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Herewith an extract from my weekly news commentary* as of 06h30 yesterday.
‘A minefield of obstacles for Motlanthe’ – Sunday Independent
The Presidency, in the person of Deputy President Kgalema Motlanthe, launched the “Draft Framework Agreement for a Sustainable Mining Industry” on Friday. The document is based on an initial process of discussion with all interested parties (including, amongst others, Amcu, Num and the Chamber of Mines) and each party is expected (hoped) to ratify the agreement by June 26. The document essentially acknowledges the importance of the mining sector for investment, economic growth and employment. If it is ratified, all parties would be formally accepting the need to re-establish law-and-order in the sector, improve labour relations and address the housing and community needs of workers and their families, both near the mine and in the labour sending area. The document commits the government to ensuring “that the legislative and regulatory programmes provide predictability and certainty for the industry” including with regard to “tax policy” – those quotes from 6.1.4 and 6.2.1 of the draft document.
This initiative is no more than the minimum of what has been demanded of government, especially of the commanding heights of government, by most of those affected by the industrial relations crises in the platinum sector that began in early 2012. Thus, Jacob Zuma, and his deputy, Kgalema Motlanthe, are looking busy and engaged with the crises and that will come as a welcome relief after what has appeared to be endless dithering and mixed messages.
However, there should be no expectation that the initiative will miraculously resolve the deep conflicts, both within government and ruling party policy and between the contesting trade unions. The Sunday Independent correctly points out that there is a tension in the government and ANC policy and the newspaper ascribes (or personifies) the tension as being between Finance Minister Pravin Gordhan (concerned about investment, profitability and revenues) on the one hand and Minister of Mineral Resources Susan Shabangu as well as ANC Secretary General Gwede Mantashe (concerned that mining companies owe South Africa, particularly black workers, a historic debt).
It is neat (but only partly accurate) to think of the policy conflict as being about the views of different powerful politicians within the government and the ruling party. The reality is that the ANC (and therefore, government) is, and has been since 1994, fundamentally torn between the economic necessity to reassure (mining and other) investors and the political imperative to demand redress and redistribution for its aggrieved constituents. Does the Motlanthe fronted attempt to negotiate a new understanding and modus operandi between the different interest groups in the mining sector represent a qualitative reassessment of where the ANC’s priorities lie? I doubt it, especially not 10 months before a national election where the ANC is starting to feel beset on several fronts but clearly (from a purely numeric perspective) has the most to win and the most to lose in the majority constituency of poor black South Africans.
It is tempting to see Kgalema Motlanthe’s role in the efforts to settle the sector as preparation for him to replace Susan Shabangu in the Minister of Mineral Resources post. Shabangu has gained a reputation as being instinctively suspicious of resource companies – although, again, I would suggest that this is more a characteristic of the ANC itself than of any particular individual. Motlanthe is perceived as ‘a good guy’, a person open to compromise, a peace-maker and a humble and loyal public servant. That would probably be a good thing for sentiment in the sector, but it would be important not to confuse form with content.
Julius Malema to party on down?
Malema has been explaining his decision to launch a new, yet to be formed, opposition party, the Economic Freedom Fighters. He yesterday described the ANC as “on a downward spiral ideologically, politically and morally” and under Zuma, as being characterised by “tribalism, regionalism, factionalism and corruption”, essentially “an association of careerists and neo-liberal bureaucrats whose sole mission and role was protecting the interests of white monopoly capital” – see what essentially looks like his draft manifesto on Politicsweb.co.za. At the heart of the expressed policy of the proposed new party (announced in the run up to June 16 Youth Day commemoration) is the demand (that Malema was central to codifying as President of the ANC Youth League) for the nationalisation of mines and the expropriation of white owned farm land.
Can Malema tap into the constituency of young black South Africans who feel abandoned by (or angry with) the ANC over its failure to affect more radical redress and redistribution measures? Can he win, as he promised last week, 5 million votes and thereby replace the Democratic Alliance as the official opposition? (Can he stay out of prison? – ed) Malema has an almost preternatural ability to identify, frame and play into the sense of disaffection amongst the most marginalised young black South Africans and he has the energy and charisma to at least make a go of forming a coherent opposition party. All his significant previous allies who have remained within the ANC (including Minister of Sport Fikile Mbalula and Limpopo Premier Cassel Mathale) came out strongly against of the former Youth League president over this last weekend. Whether or not Malema manages to form the proposed Economic Freedom Fighters in time for it to have an impact in national elections next year, he will probably succeed in creating a gravitational pole that will keep the ANC from drifting towards business and financial markets. This will not be a new role for him.
Zimbabwe elections – Mugabe agrees to seek short delay
A South African Development Community (SADC) extraordinary summit met in Maputo, Mozambique on Saturday and Robert Mugabe acceded to the pressure to attempt to shift-out the July 31 date that had been set for the election in Zimbabwe that will bring to a close the current power sharing arrangement with the opposition Movement for a Democratic Change. Jacob Zuma is the SADC facilitator attempting to radically reform the regulatory, governance and security framework that allowed widespread repression and cheating in the failed 2008 election. None of the parties are ready for an election (including Zanu-PF which, amongst other problems, is riven with division at a central level and in key provinces Masvingo, Bulawayo and Manicaland).
The key reforms that must be in place for an election to succeed in Zimbabwe relate to control of the security apparatuses and to ensuring impartiality of those apparatuses and to establishing the impartiality of the state-owned media. Also, voter registration and various administrative issues need to be completed or rectified before the election takes place if it is to be ‘free and fair’. Zimbabwe is experiencing the beginnings of an economic recovery. This might benefit the incumbents (Zanu-PF) but the opposition hopes that the growing spirit of optimism will lead voters into their fold. There are no reliable opinion polls, so we will have to wait and see. The significant natural mineral assets, the exceptional tourism possibilities and the fact that a huge but uncounted Zimbabwean diaspora is in South Africa are amongst the issues that make the outcomes of what happens in Zimbabwe important.
Bits and pieces
- City Press led with ‘War for Gaddafi billions’, based on the premise that two competing Libyan groups are in the country attempting to recover a fortune in gold, cash and diamonds that he (Gaddafi) allegedly stashed here – including a sizeable chunk “in gold bars in safe storage at OR Tambo International Airport” and in cash pallets held in the Reserve Bank. The story claims the Libyan factions are attempting to dangle the promise that the money will be used to buy South African manufactured armaments and that recovery of the many billions of dollars’ worth of assets would earn a 10% finder’s fee. The payload of the story comes in this paragraph: “According to Erasmus (a ‘controversial South African arms dealer’), Mphafudi (‘an ANC connected businessman’) and Maleka (‘the ANC security head’) were working with two Libyan investigators …. (Erasmus) claims that both South Africans accompanied the Libyans to see President Jacob Zuma at his Nkandla homestead.” (The Sunday Times reported that Zuma was accompanied by his cousin Deebo Mzobe during the meeting). Hmm. (Clarifications and emphasis in that quote from the City Press article added by me – ed).
- Telkom’s bid to sort out its ‘legacy issues’ – by the “write-off of R12 billion in defunct assets” and by the settlement of its various cases with the competition authority – got headline coverage in City Press. “Our key shareholders are frustrated, our customers are frustrated and I can promise that we will not repeat the same mistakes of the past,” said new broom CEO Sipho Maseko last week. Don’t hold your breath.
- Tina Joemat-Pettersson (Minister of Agriculture, Forestry and Fisheries) was directly accused on the front page of the Sunday Times of receiving a kickback of R100 000 in 2006 for her efforts in closing the purchase of Sunset Game Lodge, outside Douglas, while she was provincial minister in the Northern Cape. The allegation is serious, but as the story points out she is ‘the Teflon Minister’ and it is by no means clear that she will ever meet her comeuppance, no matter what she does or how badly she performs.
- “Waterkloof scapegoat on warpath” – reports the Mail & Guardian. Lieutenant Colonel Christine Anderson, the movement control officer at Waterkloof airbase who was accused of being one of two key rule breakers that allowed the now infamous Gupta wedding party to land and be ferried from the strategically important military base, is approaching the public protector for relief. The Gupta’s of Sahara Computing are friends and funders of Jacob Zuma and his family and it is widely assumed that there was tacit pressure placed on Anderson and other officials to let the friends of “Number One” pass. This is an ugly affair where the real wrongdoers, the powerful and abusive politicians and their friends, get off scot-free and loyal and faithful officials take the fall.
