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(Note: please read Jonny Steinberg’s comments on my miscasting of the implications of the recent HSRC’s South African National HIV Prevalence, Incidence and Behaviour Survey, 2012. Jonny argues that I have taken “a story of resounding success and twisted it into a tale of alarm”. Jonny Steinberg is correct on all counts and I hope to redress my error  at some time in the near future. Catch his brief criticism and my initial mea culpa in the comments section here.)

 Before it gets too out of date, herewith my last week’s (Monday 14 April) news update … it’s worth it just for Ronnie Kasrils’s comments about Zuma.

  • Employment equity in South Africa is glacially slow and will continue to help drive regulatory and political uncertainty
  • A spoilt ballot campaign and some unusually forthright statements from ANC leaders about corruption in their party and government
  • Ramapohosa brokers a truce, Vavi’s reinstatement holds and Cosatu totters on

Employment equity – dead slow ahead

Last week the Commission for Employment Equity released its 14th Annual report (available here) indicating glacial progress in making workplaces more representative of the demographic profile of the South African Economically Active Population (EAP).

Below is an indicator of race and gender breakdown of the working population as a whole:

Politics1

Original Source: Statistics South Africa, (QLFS 3 2013)

In the report’s ‘Top Management’ category, the trend between 2003 and 2013 is strikingly poor:

Employment equity reports 2003 - 2013

Employment equity reports 2003 – 2013

(The report uses categories: Top Management, Senior Management, Professionally Qualified and Skilled. The Department of Labour begun collecting data on ‘foreign natlonals’ as a distinct fraction of the EAP from only 2006.)

The performance is best in the government sector, but this only slightly improves the overall picture:

Employment equity reports 2013

Employment equity reports 2013

There have been some improvements at the lower end (Skilled Technical):

Employment equity report 2003 – 2013

Employment equity report 2003 – 2013

However, not unsurprisingly, the Employment Equity Commission believes this is not good enough in itself, nor is it adequate compensation for failures elsewhere.

(The Commission is a statutory body that reports to the Department of Labour and operates within the aegis of Employment Equity Act, 1998 – amended by Employment Equity Amendment Act of 2013.)

So what?

Poor performance by the private sector in reaching employment equity targets is a constant irritant to government and to the ‘designated groups’ (Africans, Coloureds, Indians, women and people with disabilities). Employers might argue that the administrative burden of the act is counter-productive and that the top employment categories require skills that are relatively scarce amongst the ‘designated groups’. However, the political consequence of the failure gradually adds to the risks in the operating environment.

Employment equity legislation in South Africa has, since 1998, tended not to concentrate on sanctions to enforce compliance. However it is apparent that government is gradually increasing the pressure. The Employment Equity Amendment Act of 2013 increases fines for non-compliance – both with regard to reporting requirements and with regard to targets.

The African National Congress is increasingly challenged by radical populists (e.g., the EFF) and a militant left-wing (e.g., the incipient Numsa breakaway from Cosatu) which together argue that black South Africans have failed to adequately benefit from ‘liberation’. Part of the answer to this challenge from the ruling party is likely to be a rapid escalation of pressure around employment equity and Broad-Based Black Economic Empowerment.

There will be an increasing burden on all companies operating in the country and increased government hostility to defaulters. The ANC will not be tempted towards the nationalisation policy platforms of the emerging populist and leftist groups, but must find an answer that satisfies its constituency in the rapidly growing black middle class.

Spoiled ballot campaign

Ronnie Kasrils, a former intelligence minister, and long-time leader of the African National Congress, has embarked on a campaign with some other disaffected ANC members to call for a spoiled ballot in the May 7 election.

So what?

Nothing much, except that this is probably the tip of an iceberg of discontent in the African National Congress. Perhaps what is significant is that despite the emergence of the EFF and Numsa breakaways, and the apparent success of the DA campaign, many dissidents in the ANC still find themselves unable to follow a party other than the ANC.

Kasrils’s main problem with the ANC is what he perceives as a spread of serious corruption and abuse of public funds at a senior level in government and the party.

Obviously the strategic or tactical value of a spoiled ballot will be a matter of deep controversy.

