever more shrill.

I have no idea whether he has the sense of humour or sense of the absurd to be deliberately inviting the kind of scorn he receives from those Dianne Kholer Barnard represents – and a smattering of those she hopes to represent.

But I have no doubt that it will be Julius Malema who laughs the longest.

Alan Boesak , the cleric and pardoned fraudster, resigned from Cope and the Western Cape provincial legislature today.

The once hopeful potential opposition to the ANC seems to be in a terminal state of decline, with several key leadership figures having resigned over the last few months.

Boesak was always going to be a problem for Cope and his action today proves the point of those who criticised Cope for appointing him in the first place.

It’s a pity, because the formation of Cope spurred the ANC  out of complacency in the lead up to the April election and can take some of the credit for the ANC attempting to “go back to its knitting” as far as its constituency is concerned.

This slide was part of a briefing I did for investor clients in the lead up to the general election on April 22 2009.

Can’t Cope

Under this headline I will recommend reading when there are particularly interesting titbits out there that I do not have to time to cover here. Click on the headlines for the story.

Mathews Phosa reassures the big investors in London

Mathews Phosa, ANC Treasurer, spoke at a Lonmin conference and explained that debate is fine and good, but the ANC’s policy was not to nationalise the mines – although they will explore ways of achieving a greater redistribution of wealth. He also said the main pillars of macro-economic policy would remain. Good for him.

Zuma says we shouldn’t confuse debate with policy uncertainty

Back to quite interesting “letters from the president”. An assertion by the President of the ANC (in that hat, anyway) that the ANC policy debate should be as robust as possible. But he argues that the assertion of “scary ideas” during that process should not spook the punters. He is essentially calling for us all to calm down about Cosatu and ANCYL elements (and others) – they are just blowing off steam. I think he is being too sanguine; there is a moment which lively debate becomes policy incoherence. One particularly useful reminder, though: we must wait for formal ANC conferences at which policy can be made before we worry about what the policy is or how it is shifting.

The labour market and the apparent elevation of the narrow sectional interests of Cosatu are hurting the unemployed.

Last week Statssa released the Labour Force Survey for the third quarter. Unemployment had risen to 24.5 percent (from 23.6 in the second quarter) and, even more disturbing, the total number of employed fell 484,000 to 12.885 million.

These figures would have been even worse if an additional 510 000 people had not given up searching for employment in the period and were therefore  excluded from the figures entirely. If the figures of those who have given up searching are included in the definition of “the unemployed” the  rate is now at 34.4 percent, up from 32.5.

34.4 percent? Jobs are being shed throughout the world because of the global debt crisis and the recession but South Africa’s total figures seem way out of kilter.

The reasons we have such high (and vulnerable) unemployment rates are complex and seem to be “built in” to the structure of the South African economy.

But this does not mean the government and policy makers are powerless to influence “the carrying capacity” of  this economy.

At least some of the downward pressure on employment is associated with the legislation and practice that structure the labour market. Our labour market is hugely and inappropriately “inflexible”.

The Flexibility or otherwise of a labour market refers to how easily the market is able to adapt to the changing  needs of production.

Two basic changes to “needs of production” occur regularly with the cycles and ebbs and flows of the economy more generally:

  • The need for total number of workers changes rapidly, and
  • The requirement for certain skills in the labour force changes with time.

A labour market is said to be “flexible” when an employer is easily able to access the requisite skills from the labour force and is easily able to change the size of his or her labour force in response to changing needs of production.

Now labour is not like a pile of bolts sitting in the inventory store. It is made up of human beings and it is quite appropriate that there should be constraints placed on the employer to hire and fire at will in relation to his or her changing needs vis-a-vis the general ebbs and flows in whichever particular sector he or she operates.

However, and crucially, these “constraints” should always be placed on the employer with the understanding that too little constraint will injure the individual interests of workers and too much constraint will cause the employer to seek alternatives to employing.

What alternatives can an employer seek (and this is obviously important because to some difficult to determine degree the high base line level of unemployment in South Africa is a result of employers seeking such alternatives)?

  • The employer can mechanise the production process;
  • The employer can export the production process to environments where the labour market is less restrictive,
  • The employer can break the law and participate in the thriving illegal labour market .

The complex and demanding legal framework governing the labour market has a direct impact on the total number of employed – and on “the carrying capacity” of the economy.

Government and Ruling Alliance

Which brings me to the point: we are currently seeing a deeper and more vigorous push by the Ruling Alliance to tighten the legal framework that structures the labour market.

The public face of this push is the attempt to close down the labour brokers. Labour brokers exist to serve employers’ attempt to legally circumvent the most restrictive aspects of legislation and bureaucracy that govern the labour market. It is the moral equivalent of clever lawyers working out legal ways to avoid tax.

Apartheid fell because of a simple political error by the National Party: it is impossible, in the long run, with laws and policemen and courts – and hit squads -,  to stand in the way of collective human endeavour i.e. the market. If you attempt to thwart the market it will find ways around you – possibly in a distorted form.

Imposing a labour regime on South Africa best suited to Norway or Sweden is harmful to total employment numbers in the country.

South Africa’s labour regime is responsible, to some degree, for the constant downward pressure on employment.

Cosatu appropriately attacks labour brokers – because Cosatu represents those employed in the first world conditions of the formal labour market.

But for the rest, for government and the legislature – it is crucial that they are persuaded that increased inflexibility of the labour market works diametrically opposite to the interests of the millions of unemployed people who have put their names on labour broker books in the hope of finding work – any work.

Do not imagine that in the event of labour brokers being banned employers will formally employ workers they previously accessed through the broker.

The road to hell … and all of that:

Those jobs are going boy and they aint coming back

Bruce Springsteen, My Hometown

I am an independent political analyst focusing on Southern Africa and I specialise in examining political and policy risks for financial markets.

A significant portion of my income is currently derived from BNP Paribas Cadiz Securities (Pty) Ltd.

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