- Nelson Mandela’s health remains a key media topic (he’s still in hospital) and the symbol of the man is already deeply contested, especially between the ANC and the DA in the lead-up to next year’s elections. Mandela is an almost life-long ANC member and leader, but the DA is attempting (not altogether successfully) to argue that they are the true inheritor of his mantle while the ANC has drifted into a wilderness of incompetence and corruption. If Nelson Mandela dies between now and the national election next year, the essence of this contest would play itself out on perhaps the largest global stage in the history of human-kind.
* I write this news summary for clients of BNP Paribas Cadiz Securities and send it to them at 06h30 Mondays (Tuesday this week) and I occasionally republish it here a few days later if I think it might be of more general interest. I am, of course, grateful to BNP Paribas Cadiz Securities for allowing me to do this.
I am struggling to make up my mind whether there really is a small accumulation of good news, clearly visible against the looming night … or if I am just desperate. Today’s Business Day story by the always interesting Carol Paton looking at Manuel and Sisulu on a stern clean up the public service drive must be positive, surely?
… and several points in my take on the political news in the English language weeklies from last week are postive:
The Sunday Times says Jacob Zuma is planning to axe Dina Pule, Minister of Communications and Lulu Xingwana, Minister of Women, Children and People with Disabilities. Pule’s tenure has “limped from one scandal to another – including the questionable millions paid to her boyfriend from sponsorship money meant for the ICT Indaba last year” – Sunday Times.
The Department of Communications has failed to unbundle the local loop, missed innumerable opportunities with Telkom, under-resourced the regulator Icasa and generally failed to appoint/settle/keep senior management … and has had three ministers in 3 years. Fixing this is a priority area in the National Development Plan and one of the key ‘bottlenecks’ or ‘obstacles to economic growth’ that need to be removed. So Pule’s removal has (if it actually happens) to be seen as a good thing.
(Interesting – to me – speculation on the side is that Zuma might move Thulas Nxesi (Public Works) to replace Angie Motshekga (Basic Education) and have Motshekga replace Xingwana. This means that Jeremy Cronin (deputy minister in Public Works) might then replace Nxesi. But, as the Sunday Times says “there are concerns in the Zuma camp about whether he (Cronin) can be relied on to protect the president from the repercussions over the controversial R206-milliion Nkandla upgrade.”
Lindiwe Sisulu (Minister of Public Service and Administration) is quoted in the Sunday times about planned amendments to the Public Service Act setting in place ways of stopping senior administrators benefiting from government contracts. She also promised a “super-director-general’ who would ensure that all heads of department adhere to performances linked reward systems.
Cosatu’s Zwelinzima Vavi lauded Sisulu plans, saying this would stop the “looting” of public funds by government employees. “We can only say halala (congratulations) to that!” he is quoted in the Sunday Times. I have to agree with Vavi. The biggest political failure that is actually in control of government in South Africa is the poor performance and monitoring systems – and therefore delivery failure and corruption – in government and public sector institutions. Sisulu’s intentions are to be welcomed – and she probably has the steel to follow through. So another plus.
Ramphele wanted DA to be dissolved
The Sunday Times quoted several DA members essentially claiming that Mamphela Ramphele almost joined forces with the DA, but wanted the party to be dissolved first and for her to have an equal share of a new institution. “She wanted a new political party and not to join the DA … she came with nothing but wanted an equal share” said one unnamed source.
The week has been beset with rumours about the impending announcement by the respected academic and business person Mamphela Ramphele that she is to set up a new opposition party. Speculation reached a climax when it was announced that she had resigned as Chairperson of Goldfieds on Wednesday last week. Ramphele would make an excellent addition to opposition parliamentary politics in South Africa – but the idea that one person, with no party structure or obvious constituency in hand, will change the South African game is hopeful at best. However, on the balance, this is undoubtedly another positive. (That’s three in a row for those who are counting.)
Several of the weeklies reported that Zimbabwe’s President Robert Mugabe issued an official proclamation on Friday setting March 16 as the date for a referendum on a draft constitution. Most expressed concern that local activists felt that that gave very little time to explain the draft constitution (it took 3 years of bickering to cobble together) to voters and that the draconian Public Order and Security Act would need to be suspended or repealed before campaigning for a ‘Yes’ or a ‘No’ vote could take place. All opposition parties have called for a referendum ‘Yes’ vote to allow the constitution to be accepted and signed into law without any further changes.
Zimbabwe’s stability and growth prospects impact on South Africa in a myriad ways, for example in the floods of economic refugees and the shifting size of the export and investment markets in Zimbabwe. An interesting story in the Sunday Times by senior editor Mondli Makhanya argued that Zanu-PF is likely to benefit from opposition disarray and an improving economy. “With the elections just months away, Zanu-PF is smiling and looking forward to strolling to victory. After having brazenly stolen four parliamentary and presidential elections between 2000 and 2008 Zanu-PF will not have to resort to violence and skulduggery this time.” If Makhanya is correct (which he may well be) it is going to stick in a lot of craws that through a combination of looting, patronage networks, repression and the chasing of the urban poor into the arms of the South African informal economy and welfare system, Zanu-PF might remain in power.
New Iran claims hit MTN
The jailing of Iranian born US citizen Mohammad Hajian for supplying “sensitive and potentially dangerous equipment to MTN’s mobile network in Iran” (Mail & Guardian) deepens MTN’s woes in relation to its Iranian operations.
“The conviction is damning for the South African mobile giant, as it provides judicial corroboration that the company used sanctions-busting networks to beef up its technical infrastructure in Iran” (M&G).
State of the Nation Assessment
Most reviews pointed to the key absence of any binding theme in Jacob Zuma’s State of the Nation Address.
City Press probably had the best coverage.
- It (CP) correctly points out that there was a specific “shift on land reform” – with a move from “willing buyer, willing seller” to a “just and equitable” formulation. This refers to the establishment of a “valuer-general who intervenes on behalf of the state … who then oversees land valuation …to keep the price … affordable for the state to redress” – CP quotes Gugile Nkwinti (Minister of Rural Development and Land Reform).
- It argues that the youth wage subsidy has been swept aside and that government, business and labour in negotiations through Nedlac will announce a plan soon whereby “growth industries with young workforces will attract state support to hire the young and jobless … unskilled young people will also be offered a second chance to write their matric exams”. So no across-the-board subsidy … but a directed one, only in selected industries.
- It picks away at the infrastructure programme and the various roles that will be played by Malusi Gigaba (Minister of Public Enterprises) and Ebrahim Patel (Minister of Economic Development). City Press interviewed the ‘up-and-coming’ Gigaba and asked him if Ebrahim Patel had left him much of a role to play. Gigaba replied: ““Economic Development is responsible for a broader plan. My department is responsible for three big infrastructure projects: the roll out of broadband, electricity infrastructure and logistics like rail. Other departments are responsible for roads, transport and dams.”
The State of the Nation address is always over-anticipated and usually bitterly lamented as not having been specific or visionary enough. This year, not unexpectedly, Zuma enumerated the successes of government and hyped the plans. Much of what Zuma and his government will do and say in the next while will be focused on the national election in 2014 – and expectations likely to be disappointed.
Bits and Pieces
- City Press reports that the department of fisheries, headed by Tina Joemat Pettersson is in “total free fall” – raising serious concerns about government’s ability to conduct research required to determine quotas of ‘allowable catch’ for key species.
- Sunday Times business section reports that industrial unrest and violence at the Medupi construction site make the “chances of the R91bn power station feeding power into South Africa’s overstretched grid by the end of this year … slim”.
- Sunday Times reports Harmony Gold made history by making individual workers at its Kusasulethu mine sign a treaty with the company in order to lock individual workers into a contract with the company. “This is quite a revolutionary move … (it) means that individual workers can now be taken to task when stepping over the line” says Peter Major, Cadiz mining analyst. Major argues, according to the report, that if similar agreements had been put in place a year ago when trouble first started brewing on the mines at Impala Platinum, a “Marikana” might have been prevented.
(Added as an afterthought: I realise I haven’t made any kind of conclusion given that the opening paragraph suggests I was going to indicate either that I am more positive than negative or vice versa. Frankly, I can’t make up my mind. Which probably makes me a fairly bog standard South African.)
Sunday’s newspapers were more interesting from a political risk and investment point of views than normal.
This is what I thought mattered, as far as financial markets were concerned, in last week’s Mail & Guardian, the Sunday Times, Sunday Independent and City Press:
Construction industry – possible prosecution and fines for fraud and racketeering
Government and the national prosecuting authority are reported to be facing a dilemma: managers in at least 20 major constructions firms might be guilty of serious criminal practices relating to may years of in-industry collusion, but a successful prosecution of the guilty parties would rip the whole management level out of up to 20 top companies and thereby sink government’s infrastructure plans – Mail and Guardian.