(My own view is that Kasrils and his colleagues are well within their rights to propagate this option – it is, however, not an option I will be pursuing.)

Most interesting

What is most interesting is to read Kasrils’s comments about Jacob Zuma and other ANC leaders in the interview with published in the City Press yesterday. I quote him here in-depth, because of how unusually explicit his mode of expression is and because I believe this view is representative of a significant group of ANC insiders, deeply unhappy with their party, but not yet ready to leave it:

People will tell you and it has been stated from people in exile and I can confirm – (that) he (Zuma) was a pretty simple guy. He wasn’t a person who was looking for fancy clothes and flash cars. He was pretty down to earth … I did see a certain ambition there by acquiring so many feminine relationships and wives and then children … (But Zuma has) changed very dramatically. Here is a man who comes back to South Africa and you can imagine how worried he must have been, how he was going to take care of this kind of menagerie … And then there are the people, capitalists, with money in their back pockets, who were looking at the new political power and pounced like vultures … There were some who were only too happy in the embrace because they did not have to worry about the wolf at the door, how they would have to pay the bills, how they were going to educate their kids, where they find a way to house their women … from then on, what happens to your fine principles of serving the people first and thinking of the key things that are necessary when you are now in league, and in bed, with people who become your sponsors? From that point of view, you change.

My view is that the people who now run the ANC, not every one of them, but there is an elite that has become incredibly corrupt that managed to take over – take power from Mbeki and kick him out and it’s just been downhill ever since with this system just rolling on like a snowball becoming larger and larger.

Ronnie Kasrils, City Press 13/04/2014

(Again, my personal views on whether Mbeki, Zuma or none-of-the-above are the root of all evil might differ somewhat from Kasrils’s but I think his plain speaking here is useful anyway.)

Ramapohosa brokers a truce, Vavi’s reinstatement holds and Cosatu totters briefly on

Cosatu’s Central Executive Committee meeting on Tuesday last week was widely expected to be the close-to-final act in the trade union federation’s unravelling. However an ANC delegation led by Cyril Ramaphosa persuaded the Zuma loyalists as well the Zwelinzima Vavi-led faction to postpone a final showdown till after the elections. (Such a ‘final showdown’ is ostensibly about the suitability and prudence of the Vavi, but is actually about loyalty to Jacob Zuma to the ANC’s policy positions.)

So what

Again, it is interesting to note the interaction between fragmentation and momentum in the ruling alliance. The ideas and history (mythological or otherwise) that bind the members and supporters to the ANC make the split that is happening bizarrely protracted. However, there is no question that several splits in the ruling alliance are, in fact, in process. It is tactically important for Vavi and Numsa to hold on within Cosatu for as long as possible. Cosatu remains terrain which neither contestant feels ready to abandon to the other.

 

Early on Monday mornings I send my clients a review of the previous week’s political news which might be of relevance to financial markets.

This morning I thought the issues were of more general interest.

Thus …

Summary:

It is difficult not to see the main items in this review as connected:

  • The ANC yesterday disbanded its Youth League’s executive and the executive of its Limpopo provincial structure – both epicentres of the unsuccessful campaign against Zuma in the lead up to Mangaung;
  • An investigation into Cosatu secretary general Zwelinzima Vavi’s affairs and political loyalties deepens and widens – although, just because it is a stitch-up doesn’t mean there is no fire within the smoke;
  • Zuma’s approval rating among city dwellers drops to an all-time low and disapproval ratings rises to an all-time high.

Main body text:

ANC disbands its Youth League executive soon after axing its Limpopo Provincial Executive Committee

Yesterday, it was reported that at its 4 day legotla [1], the ANC National Executive Committee disbanded, as expected, the Provincial Executive Committee of the party in Limpopo. More surprisingly the NEC of the ANC then went on to axe the NEC of the ANC Youth League – which most observers had thought abased itself adequately to Jacob Zuma after failing to unseat him at the Mangaung national conference. (Note I am reliant on news reports for this … the ANC NEC is due to hold a press conference at 12h00 today where it will give a fuller report.)

So what

The Limpopo ANC and the ANC Youth League were the launching pads of the challenge against Jacob Zuma that had been led by Julius Malema. Disguising itself behind the ‘nationalisation of mines’ call and funding itself through tender abuse in Limpopo the challenge peaked in mid-to-late 2011, just before Julius Malema was suspended. While the leaders of the ANC Youth League were clearly surprised by their axing yesterday, they can probably count themselves lucky that they are not being taken down the same path as their erstwhile leader Julius Malema, which might well end in prison for corruption charges.

While the Limpopo ANC, and to a lesser degree the ANC Youth League NEC, were riddled with corruption, it would be a very generous interpretation of what happened yesterday to see it as a “clean-up” of the ruling party. The  more appropriate prism would be to understand this as an attempt to get rid of centres of resistance to the leadership of Jacob Zuma and the faction he represents. In a less jaundiced view, it is also an attempt to establish a basic degree of coherence in the party before the national elections which will be held midyear 2014.

Cosatu – 3 commissions to investigate Vavi

Zwelinzima Vavi is facing 3 simultaneous commissions into aspects of the criticism that members of Cosatu’s national executive committee made against him two weeks ago – including that he has been involved in corrupt activity and that he is disloyal to the ANC. This comes against the backdrop of ANC secretary general, Gwede Mantashe, attacking Cosatu for failing to defend the ANC against “a neoliberal agenda” and he has warned that anarchy is taking root in Cosatu: “my conclusion is that Cosatu is on a dangerous downward slope” – (Mail & Guardian March 15). (This added after publication – Carol Paton, in her excellent article in Business Day about this matter a few hours ago said: “One of the most distasteful dimensions of Cosatu’s internal fight has been the partial role played by several journalists, who have published information from parties to the conflict designed to smear Vavi. For example, allegations have appeared in the press to the effect that Vavi sold Cosatu’s former headquarters for R10m less than the market price. But such a direct allegation has not been made in a Cosatu meeting.

So what?

The answer is best provided by a quote from “a senior Cosatu leader” in the same article: “All this is a smoke screen. The main cause of divisions in Cosatu is ANC and SACP politics. The two organisations are trying hard to capture Cosatu, but Vavi is the obstacle. He is the only one prepared to defend the interest of workers. Dealing with him will ensure that they capture the federation.”

Not unlike the decision by the ANC NEC to close down internal opposition in Limpopo and in the Youth League, at least part of what is happening in Cosatu is an attempt to close down criticism of Zuma (especially after Vavi called for an investigation into the R230 million state spending on Zuma’s home in Nkandla) and criticism of the ANC more generally. This is the Nkandla faction crushing the last vestiges of the attempts to unseat Zuma at Mangaung – as well as an attempt to establish coherency in the ruling alliance in the lead-up to national elections next year.

(The allegations against Vavi – aside from ‘collusion with opposition’ parties – includes that he sold Cosatu’s old head-office for R10 million less than its market value and that he awarded a tender to a company at which his stepdaughter was employed. Just because there are other agendas at play, says nothing of the veracity or otherwise of these charges. Vavi himself has welcomed the commissions, stating that he believes they will clear him of all charges – although, interestingly, he attempted, unsuccessfully, to have ANC stalwart Pallo Jordan and Minister of Economic Development, Ebrahim Patel as commission leaders.)

(This added after publication: Carol Paton writing in Business Day argued a few hours ago as follows: “One of the most distasteful dimensions of Cosatu’s internal fight has been the partial role played by several journalists, who have published information from parties to the conflict designed to smear Vavi. For example, allegations have appeared in the press to the effect that Vavi sold Cosatu’s former headquarters for R10m less than the market price. But such a direct allegation has not been made in a Cosatu meeting.” I wish I had put that  in earlier.)

 

Zuma approval rating among city dwellers drops to all time low

The Sunday Times reports that President Jacob Zuma’s approval rating among urban dwellers is lower than ever and his disapproval ratings are at their highest – and, in general, views are firming up on this matter.