The stories are covered in the Mail & Guardian and the City Press – both drawing their details from a series of leaked 2011 affidavits apparently produced by individual managers at Sefanutti Stocks when they (Stafanutti) realised that despite co-operating with a Competition Commission investigation, individual managers were likely to be liable for criminal prosecution (by the Hawks and the NPA) and that the punishment could include imprisonment.
Paul Ramaloko, Hawks spokesperson said “This case is bigger than people think. We are going to take our time and do a thorough investigation” (Mail & Guardian), but in City Press he says the investigation was in its “early stages” and that he would only comment once it had “matured”.
So What? Sounds like a political dilemma. The NPA and the Hawks are not (entirely) governed by the political priorities of government (despite apparently decisive co-ordination between the Hawks, SARS and the Public Protector in the Julius Malema fraud, money laundering and tax evasion investigation). However, government is likely to do what it can to make sure the companies survive intact – albeit compliantly chastened and grateful for leniency. Of course, the NPA and the Hawks might, alternatively, feel these managers would make good examples of how ‘old-order’ and ‘untransformed’ individuals and companies are as important sources of corruption as the ANC, its leaders, supports and structures.
Either way, the reputation and coherency of the companies concerned could be seriously impacted. However it is not clear from the news reports that there is any differentiation between, “winners and losers” … no-one appears more or less guilty than anyone else – which rather suggests the sector as a whole is risky, with no safe havens.
Key Jacob Zuma allies Atul and Rajesh Gupta (using family vehicle Oakbay Investments) are reported to be on the verge of adding a 24-hour continent-wide news channel to their media portfolio (which includes New Age newspaper) in partnership with Essel Media and an unnamed black empowerment firm. Multichoice will likely be providing the platform but purely on a commercial basis and is not expected to be partner in the venture (Mail & Guardian).
Well, one of the Guptas’ current empowerment partners is President Zuma’s son Duduzane and the Guptas themselves have become key ANC funders and power players in South African politics. The Mail & Guardian has a picture of Atul and Rajesh Gupta (who came to the country from India in the early 90’s) ensconced at the ANC’s elective conference in Mangaung in December. Obviously, the more the merrier on the news diversity front – and who says government and the ANC shouldn’t spend more money in the space? South Africa has a free and open media culture – to the point of government and ANC leadership spending a considerable amount of their time denying allegations and defending government policy against feisty attacks. It is unlikely to be harmful if government and the ANC strengthen their ability to put their point of view. Influence trading is always a feature of politics and is no worse or better in South Africa than it is in many countries across the world.
Telecommunications – new political upheavals on the cards
All the weeklies report that Communications Minister Dina Pule is about to be removed from her post in a cabinet reshuffle. At least part of the reason is because she is accused of “routing large sums of money to her alleged lover” – Sunday Independent. So many individuals are touted as possible replacements, but the one person who comes up time and against is Lindiwe Zulu. This is what the Mail and Guardian has to say about this close Zuma confidant: “Zulu has just been appointed head of the ANC’s communications and her star has been rising under Zuma. A government source said Zuma trusted her opinions. She is his adviser on international relations. ‘He likes her bravery. The way she’s handling the Zimbabwe issue in a fearless manner has impressed him.’ She is one of Zuma’s three envoys on that country.”
So what? Pule will be the third minister to exit this portfolio in four years and instability in the department has raised fears that SA will continue to wander in the policy wilderness as far as migration to digital TV, Telkom’s business plan chaos, spectrum allocation and unbundling of the local loop (to name but a few pressing policy mattings) are concerned.
Mining Indaba – policy confusion as rife as ever
The Business Times has a depressing few pages about the Mining Indaba that implied that if anything the industry is more concerned than ever about policy uncertainty. On the proposed Mineral and Petroleum Resources Development Amendment Bill: “The move has again flooded the country’s struggling mining sector with uncertainty” – Loni Prinsloo.
“On the exploration side” said Magnus Ericsson, Chairman of Raw Material Group, in the lead story, “I think it’s a general hesitation … if you find something in South Africa, what will be the BEE requirements? What are the other requirements? For some foreign investors they are seen as difficult”.
The same series of articles argues that the pressure to “quarantine” SA assets is becoming fierce. “A valuation by AngloGold Ashanti’s biggest shareholder, Paulson & Co, indicated that South Africa’s biggest gold miner could boost its share price by as much as 68% if it split out it local assets.” Elsewhere on the front page of the Business Times, the paper argues: “The true investor sentiment will be measured tomorrow (now yesterday– ed) when Sibanye (Gold Fields’ local assets – ed) lists separately.”
So what? To my mind regulatory uncertainty, especially in the minerals sector, remains the key politically driven investment risk in South Africa. The risk is being driven by pressures (felt by the ANC and government) to improve delivery and redistribution. These pressures will increase going forward and the increased regulatory burdens government is placing on private mining companies is unlikely to achieve any of government’s objectives … in fact, the reverse is more likely to be true. This is an unhappy environment for those searching for policy certainty.
Bits and pieces
- The brutal rape, torture and murder of Anene Booysen in Bredasdorp filled many column inches in all four weeklies – hoping to stimulate the kind of outrage against rape that swept India recently. Many of the stories point out that South Africa has the highest incidence of rape in the world.
- Ramphele – will she or wont she? The press is full of speculation about whether Mamphela Ramphele (former anti-apartheid activists and close friend of Steve Biko, a doctor, academic, successful businesswoman, a former director at the World Bank and former Vice-Chancellor at the University of Cape Town) will set up a political party and that that party will capture a significant percentage of urban black support. I think she might, but I doubt whether the party will make a dent on South Africa’s politics. The most likely scenario, to my mind, is Ramphele ends up in the Democratic Alliance.
- There was much speculation about what President Zuma might say in his State of the Nation address this Thursday – with a generally excited consensus emerging that Zuma is less beholden to special interest groups (post his decisive victory at Mangaung) than he was previously. I am not convinced this will lead to bold new steps. I am watching for tension between this speech and the National Budget on the 27th of February. I expect the political plans in Zuma’s State of the Nation to be at odds with Pravin Gordhan’s plans to balance the books … but I expect that tension to be hidden.
- The Mail & Guardian gave a list of who it thought is in Zuma’s inner circle: (Lakela Kaunda, Lindiwe Zulu, Mac Maharaj, Collins Shabane, Gwede Mantashe, Nathi Mthethwa and Batandwa Siswana), but then spoiled any special insight that might have given us by adding :
“Those privy to Zuma’s kitchen Cabinets say the president also has a high regard for Economic Development Minister Ebrahim Patel, National Planning Commission Minister Trevor Manuel and Justice and Constitutional Development Minister Jeff Radebe. Other key confidants include Rural Development Minister Gugile Nkwinti, Intelligence Minister Siyabonga Cwele, Cosatu president S’dumo Dlamini, Public Enterprises Minister Malusi Gigaba, KwaZulu-Natal Premier Zweli Mkhize, Finance Minister Pravin Gordhan and, to some extent, Higher Education Minister Blade Nzimande. People outside government who are in the president’s good books include businessperson Sandile Zungu, film producer Duma ka Ndlovu and businessperson Deebo Mzobe, widely considered the man behind the building of “Zumaville”, the town surrounding the president’s homestead.”
… hmmm, must have a pretty big kitchen.
Occasionally I publish slides from a current presentation series and here are a few from something I am busy with called: “The Second Transition – SA politics and policy somewhere twixt hither and yon”.
The general idea is the ANC government is determined to move beyond the ‘transitional’ arrangements that it agreed to in 1994 and strike out boldly towards some undefined, but more profoundly transformed future.
Then, taking some liberties, I summarise what the ANC is “really” (in my humble opinion) saying in motivating the documents:
I then set out on the difficult task of attempting to assess whether the ANC documents actually propose anything as thoroughgoing as the initial motivation implies.
Frankly, the answer is “no”; although the proposals are both worrying in tone and in how contradictory and “bitty” they are.
The best formulated document is the “Maximizing the Developmental Impact of the People’s Mineral Asset: State Intervention in the Minerals Sector (SIMS) – document (get a link to that here). It contains a thoroughgoing set of proposals that change the tax system for mining and propose a complicated set of upstream, downstream and sideways linkages for the industry that will create a new set of burdens and obligations (not all bad) for the mine owners. (My own feeling about mineral resources is that these are “non-renewables” and government is obliged to get the maximum developmental benefit out of them before they are lost forever – but that is just by the way.)