%

Apr

‘09

Jun

‘09

Sep

‘09

Nov

‘09

Feb

‘10

May

‘10

Sep

‘10

Nov

‘10

Feb

‘11

Mar

‘11

Sep

‘11

O/N

‘11

Feb

‘12

Apr

‘12

Aug

‘12

Feb

‘13

Approve

52

57

53

58

43

51

42

49

49

48

45

55

55

46

48

41

Disapprove

29

13

19

23

41

33

44

34

35

38

41

38

35

46

44

51

Don’t know

19

31

28

12

17

16

15

17

16

14

14

14

10

8

8

9

Net positives

+23

+24

+34

+35

+2

+18

+2

+18

+2

+15

+14

+1

+20

0

+4

-10

Zuma’s approval ratings amongst city dwellers over time (TNS Research)

TNS conducted home interviews with “1290 blacks, 385 whites, 240 coloureds and 115 Indians and Asians.”[2]  54% of black people were still happy with Zuma’s performance, but only 13% of whites. The president still has 64% of the vote from “younger Zulu-speaking adults, of whom 64% – down from 71% in August last year – were happy with his work” (Sunday Times).

An important indicator comes near the end of the story: “Zuma’s biggest drop in approval was recorded in Soweto, where the figure of 42% was the lowest since he assumed office. The Port Elizabeth figure of 22% was also an all-time low.”

So what?

National general elections must be held some time between April and July in 2014. For the first time “born frees” (young people born after 1994) will be eligible to vote. This first wave of born frees will consist of approximately 6 million people, “using the 76% turnout of the 2009 elections, these new voters could make up more than 20% of the vote by 2014 … for context, the Democratic Alliance won 17% of the vote in 2009. From 2014 onward, the born-frees will come in waves of just over 5-million each national election until they make up nearly half of the voting population by 2029” -  (Osiame Molefe in the online news source Daily Maverick).

There is growing excitement that, perhaps, this category of voter, and urban African voters more generally, might be open to political choices unthinkable only a few years ago. Much of the growing expectation in the Democratic Alliance and the energy behind Agang comes from this source. Could younger and urban voters (especially Africans) vote for a party other than the ANC in 2014?

Jacob Zuma has established a rigid hold on the ANC, but the TNS and other market research could indicate that it is precisely this victory that makes the ANC a less appetising choice for younger and urban voters. If Jacob Zuma leads the ANC in an election in which the ruling party gets much less than 60 % of the vote, his hard but brittle hold on the party could shatter.

ANC strategists are seriously worried about both the Eastern Cape (especially, but by no means exclusively, the Nelson Mandela Bay metropolitan area) and the Northern Cape. The idea of whole of the Cape (Western Cape is already in Democratic Alliance hands) in opposition hands and a party the equivalent to the Movement for Democratic Change in Zimbabwe giving the ANC a run for its money in urban areas throughout the country is a nightmare scenario.

Analysts have consistently been surprised at how well the ANC has performed in national elections (62.65% in April 1994, 66.35% in June 1999, 69.69% in April 2004 and 65.90% in April 2009) so treat any wild predictions with a degree of scepticism. However, the TNS survey of Jacob Zuma’s ratings is an indicator that shifts are in progress .

Bits and pieces

  • Business Times quotes a succinct put-down by Finance Minister Pravin Gordhan of the ratings agencies: “[You must] understand that we in South Africa did not create this crisis …when … the financial sector began to create … derivatives, based on sub-prime mortgages … [they] had an AAA rating given to them by the same agencies.” Last week S&P affirmed South Africa’s foreign currency sovereign credit rating at BBB and kept the outlook negative, arguing that external imbalances and underlying social problems remain.
  • All the major weeklies expressed deep levels of concern about what they see as out-of-control police violence in the country – most obviously evinced in the killing of Mozambican taxi driver Emidio Macia in Daveyton, but also brought into public focus by police commissioner Riah Phiyega’s spoon-fed testimony to the Markikana commission on Thursday last week. Police minister Nathi Mthethwa is one of Zuma’s closest allies and his department is, truly, in a parlous and dangerous state.

[1] A word in South African English borrowed from Sesotho, usually meaning a consultation or community meeting with government and the community or within a political party

[2] Categories and language routinely used in South Africa where the racial categorisation of the past is correctly understood to have a significant influence in the present and is routinely used in the media and academic analysis.

Remember kaleidoscopes?

Basically a tube that you held up towards a light and peered through as if it was a telescope?

But unlike kid’s telescopes –  which, like kid’s microscopes, were blurry and disappointing and stupid – the kaleidoscope was a device of astonishing power and beauty.

The point for my six-year-old self who received his first kaleidoscope for a birthday, probably, was the power that little tube put in my hands.

The simple expedient of  twisting one end caused visions of astonishing, luminous, grandeur to pour out the other.

I can still feel that tingling as if I was balanced on a precipice, reaching out to shape a whole universe; causing tectonic shifts in the intrinsic structure of reality … okay, maybe not that last bit … but you get the point.

Such power … and I had absolutely no idea how it worked.

My “device of power and beauty” was a semi-rigid cardboard tube with loose coloured translucent beads or pebbles in the end and two mirrors running lengthways up the inside, duplicating images of the transparent junk that tumbled as the tube was rotated.

My first kaleidoscope wilted in my sweaty, meglomeniacal hands a few hours after I had torn it from its pretty wrapping – and I cut myself on a broken piece of mirror as I desperately pounded it to make it continue producing those wondrous images.

Which brings me to my worries about ANC policy making.

I am slightly more worried today than I was when I wrote the piece below (July 2) just after the conference.

That is partly because I have thought further about some of the issues and partly because the consensus points within the ANC seems to be slippery – and therefore uncertainty is rising.

In short my worry is that the ANC is approaching more vigorous economic intervention with the enthusiasm and growing expectations of my six-year-old self after he first looked through his pretty new cardboard tube.

I think the likelihood of this all ending in tears in increasing exponentially – and the reasons are not very different from those that caused the ruin of my first kaleidoscope and my cut finger.

I will pursue this theme (the threats involved with increasingly desperate state interventions – especially those that worsen the problems they promise to fix) in future posts, but first my initial take on the conference; written just after having read the particularly awful English language Sunday newspapers of July 1:

Much ado – and confusion – about the ANC policy conference

The teams of journalists from the political desks at the Mail & Guardian, the City Press, the Sunday Times and the Sunday Independent could have been covering different conferences given the divergence of their understanding of what went down at Gallagher Estates in the Midrand from Tuesday to Friday last week.

This is my first attempt at a distillation of the main points – partly of the coverage, partly of what was supposedly being covered:

  • Debates about policy and the struggle over who will be elected to the top positions in the ANC at the National Conference in December became blurred, to the detriment of both.
  • The “Second Transition” concept became associated with Jacob Zuma (even though it was penned by his factional enemy, Tony Yengeni) and its rejection by most commissions at the conference was interpreted as a set-back to Zuma’s re-election campaign.
  • The power struggle obscured the fact that there was general consensus that transformation is “stuck” and radical and urgent action to hurry the process along needs to be taken if the ANC is to keep the trust and support of its majority poor and black constituency.
  • The report-back to plenary of the key breakaway commission on mining became the most blurred moment, when Enoch Godongwana presented a summary of the views on the state’s proposed involvement in the mining sector – with pro-Zuma provinces KwaZulu-Natal, Mpumalanga and Free State tending to go with the SIMS compromise and the other six provinces tending to support the ANC Youth League in a strengthened nationalisation position.
  • When consensus is finally reached, it is likely to include an even stronger role for the state-owned mining company – perhaps giving it the right to take significant stakes in all future mining licenses issued. Absolute taxation levels might be an area of compromise between the state and the mining sector in negotiations about this matter in the final lead-up to Mangaung where policy will be formally decided.
  • There was broad consensus that the state could and should force the sale of farmland for redistribution purposes and that an ombudsman be appointed to determine ‘a fair price’ – to prevent the process being frozen by white farmers holding out for better terms. It is not clear whether this would require a constitutional amendment.
  • There was general consensus that the Media Appeals Tribunal is no longer necessary, that the number of provinces needs to be reduced, that the proposed Traditional Courts Bill is reactionary and against the constitutionally guaranteed rights of women and children in rural areas, and that the youth wage subsidy (as a tax break to employers) had to be sweetened, or replaced, with a grant directly to young job seekers.
  • The push for “organisational renewal” will require a number of changes: a probation period of 6 months for new members, a 10 year membership requirement before such members can be elected to the NEC, a reduction of the size of the NEC from 80 to 60 members and a downgrading of the status of the Leagues (women, veterans and youth) so they more directly serve the interests of the mother body.