Almost every other document – and there are 12 in all – meanders between
- being meaningless wish-lists,
- statist and authoritarian blueprints to bully and control and
- well researched and argued guides to fixing key aspects of what is wrong with our society
Almost all the good stuff is lifted body and soul from the meticulously researched National Development Plan with its focus on the 9 challenges of
- widespread unemployment
- ailing infrastructure
- low standards of education
- exclusion of the poor from mainstream development
- a resource dependent economy
- a failing public health system with a large disease burden
- inept public service provision
- widespread corruption and
- societal divisions.
My presentation itself does not make strong predictions on how far the ANC will get with its deliberations … although what is clear is that policy discussion this whole year will be drowned out by the Mangaung election noise. It is is going to be difficult to ascertain any real direction through the clamour of the struggle to re-elect Jacob Zuma.
Leaving aside all the slides that deal with the actual documents, I do, however conclude by asking some questions of our key players … and I include those slides here for your interest:
As the months go by, I will hopefully have time to flesh out some of those question.
But for now I am in the final days of the road show trying to make sense of the mess of proposals and hints in the documents, which span issues as diverse as fracking the Karoo, IDZ’s to SEZ’s, the Treasury versus EDD versus DTI, local procurement fantasies, some excellent fixes of BEE from Rob Davies, the lonely excellence of the Gordhan and Marcus and infrastructure looking more and more like the ANC’s one-trick-pony.
Anyone who reads this blog on a regular basis will have noticed two things.
The first is that the number of posts have tailed off. This is largely because my time has been taken up with paid work and the website has slipped down the list of priorities in the imperative to pay the bills.
I am, however, not yet ready to give up as so many of my friends who set up “free to air” websites in the last few years have done – usually because their work load became intolerable and the blog seemed to sit sulking on the edge of their consciousness and the bloggers became consumed with guilt and a sense of failure and eventually posted that final signoff: “its been fun - so long and thanks for all the fish … and catch you in the commercial media ….” or whatever.
I set the blog up in the darkest depths of the Great Recession as a way of marketing myself … and the strategy has worked. I get a trickle of briefs to write, analyse or speak for corporations and businesses via the About and Professional Services links and this has been part of how I have scraped by after the cataclysm of 2008. If anything the global economy is looking scarier than ever … I am not going to drop the blog just as the as the world looks as if it might fall into an even more boneless heap than it did in 2008.
But the second reason I am going to hang onto this forum is that it gives me a discipline and space to work out my views on what is happening in the political realm. I can go back – as can anyone else who may be interested – through the hundreds of posts and get a record of my thinking and I use that constantly to refresh my mind as to where we are in the South African political wrangle … I just have to post more regularly again, and this I undertake to do.
So the blog remains in place for now, and I am grateful to the 150 or so people who check every day to see if I have said anything or who end up at the website through various search engines. One day you will be the CEO or running the company’s staff training programme or heading the strategic planning department (or you may already be one of those) and you will know where to get hold of some excellently priced expertise … I look forward to your emails to firstname.lastname@example.org in this regard.
Now onto what I have missed posting here in the last 2 weeks – all of which adds up to something of a shy and tentative spring – a bright new world peeping around the corner to see if it is okay to skip happily into the garden … and whatever other cutesy optimistic metaphors I can cook up, because I am extremely tired of the dark cynicism that has taken root deep in my – and probably your – mind.
Jacob Zuma cleans up his act
This is what I said about the Cabinet reshuffle, the suspension of Bheki Cele and the institution of the judicial commission into the Arms Deal.
In one broad swipe President Jacob Zuma has addressed several of the key corruption and maladministration problems that have beset his administration. He has fired Public Works Minister Gwen Mahlangu-Nkabinde and Co-operative Governance and Traditional Affairs Minister Sicelo Shiceka and suspended police commissioner General Bheki Cele and appointed a commission of inquiry into the General’s actions in fiddling leases for police buildings. In the same announcement Zuma named the members of the commission to investigate the ‘arms deal” scandal and named a senior Supreme Court of Appeals judge to head the inquiry. He has also made extensive minor changes to the cabinet – mostly through knock-on effects from the two ministerial changes.
The president has taken his good time about addressing some of these issues and we expect some of the early commentary to be less than generous – and to comb the details for evidence that Jacob Zuma has used the opportunity to marginalise enemies and reward friends – and generally restructure government in a way that favours his bid for a second term at Mangaung.
My own view is that Zuma has finally responded to a plethora of criticism and he has done so in a thoroughgoing way and in a manner that considerably strengthens the administrative capacity and probity of government. An expectation that such a significant reshuffle would not be influenced by the power struggles within the ANC would be naive, but on an initial reading I am cautiously optimistic.
Julius Malema gets his comeuppance
And this is what I said about the ANC Disciplinary hearing yesterday:
The African National Congress disciplinary committee (DC) is just finishing its announcement of findings and sentencing in relation to the ANC Youth League leadership.
Julius Malema has been found guilty (in his personal capacity) of provoking serious division in the ruling party and he has been suspended from the ANC and the Youth League for a period of five years – and several other sentences have been handed out to Youth League leaders including the 3 years suspension of Floyd Shivambu, the Youth League spokesperson.
This is obviously good for the ANC – for its image, for its internal coherence and for the reputation of its leadership. The loutish and grandiose behaviour of the ANC Youth League and the individual leaders’ involvement in abuse of public sector finances and tendering process behind a façade of representing the interests of the poorest and most marginalised has deeply damaged the reputation and core values of the ANC.
Obviously much will depend on whether the leadership has the stomach – and spine – to follow the disciplinary process with a thoroughgoing implementation of the sentence throughout all forums of the organisation. We shouldn’t forget that important individuals and constituencies have backed Malema through this process – and as I write this Twitter is alive with ANC YL arrangements for emergency meetings to organise protests against these sentences this weekend. Will the sentence provoke a backlash, attempting to build opposition by portraying Malema as a victim? Obviously, but I think – and hope – that the grave tones and thorough approach of the ANC Disciplinary Committee might presage a process of repair and renewal in the ruling party.
I expect the situation to be unsettled – and even threatening – for the next week, but my best call is that this sentence is likely to stabilise the debate within the ANC and in the leadership and policy discussion in the lead up to Mangaung in December 2012.
So that’s my two cents of this morning. There are reasons for optimism. Obviously Jacob Zuma has not suddenly been transformed into an epitome of probity and eloquence … but things are looking up and I think it is important to say so.
Doesn’t the Julius Malema saga feel so familiar?
Remember how the Jacob Zuma campaign seemed to transform each new obstacle placed in his path into fuel for his political train that eventually steamed triumphant into Polokwane in December 2007?
The fact that he was known far and wide as hopelessly incapable of moderating his sexual behaviour and as being on the take from, at least, Shabir Shaik, seemed to make almost no difference to the eventual outcome … unless the legal and other processes to charge him actually strengthened his claim to the presidency.
He was the victim of Mbeki’s shenanigans and he was heading a column of pro-poor ANC alliance cadres that were coming to take the ANC back from the pro-monopoly capital “1996 class project” – and every deed or word against that was coming from the privileged few defending their privilege. The marching column was irresistible and Polokwane was its destiny. Or at least that was the narrative that seemed to win out.
With the benefit of hindsight it is clear that Zuma’s success was all about momentum – and its inevitability is a post hoc construction.
I remember a movie from my childhood where the hero escapes almost certain death (it was either Indiana Jones or one of the Bonds ) by running across about fifty metres of crocodile infested waters by … yes, you guessed it: stepping on the back of each starving crocodile but with such speed that he was on his way to the next one before they snapped at him or sunk.*
That is probably a better metaphor for Zuma’s perilous progress towards Polokwane than the one that has him steaming towards that conference as if it was his manifest destiny. The second post of this blog was called The Accidental President and in it I argued that Zuma’s presidency was a result of an unlikely set of circumstances and he was not a character that many could have previously imagined in the role.
On closer examination it becomes clear that Zuma, on several occasions, almost crashed and burned – and came close to going to prison. Ultimately it was only the forward momentum of his campaign that allowed him to escape the snapping crocodiles at his heals.
In fact, I would put it even more strongly: for Jacob Zuma the only way to avoid ignominy and prison was to win the presidency.
And that is where the comparison with Julius Malema becomes so compelling – especially in his weekend attempt to boost the Economic Freedom in Our Lifetime campaign into the mouths and minds of the genuinely marginalised and poverty-stricken in places like Diepsloot and Bantu Bonke.
Just as his disciplinary hearing comes to a head.
Just as his questionable personal finances start to be ‘put to the question’ by various authorities.
Just as he prepares to lead the marches on the Chamber of Mines and the Johannesburg Stock Exchange.