So if this was a soccer tournament, what is the score?

The City Press led with “Tide Turns Against Zuma”, but frankly I think this is more about that newspaper’s preferences than anything else. The ideological disputes in the ANC are complicated but broadly follow an Africanist/nationalist group versus a SACP/Cosatu/anti-nationalist group. Neither Jacob Zuma nor Kgalema Motlanthe are clearly in either camp (but Zuma tends towards the former and Motlanthe towards the latter). Only one potential challenger, Tokyo Sexwale, is firmly in one group (the nationalists, which is the ideological home of the ANC Youth League) and he has more chance of passing through the eye of a needle than winning this competition.

Only Motlanthe could seriously challenge Zuma in a succession race and despite all the rumours and leaks it is by no means clear whether he has any intention of running – or, if he did, whether he would have a significantly different policy agenda than that being pursued by Zuma and his backers.

The previous post was headlined “The ANC’s surprising return to form” and it stayed as the face of this website throughout a week in which we were reminded of the nest of corruption our president emerged from.

… oh yes, and a week when the ANC in parliament passed the Protection of Information Bill – with sneaky abstentions from three of their MPs. (Gloria Borman actually abstained, Ben Turok walked out and Salam Abram said he would have abstained if he could have made it to the sitting.)

… and a lot else has gone wrong such that it is difficult to even pierce the gloom.

Many of these issues have been done to death, but briefly on Mac Maharaj:

The Mail&Guardian weekly newspaper and the Sunday Times (and now City Press) revealed different pieces of evidence that appear to prove that French arms company Thales channeled money to Mac Maharaj, then Minister of Transport (also, crucially, architect of Zuma’s rise and key strategist behind Zuma government) a few months before Thales was awarded a credit card licence tender (worth about R265 million) by Maharaj’s department in 1996.

The more revealing points are that the alleged middleman, Zuma’s financial advisor Shabir Shaik, was sentenced to 15 years in prison for, amongst other things, securing a bribe from Thales for Jacob Zuma’s protection in the arms deal. Thales country manager Alain Thetard allegedly signed or originated both the agreement that channeled money to Maharaj through his wife Zarina as well as the encrypted fax spelling out the payment for Zuma and the protections and advocacy those payments were for.

The issue is Zuma only avoided prosecution for corruption and racketeering because it was shown that there was political meddling in the prosecution – not because there was not a prima facie case for him to answer (his financial advisor went to prison for securing the bribe for his boss … you don’t get more prima facie than that!)

The leaking of the evidence is undoubtedly linked to the conflict between Zuma and the faction of which Julius Malema is a part. In fact the Youth League has made it clear that it plans to raise issues associated with Zuma’s sexual conduct as well as the fact that his (Zuma’s) friends and family have benefited financially (and overwhelmingly) from his presidency. Some of Malema’s key backers were insiders to the arms deal scandal and it would have been an easy matter for evidence against Mac and Zuma to emerge from some of those quarters.

At the very least the accusation (and reminder) that the Zuma presidency is deeply tainted by this history will hurt his  re-election bid at Mangaung.

… while the ANC itches to get more fingers on the economy

Late last week it emerged that there are proposals to tax ‘unbeneficiated’ mineral exports and to force the South African fund management industry to own a specific amount of government and SOE bonds in ‘draft of draft’ reports from the ANC Economic Transformation Committee – that were due to be discussed by the ANC NEC this weekend.

Both Bloomberg and Reuters have got hold of these, but the ‘final drafts’ take a less prescriptive approach, according to committee chair and key ANC economic policy strategist (and deputy minister Economic Development) Enoch Godongwana.