He told those audiences: “They [the whites] found us here. They did not bring any land nor did they bring any minerals.”
And: “”We are here for every one of you. We will not rest until you stop worrying about where your next meal will come from.”
Woven into every word and phrase is the argument that the incumbent leadership of the ANC has failed the poor. That Julius Malema’s fight against Jacob Zuma is actually a fight to have the needs of the poor and dispossessed met.
Can Julius Malema, engorged as he and his comrades apparently are from sucking the marrow from the bones of Limpopo’s (amongst others)
public purse skeletal public finances (some bad metaphors are impossible to fix – ed) hope to pull off this audacious argument?
Clearly he can.
Clearly he is betting on himself to be sitting up in the cab of a triumphant train steaming into Mangaung; to have turned all obstacles aside and spun the narrative of the little guy standing up against the incumbents, standing up for the poor and dispossessed.
The parallels are not perfect. Julius Malema is not the apex of a push for the presidency of the ANC – he is too young, untested and controversial to aspire to those lofty heights this time around. He is rather part of the campaign of other powerful contenders – although he hopes to be nested near the centre of a new ruling configuration of the ANC.
Finally, Zuma had the backing of the SACP, Cosatu and a host of ANC democrats exhausted by Mbeki’s stale centralism – as well as a swathe of aspirant BEE wannabes who felt excluded from the previous gravy train.
Julius Malema (and those who hope to benefit from his campaigning) have nothing like the mighty alliance of those disaffected by Mbeki’s presidency.
After yesterday’s radical cabinet reshuffle and Zuma’s apparent ability to reinvent himself as an anti-corruption and responsive president I would have to bet on the incumbents and against the invaders at the castle gate.
This is the week, however, when Malema’s gamble will either pay off or fail. On Wednesday his disciplinary hearing resumes. On Thursday and Friday the marches on the JSE and the Chamber of Mines will take place.
This is not an accident of timing.
This is about planning, planning by individuals and groups with large appetites for risk – especially when the prize is so rich and the price of failure so high.
*I have a terrible feeling that someone has used that metaphor for Zuma’s march to Polokwane before … so let me apologise in advance if I stole it … and while on the textual commentary – I found this in Wikipedia while trying to check if the image had, in fact, been used for Polokwane before:
“Ross Kanaga as James Bond used four crocodiles as stepping stones to reach safety on the other side. Kananga, who owned the crocodile farm seen in the film, and after whom the main villain is named, did the stunt five times wearing the same crocodile skin shoes as his character had chosen to wear. During the fourth attempt, the last crocodile bit through the shoe and into his foot.The fifth attempt is one seen on film, with the tied-down crocodiles snapping at his feet as he passed over them.”
It’s been a difficult week, and I started the following post on Monday soon after hearing the general tone of the press and analysts response to the cabinet reshuffle.
I wanted to publish while the accolades for Jacob Zuma were still glowing and, unfortunately for both the President and me, the corrective doubts and scepticism are starting to be discernible in the analysis that up until now has been characterised by the “a change is as good as a holiday” school of political commentary.
Anyway, this is what I wanted to say:
- outwits some enemies at the ANC NGC,
- announces (again) a process towards a (not very) New Growth Path,
- (his Minister of Finance releases) the Medium Term Expenditure Framework which emphasises continuity, and
- he shuffles his cabinet
and suddenly he’s a visionary, man of action, seizing the nettle of corruption and there’s a new spirit of optimism skipping through the land.
It’s obviously exhausting to have to read the same old strands in our news media day in and day out: incompetence, lack of vision, cronyism and inability to overcome endemic conflict in the ruling alliance.
So I understand the need to seize on a sign, any sign, as the first swallow of summer, but I think a little restraint is called for.
What leads the official opposition to conclude that the cabinet reshuffle is first and foremost “a positive indication of renewed focus on accountability’, when the far more obvious explanation is Jacob Zuma is using the reshuffle as part of his own agenda to stay in office beyond 2014?
Jacob Zuma is no fool and those who forget that he has played inner-ring ANC politics as head of Mbokodo, the ANC internal intelligence organisation, will constantly be led to make mistakes of analysis. He did, after all, defeat the acknowledged master of palace politics, Thabo Mbeki – and if this was a swords and sorcery story we would understand that he now has the previous master’s powers at his disposal.
A whole range of benefits and protections accrue to Jacob Zuma and his backers from him remaining president of the country. But to remain president, he needs to use a cabinet reshuffle to do four things:
- He must ensure that his cabinet is seen to be busy with the job of optimising delivery to the poorest South Africans (the constituencies he is talking to here are made up of the voting poor themselves and the various elites who feel threatened by those poor South Africans and who pay their taxes and various formal and informal levies towards the upliftment of the poor – and who cannot countenance that protection money being stolen or squandered by the political middle-man);
- Linked but separate is the need to be seen to be fighting against government corruption and cronyism. This is slightly difficult when one of the features of his presidency is the degree to which his own family is making oodles of money out of his good name, but a major cabinet reshuffle gives him an excellent opportunity to sacrifice the biggest and fattest offenders and offer them up to the uncritical daily media as grist to the mill of their learned analysis.
- Forming the cabinet allows him to woo individuals who belong to camps which oppose him. This is either in preparation for alligning with those camps around particular issues in future or it is part of an attempt to weaken the coeherency of the opposition.
- Finally cabinet posts and and especially the more amorphous post of deputy minister are excellent ways of building a corps of supporters to back him during future transitions.
Thus some of the major aspects of the reshuffle could be undertood as follows (and I quote myself from a recent research report);
The firing of General Nyanda
Zuma and the ANC has been under the cosh of public opinion – and negative opinion of Alliance leaders, particularly Cosatu’s Zwelinzima Vavi – for the tender abuse and rampant corruption of senior politicians. No-one represents this better (along with a very in-your-face approach to the ministerial car fleet) than the good General. Nyanda is powerful and wily, but his usefulness as an ally has gradually been outweighed by his usefulness as a sacrifice to prove that the President is serious about corruption. The fact that telecommunications policy has been a consistent political failure for the ANC (right back to the days of the awful but sweet Ivy Matsepe-Casaburri) makes it easier to throw Nyanda to the wolves.
Barbara Hogan has been a growing problem for the ANC. Liked and respected by business and the media and largely regarded as competent, her incipient ideological rebellion has been deeply threatening to the ANC and since her criticisms of the refusal to grant a visa to the Dalai Lama the party has been looking for strategy to getting her out of the way before she does something really embarrassing. Also, the position of Minister of Public Enterprises is a real plumb. Hogan represents no power constituency in the ANC and therefore the ‘patronage resource’ of the position is wasted on her. Public Enterprises is a massive area of political oversight. Hogan was a gifted and thorough minister, but moving her out of this portfolio is not going to make much difference to government performance in this arena. Finally, she has conflicted with Nyanda (and Zuma) and removing Hogan and Nyanda at the same time allows Zuma to sell the act as ‘even-handed’. She will be missed.
Malusi Gigaba, Fikile Mbalula and Paul Mashitile
This is slightly more Byzantine, but the promotion of Malusi Gigaba to public enterprises and Fikile Mbalula to sports and recreation and Paul Mashitile to arts and culture (and to a lesser extent Ngoako Ramathlodi to deputy in correctional services) is both an attempt to keep in with a key and potentially competing faction and also to place those competitors in positions that will be demanding and time consuming, but will not be a base from which to launch attacks. The leading figure in this faction is probably Tokyo Sexwale. Now all the key members are up to their necks in Cabinet jobs that will keep them out of trouble. At the same time Zuma may benefit by drawing them all into the heart of government, bound by its discipline and codes and directly under his authority. It is now only Julius Malema who is still outside the tent, with an independent base, able to make a noise and engage and challenge Zuma publically.
One of the ways to ensure power and influence is to woo particular and defined constituencies. ANC Women’s League stalwart Bathabile Dlamini to social development is an obvious example of wooing the voting block of the League. Also, the South African Democratic Teachers Union has already expressed its delight at the appointment of its previous General Secretary Thulas Nxesi as deputy in rural developement.
The slew of deputy ministers
In general the pushing up of cabinet numbers works to the benefit of Zuma. The more largesse he can dispense the more power he will have when it comes to the lead-up to the ANC’s centenary conference. Each deputy appointment provides the opportunity to reward some, make promises of future greatness to others and bring potential enemies closer.
I am sure it would be possible to run a similar analysis on every appointment or shift and the guiding analysitical principles would prove fruitful.
An interesting point to note is that President Zuma has left untouched the key economic departments which are part of a broader alliance process and the security departments, which were the first areas he put firmly under his own control.
In conclusion let me reiterate: Zuma is great on tactics and strategy – it is the arena of principles that he leaves something to be desired. His presidency has not been a great advance on Thabo Mbeki’s, but, in general, his priorities have led him to appoint people better equipped for the tasks set for them.
The cabinet reshuffle has not significantly changed the overall capacity of this government , but it does leave the Nkandla team stronger than at any time since Polokwane and a second term for Jacob Gedleyihlekisa Zuma is looking more likely than ever.
My sister was a famous model and in that capacity was invited to judge the Miss World competition at Sun City in 1995.
She asked me to accompany her as her official partner for a whole weekend of glitzy celebration and judging.
The event was interesting to me for a number of different reasons but the only aspect that might apply to a column on politics and investment risk is the astonishing effect that being treated as a celebrity can have on one’s moral and intellectual soul.
I had been living alone on a farm in the Southern Cape for 5 years when Josie invited me to accompany her to the competition.
I had spent the 1980′s involved in “the struggle” in various capacities. By 1990 I’d had enough and I left politics and my myriad comrades and friends as they got on with the business of negotiating the peace and then running the country.
Of course I had some contact from afar with previous friends, but those who had moved into the ethereal realms of Mandela’s first cabinet seemed to have been lifted body and soul out of the social networks they had previously occupied .
I would only meet again those of my old friends who had become senior politicians in government a year and a half after the Miss World competition when I returned to ‘civilisation’ to become a father and take up a permanent position as a political analyst for a Cape Town based investment broker.
At the Miss World competition we stayed in the The Palace of the Lost City at Sun City (a big step for me because we had spent the 1980′s promoting the boycott of the resort that was built in the then bantustan of Bophuthatswana).
The point I wanted to make about all of this is that from early morning to late at night the organisers of the event and the hotel treated me as if I was a celebrity. It was a peculiar but not altogether unpleasant experience. I couldn’t walk out of my room without a dapper assistant type person reaching for my arm to accompany me to waiting vehicles or parties of fabulously beautiful women sipping at drinks.
Every second of the day there was someone right beside me nodding with interest at everything I said and did. Everything was paid for. It was like being in a dream where the lights swirl around you and you are the centre of the attention of some vast organisation of doormen, waiters and compliant and beautiful people.
An air-conditioned limousine (there really is such a thing – it is not just a cliché in bad spy novels) delivered me to Jan Smuts airport for my trip back to the farm after the celebrations were finally over.
What I remember most vividly about the whole weekend was standing alone with my bag just in the entrance to the airport.
“Hello!” I might have thought shrilly to myself . “Excuse me? I’m here – where the hell is everybody?”
Two years later I met again, mostly in their formal capacities, my previous friends who had become ministers and deputy ministers, ambassadors and persons of similar august standing in society.
I was never shocked and surprised at the grandiosity and extraordinary pomposity most of them came to exhibit.
I have since sat around tables with men I had previously watched fight Apartheid police with their fists and feet and watched as they lean back from the table, eyes closed, their voices drawling as their massive new brains formulate positions that keep all of those present silent as the great man speaks.
I have sat with ambassadors at formal dinners where the guest are subjected to a reading by the said ambassador of her extremely bad poetry. We all sit in silence and most nod in awed approval.
This is a different world they inhabit.
Their whole lives, every moment of the waking day, is spent surrounded by a system that takes them extremely seriously. They travel first class and they are met at the plane by luxury vehicles driven by people trained to give the impression that this is the most precious cargo they have ever carried.
Everyone they interact with confirms the lived reality that they are, in fact, a different kind of person: cleverer, more interesting and more valuable.
There is often a faux gentleness and compassion that goes along with this kind of celebrity. When someone with whom you might once have thrown stones at the police as you dodged through billowing clouds of tear gas puts her hand on your arm and looks into your eyes and says “we really appreciate the work you are doing” you don’t screw up your face and ask “what work?” You just nod.
I believe there is something intrinsically harmful to ourselves and our society in the way we elevate our politicians. I recommend taking every opportunity to deflate the individuals, prick the bubble that we have surrounded them with.
I do not think it is inevitable that politicians, ministers or even super models become pompous wind bags but I can name very few who have escaped the corroding effects of celebrity and power.
I still see Jeremy Cronin flying with real people on the plane and chatting like a normal human being (what will we do if that stalwart ever goes over to the dark side?)
And my lovely sister Josie seems to have escaped with her humility and charm intact – although I rather suspect that is because even as whole restaurants full of New Yorkers would break into spontaneous applause as she entered in the 1980′s she never quite lost the sense that there had been some huge and embarrassing mistake – one she was just too polite and sweet to correct.
*from the poem: Heron Rex by Michael Ondaatje in The Cinnamon Peeler – Selected Poems – 1989 … my long time favourite collection of poetry.
Just when all hope flees, as the last good politician still within government leaves his/her post to join the feeding frenzy and as the last decent officials trying to do a public service throw up their hands in disgust; and as the striking workers blockade the last functional HIV/AIDS clinic and trash the streets again; and as the broken bits of the Ruling Alliance go for the kill in their eye gouging, groin stamping gutter fight – just as all hope flees, whose silhouette is it that appears, backlit and heroic, flying in low over the horizon?
Is it a plane?
Is it a bird?
No, it’s … hmm, I’m not really sure.
When things are going as badly wrong as they are going for us, the person to look out for is the one who seems to have been sent by history itself as the solution to all of our problems.
I am not suggesting, as my old Granny used to say: don’t worry, cometh the moment, cometh the man or all’s well that ends well. I am suggesting the very opposite.
This is more of a warning to be careful about decisions we make when we are desperate than it is anything else.
Societies, political parties and whole nations are uniquely vulnerable at times like these. Our desperate need is for someone who can raise an anti-corruption army, is prepared to control the unions, able to fix service delivery and able to make the difficult decisions that will allow job rich economic growth.
The darker and more dire things become – and goodness knows they are as dark and dire as anyone can remember – the stronger our wish fulfilment drive becomes.
Where is the good-looking one, with the strong jaw and the easy, comforting manner, and the very firm but gentle eye and the plan and the promise and the words – and the record, or at least one you can, in your desperation, convince yourself of?
This is the moment in which nice Germans welcomed Adolf Hitler and Spaniards General Franco. King Constantine II of Greece inducted the awful “Regime of the Colonels” in 1967 saying he was “certain they had acted in order to save the country” and there was a (brief) Argentinian sigh of relief when Brigadier-General Jorge Videla overthrew the execrable, incompetent and authoritarian regime of “Evita” – as popular culture has dubbed Isabel Martínez de Perón.
I am not suggesting that a fascist opportunist and criminal is about to present him or herself as the saviour from our woes – or that things are so bad that we risk losing our judgement and welcoming him/her into the stockade. Well, not yet.
But explicitly and implicitly various political factions and individuals have presented themselves as alternatives, and the solution to our current problems.
There’s Zwelinzima Vavi – and whatever kind of workerist paradise he represents – who heroically criticised the media appeals tribunal and has laid about himself with a stout cudgel at all the worst of the cabinet ministers and officials trying to stuff the last tasty bits of the family roast into their distended bellies. And he’s available next year.
Deputy Minister of Police Fikile Mbalula suggested (of criminals) we should “shoot the bastards!” and in so doing presents a kind of law-and-order (and anti-communist) alternative, clearly being supported by the ANC Youth League and tenderpreneurs everywhere.
Lindiwe Sisulu dresses nicely and would be excellent if we ever panicked enough to need a kind of Cleopatra/Boadicea empress to save us.
Tokyo Sexwale is getting the kind of press that suggests he is an effective anti-corruption campaigner and an excellent Minister of Human Settlements i.e. he’s clean and gives good service delivery – and he’s bright, presentable, charming, good-looking and available – very available.
(This added as an afterthought: don’t discount Kgalema Motlanthe as a sort of leftish compromise that we have grown used to and, obviously, Mathews Phosa with his charming Afrikaans poetry and his friendly demeanour and his market friendly comments and his bitter struggle with ANC leader and communist Gwede Mantashe. Also consider a scenario, one I discuss elsewhere, where none of the contending factions achieves dominance and everyone agrees to stick with the burdensome incumbent … all is still possible.)
The National General Council of the African National Congress (to be held in Durban from 20 – 24 September) will reveal the main factions and their key representatives for leadership. The last NGC resulted in a rebellion against Mbeki and foretold his rout at Polokwane. This one is likely to be as instructive.
The point I wish to make here is a simple one. Those who appear to offer solutions must be judged in terms of who they are, what they have done and what they really represent. Just because we are in trouble does not mean we can afford to lose our critical faculties. My long gone Granny would have had two more things to say on the subject: don’t throw the baby out with the bath water, and don’t jump from the frying pan into the fire.
* The title of this post comes from the glorious “Thunder Road” by the inimitable Bruce Springsteen (it doesn’t really fit the story … but I really love the song:
You can hide `neath your covers
And study your pain
Make crosses from your lovers
Throw roses in the rain
Waste your summer praying in vain
For a saviour to rise from these streets
Well now Im no hero
All the redemption I can offer, girl
Is beneath this dirty hood
With a chance to make it good somehow
Hey what else can we do now?
How to explain the decision to start a review of the parastatals by a presidential committee just as Public Enterprises minister Barbara Hogan was busy with that job?
When anything in our country seems confusing it is always useful to abide by the famous injunction from Watergate’s ‘Deep Throat‘: follow the money.
The raison d’être of the new political/economic elite – the thing that brought it into being and the thing that sustains and grows it – is the opportunity to take rents out of the economy. The overwhelming bulk of the low-hanging fruit in this endeavour is in the public sector – specifically in senior management positions and the multi billion dollar expenditure of the Parastatals.
Now if what you are/what you do is sheep stealing you don’t want an independent and famously incorruptible shepherd tending the flock. Far easier to give the job to a few of your wolf mates.
There are times and places when history feels like it is just meandering along minding its own business.
South Africa today is not one of those places or times. Here history is being driven and whipped along by an evil monkey on its back.
This particular evil monkey is none other than the squabble to harness the state to the task of personal accumulation.
Karl Marx and Frederick Engels, writing in The Communist Manifesto in 1848 said:
The history of all hitherto existing society is the history of class struggle.
The “class struggle” shaping our course would have seemed a little eccentric to Karl Marx. There is no simple division into proletariat, bourgeoisie, petit-bourgeoisie – with the aristocracy fading into oblivion and the lumpen-proletariat skulking along the edges.
Here you have an elite that has emerged through leveraging political power – in exactly the same way as the local representatives of the previous political oppressors (the Afrikaner Nationalists) did from 1948.
The Afrikaner nationalists began to lose young Afrikaners (at a greater rate than before) from the early 80′s. The reasons are complex but using the state to advance the economic interests of a political/ethnic group deadens creativity, grows authoritarianism and the stultifying effects of patronage drowns cultural growth.
I suspect exactly the same thing is happening in the ruling party.
For an excellent review of the shenanigans in Public Enterprises read Christelle Terreblanche’s article from the Sunday Independent here. For a brilliant – and quite moving – overview of the growth of what I elsewhere call Vampire Capitalism, read Moeletsi Mbeki’s Architects of Poverty – which I review here.
Short of an angry and vindictive divorce you don’t really get a more serious breakdown between previous partners than described by the amazingly revealing Cosatu’s press statement yesterday threatening the end of the ruling alliance because ANC has laid disciplinary charges against Cosatu secretary general Zwelinzima Vavi.
This is what the statement reveals:
- The powerful National Working Committee (here‘s a list of members of that august body) of the African National Congress has decided to lay disciplinary charges against Vavi;
- Cosatu suspects (or knows) that the charges relate to a Cosatu statement, delivered by Vavi, in which the trade union federation criticises, amongst other things the fact that “newspapers continue to carry stories of allegations of corruption against Ministers and we are still to hear the President or Cabinet announcing that these allegations will be subjected to investigation ….” and further: “Perceptions … runs deep in our communities, that government is soft on corruption, in particular if it is committed by members of the cabinet and/or senior party leaders or officials.”
- The original Cosatu statement is a devastating critique of the Jacob Zuma led ANC and it was just a matter of time before those who believed they were the “members of the cabinet and/or senior party leaders or officials” singled out hit back;
- The Cosatu statement (catch it here) accuses these “cabinet and/or senior party leaders or officials” of sneaking the attack on Vavi into the NWC meeting by waiting until those who would have stopped left.
- The statement strongly implies that Zwelinzima Vavi is entering the leadership race for 2012 and that this somehow must be read together with the ANCYL push to get rid of Gwede Mantashe and promote Fikile Mbalula.
Business Day has a quote from Malesela Maleka of the SACP that perfectly summarised what is actually going on:
There is a small grouping in the ANC that is in a hurry to gain power, and alliance leaders stand in the way of their get-rich-quick scheme.
It cannot be such a small group if only “alliance leaders” are standing in the way, but this is succinctly put and reeks of the ugly truth.
Herewith a note I wrote a week ago for a South African client concerning a recent whip around the London fund management industry
Foreign fund managers perceptions of South African political risk
I recently had an opportunity to interact with a few London-based global emerging market fund managers. These were generally from long-only equity funds, but included a smattering of everything else.
The main lessons I learned were
- not to be overwhelmed by the negative news flow;
- always think in relative terms – a negative and obsessive focus on South Africa is meaningless without realistic peer comparisons.
This was brought home to me again as the weekend news of the brutal killing of Eugene Terre’Blanche hit the local and international press. The media focus alone seemed to suggest that this was a potentially destabilising event. However the story has quickly descended into the squalid domestic tale it really is, and the over-the-top alarmism should be faintly embarrassing to those who trumpeted it over the holiday weekend.
Here are the main questions I raised in London and the main responses I received*:
The news explosion around Jacob Zuma’s latest romantic and similar engagements does not drive capital flows
This point did not need emphasising with the fund managers I saw. If anything they were faintly puzzled as to why I would bother to raise it. For them the emerging market universe has much colourful (and sometimes ugly) personal behaviour by the political leadership and other powerful members of society. Zuma’s polygamy and latest love child are way down the list of “transgressions” in that universe.
Conflict over economic policy making the investment and operating environment difficult
The point I was making was that Pravin Gordhan’s budget speech differed in important ways from both the DTI’s Rob Davies’ Industrial Policy Action Plan II and Ebrahim Patel’s Two Year Strategic Plan. My issue with this was that Jacob Zuma had not settled important policy conflicts within his cabinet.
The different emphases could be summarised as follows:
- Pravin Gordhan supported fiscal restraint, inflation targeting, a segmented labour market and a competitive and unprotected manufacturing sector – and for this he was heavily criticised by Cosatu.
- The policies espoused in IPAP 2 and the Two Year Strategic Plan from the Department of Economic Development implicitly called for monetary easing, a weaker currency and a vigorous programme of interventions into the domestic economy through the use of tariffs and taxes – policies strongly supported by Cosatu.
Several of the fund managers that I interacted with had recently (within the last few months) met with all the ministers concerned either as part of a marketing tour led by Jacob Zuma or while in South Africa themselves. The detailed interactions with all these departments had convinced them that the policies of government were the policies as espoused by Pravin Gordhan and further that the more activist policies from Patel and Davies were not uncommon in emerging markets and at least did not include new capital controls.
I am not convinced the policy confusion is ‘investment neutral’ – although I do not think is catastrophic. Cosatu and the SACP clearly believe they have a chance to set policy – including monetary and industrial policy – through the DTI and the new Department of Economic Development. Thus Jacob Zuma seems to be clearer and more decisive about these issues in front of foreign fund managers than he ever is in front of a domestic audience. He will reap high resistance and anger from Cosatu and “the left” when they realise they have been lied to again. I think it is clear we are seeing the first signs of this realisation – in, for example, the threatened strikes during the World Cup against Eskom increases.
Julius Malema and the Nationalisation of the Mines
Julius Malema provokes a lot of reaction wherever he is discussed. Not many fund managers take him seriously and again it is because they have met and dealt with senior government and party officials who have spoken of Malema with patronising indulgence and a touch of exasperation.
Susan Shabangu, Minister of Mining, has done good work in assuring fund managers throughout the world that there is no possibility that the South African government will consider the nationalisation of mines as a serious policy option; and I came across several people who had met her and been convinced by her assurances.
Cronyism and tenderpreneurial flair – the threat to service delivery, stability, the functioning of the parastatals
Continuing on the theme of Jacob Zuma’s inability to solve the big conflicts in his government I argued that cronyism, nepotism and tender abuse are:
- important contributing reasons for the poor functioning of the State Owned Enterprises – the Eskom example reveals that enrichment agendas in tendering and the appointment of senior personnel damages the utility’s ability to do the job;
- key to understanding the failures of local government and hence the ongoing violence of the service delivery protests.
There were few fund managers I met who disagreed with this assessment, although some, yet again, argued that in the universe that includes Russia, the Middle East and Brazil, South Africa stands out less than we would imagine.
The World Cup and the waiting Hangover
It is perverse to argue that the downside of the World Cup includes:
- it could become the focus terrorist attacks;
- it could be targeted by organised labour and taxi operators to strengthen their hand against government or employers;
- it will inevitably entail a let-down or ‘hangover” period.
This would be a little like arguing that the downside of life is death and that it should therefore be avoided.
I never met a fund manager in London, or elsewhere for that matter, who disagreed.
*Please note that this is a subjective process, over determined by my own interpretation and by a selection processes out of my control. Any real collation of “the views” of fund managers must theoretically translate into their holdings and the prices at which they buy and sell.
A quick run through documents and press statement emanating from the Congress of South Africa Trade Unions and the South African Communist Party reveals the existence of a new ‘song sheet’ our crimson brethren have devised to help them sing in tune with each other.
This is something more than a coordinated set of slogans and something less than a recipe for creating socialism, socialised production and a workers’ republic out of the ingredients of the conjuncture.
If I had to try to construct a Ten Point Programme out of the bits and pieces in the press statements and discussion documents of the last few months, but particularly the last few weeks, it would look something like this:
A ten point (interim) programme for The Left
- Argue that macro-economic policy is increasingly in conflict with micro-economic policy.
- Argue that IPAP II (industrial policy) from Minister Rob Davies of the DTI in combination with Minister Ebrahim Patel’s Medium Term Strategic Plan (2010/11 – 2012/13) form the first pro-poor, employment creation oriented plan to put South Africa on a “new growth path” in which state intervention will lead to job-rich and equitable growth.
- Argue that the Rand is overvalued and wherever possible criticise inflation targeting and call for the nationalisation of the SARB as well as devaluation of the currency to effect a growth of valuable jobs in the export manufacturing sector.
- Link the Treasury under Pravin Gordhan to the economic tradition fostered by Thabo Mbeki and Trevor Manuel and keep pointing out that many of the senior bureaucrats in that department were trained and placed by the former president and former Minister of Finance; as part of this thrust attack labour brokers and the subsidy for first time youth workers as part of ongoing attempts to segregate the labour market.
- Co-ordinate calls for a national health insurance and free and universal education.
- Defend Gwede Mantashe (your man at the heart of the ANC leadership) and isolate the most hostile elements among the conservative nationalists, populists, tenderprenuers and anti-communists – Julius Malema and Fikile Mbalula (the proposed challenger to Mantashe) are perhaps seen as core elements of this “most dangerous friend” group, although Billy Masetlha and Tony Yengeni are in there somewhere.
- Start preparing a strategy linking this group with those attempting to buy their way into leadership of the alliance i.e. those who have inherited the Brett Kebble mantel. The general direction of the red finger of accusation appears to point at Tokyo Sexwale.
- Fight to stay in the alliance and fight for your views within alliance forums; make sure the ANC and government takes the results of those forums seriously.
- Prepare your cadres to influence the outcome of the National General Council later this year and the ANC’s elective National Conference in 2010 – and start preparing a set of policies and candidates to support. In the process continually cement relationships between SACP and Cosatu
- Always maintain a mass profile (through work amongst the masses) that is distinct, pro-poor, anti-corruption and principled; this strengthens your hand in Alliance forums but, more importantly, is your insurance policy if or when you are eventually forced out of the alliance.
It seems logical that despite the vicious atmosphere in the ruling alliance Cosatu, the SACP and the ANC’s own left-wing are not about to abandon the field to the “proto-facists“, populists, tenderprenuers and powerful hangers-on from the “1996 class project“. Not so soon after their triumph at Polokwane. Not after “capturing” two key cabinet posts and finding themselves in a position to, perhaps, profoundly influence government policy for the first time since 1994.
Those hoping that the tension in the ruling alliance would lead to a blossoming of opposition politics in parliament will have to wait a little longer. For now the real prize is still within the ANC and the ruling alliance.
This is not a budget review. There are just too many of them out there and I am in the middle of a roadshow to the South African fund management industry where the budget is being VERY well received.
This is more a comment on the whole budget season that yesterday’s excellent National Budget began.
The good thing about Zuma’s presidency has always been the fact that he has let every contending faction into the ruling tent.
But, I hear you cry, they are milling about in there in confusion, stepping on each other’s toes and bellowing and mooing in a kind of bovine riot as they fight to get as close as possible to the trough.
Well yes, but aside from that. You see, the Alliance of the disaffected (thank you Stephen Friedman) always consisted of an unhealthy number of BEE wannabes who wanted their turn to tear at the dwindling cherry. But they were never alone. The communists, the trade unionists, the ANC democrats who thought Mbeki had sold the revolution down the river and then a whole host of people whose contribution had been thwarted by the logic of the Mbeki imperial presidency (avoid real participation by the structures of the party, the alliance or even parliament in decisions, because they will go against you) they were all in there together. The fight between the “communists” and “nationalists” is very much a fight within the Zuma camp.
Thus, we come to the first season of the Zuma presidency in which their plans and budgets are revealed. It is important to remember that this is the first real political season of the Pirates of Polokwane (thanks Zapiro).
Well, so far we are seeing the first rays of light we have encountered in many dark months. The thugs and gangsters and vampiric crony capitalists and the racially chauvinist cabal at the centre of the security establishment (all of whom make up an important element of Zuma’s support base) have had all the running and all the press and have done all the bellowing, mooing and grunting at the trough.
Now it is the turn of the technocrats. This is the crew of lefties and trade unionists and dour financiers and tax collectors who were included in the Zuma cabinet, and gave many of us some hope to cling to in the darkening months of the whole second half of last year.
Yesterday Pravin Gordhan revealed a thoughtful budget that took all of the continuity that Manuel always showed, but added a real democratic inclusiveness that the previous minister was never able to demonstrate – given his crucial position in Mbeki’s non-inclusive regime.
Today we will hear Rob Davies and the DTI talking “industrial policy”. This is policy that sets up a combination of incentives and disincentives to shape the kind of growth we will achieve: how inclusive or job rich it will be.
During the next two weeks we will hear parliament debating the budgets of each and every department of government and finally all will be revealed.
I think it is worth treating this process with an open mind.
I will, as far as possible, provide some insight into the process as we go along.
I have whipped through the State of the Nation address while Jacob Zuma is just getting started. My initial impression is good, maybe even very good …. but maybe there has just been so much bad news and poor performance that any detailed and thoughtful stuff from government is likely to impress me …
Here are some bits and pieces:
As always the address was long on the broad brush, leaving the details to ministerial budget votes over the next few weeks.
However, there were interesting bits:
First a claim that no-one appears to be believing …. I will have to check these figures and see how they arrived at them:
We are pleased to announce that by the end of December, we had created more than 480 000 public works job opportunities, which is 97% of the target we had set.
More money for public infrastructure – power and transport
Over the next three years government will spend R846 billion on public infrastructure.
One of the most favourable public expenditure/infrastructure statements was:
Among other things, this will look at the participation of independent power producers, and protecting the poor from rising electricity prices.
We will establish an independent system operator, separate from Eskom Holdings.
Money to subsidise the employment of first time young workers
Proposals will be tabled to subsidise the cost of hiring younger workers, to encourage firms to take on inexperienced staff.
He announced a plan to hold departments accountable:
The Ministers who are responsible for a particular outcome, will sign a detailed Delivery Agreement with the President.
It will outline what is to be done, how, by whom, within what time period and using what measurements and resources.
Very concrete education targets:
We aim to increase the pass rate for these tests from the current average of between 35 and 40% to at least 60% by 2014.
Results will be sent to parents to track progress.
In addition, each of our 27 000 schools will be assessed by officials from the Department of Basic Education.
This will be recorded in an auditable written report.
We aim to increase the number of matric students who are eligible for university admission to
175 000 a year by 2014.
Brutal admission on certain health failures:
We must confront the fact that life expectancy at birth, has dropped from 60 years in 1994 to just below 50 years today.
We are therefore making interventions to lower maternal mortality rates, to reduce new HIV infections and to effectively treat HIV and tuberculosis.
We are implementing plans to increase the number of police men and women by 10% over the next three years.
Concrete stuff about housing and mobilising private sector funds:
We are working to upgrade well-located informal settlements and provide proper service and land tenure to at least 500 000 households by 2014.
We plan to set aside over 6 000 hectares of well-located public land for low income and affordable housing.
A key new initiative will be to accommodate people whose salaries are too high to get government subsidies, but who earn too little to qualify for a normal bank mortgage.
We will set up a guarantee fund of R1 billion to incentivise the private banking and housing sector, to develop new products to meet this housing demand.