The ANC aches to get its hands on the IDC’s Public Investment Corporation’s investment power – especially as assets under management (mostly public sector pensions) topped the 1 trillion Rand mark in March.

The prescribed assets idea and strategies to force beneficiation – all in the service of the jobs drive – have been on the fringes of government thinking for years and are flirted with in much of the motivation that led to the NGP.

I don’t think these proposals will ever be legislated in this form.

A pre-Mangaung policy conference (in May according to the Business Day and June according to Bloomberg/Reuters) will make recommendations but the decision will only be made in December 2012.

The ‘nationalisation of mines’ draft proposal was also expected to be delivered to the NEC this weekend. I haven’t seen it or read any reports about it, but I expect a shift in the tax regime, a tightening up of the Charter and a plan to strengthen the African Mining Exploration and Finance Company (AEMFC) – which is the much vaunted “state owned mining company”. Together these fall well short of the ANCYL nationalisation proposals, but still weaken the investment case for the industry as a whole.

(Note, that these ideas proposed by think-tanks within the ruling party are essentially grappling with ways to make the economy more supportive of the transformation project. The problem, though, is one of trust. Giving this ANC is led by the kind of people named in the first few paragraphs of this post, more control over central aspects of our lives feels stupid. I just don’t trust them any more.)

… meanwhile

… Cabinet approved the publication of the Broad-Based Black Economic Empowerment Act Amendment Bill that plans to fine companies up to 10% of revenues for ‘fronting’- and allows for companies to lose points on one part of the balanced scorecard for failure to achieve targets on another.

This is the first major attempt to give B-BBEE serious teeth (outside of mining licensing where the legislative and regulatory teeth are already pretty sharp.)

My own feeling is that resources for ‘deracialising’ the SA economy are limited; cheating is a problem, but the fact that the process is too often indistinguishable from a bribe of the political class is the bigger failing the new amendments ignore.

There’s my happy little corrective for an early Monday morning.

Tokyo comes out to defend Julius Malema in the disciplinary hearing?

To be followed by Winnie Madikizela-Mandela and Tony Yengeni?

It is an almost too perfect reversal of Julius Malema’s own metaphor after his victory at the Eastern Cape provincial conference of the ANC Youth League in August 2010:

“We will never surrender to Blade. He has never been a member and has no understanding of …  the youth league … Their people have been receiving serious lashings in the youth league conferences. As we said before, we will beat the dog (SACP) until the owner (Nzimande) comes out” … (a copy of The Herald editorial I took that from here.)

The boot, at the moment, seems to be on the other foot (or ” the stick is in the other hand” might have been better – ed.)

The “dog” that is now being beaten at the disciplinary hearing is Julius Malema himself and the owners that are revealing themselves are Tokyo Sexwale, Winnie Madikizela-Mandela, Tony Yengeni and friends.

And who is doing the beating? Why, the South African Communist Party and Blade Nzimande (as well as Jacob Zuma, Gwede Mantashe and many – but by no means all – in the incumbent leadership of the ANC).

Last weekend, almost while the disciplinary hearing was sitting, SACP Secretary General Blade Nzimande said to  the SACP provincial congress in Esikhawini, near Richard’s Bay, in northern KwaZulu-Natal, that young people should be discouraged from participating in the ANC Youth League’s Economic Freedom in Our Lifetime marches and protests on the 27th and 28th of this month:

“Do not allow yourselves to be used by people with agendas that are not in your interest … We are not going to be supporting any march whose intention is malicious and to undermine the authority of the ANC and the government.”

Breaking ideological stereotypes and confusing the foreigners

Spare a thought for those of us whose job it is to explain to foreign investors why the communists are leading the fight against a youth movement calling for the nationalisation of mines, the expropriation of land without compensation and “Economic Freedom in Our Lifetime!”

I could, of course, have just sent them a few extracts from Fiona Forde’s An Inconvenient Youth – Julius Malema and the ‘New’ ANC (Picador Africa 2011).

Here she is, sitting outside a hotel in Caracas Venezuela chatting with a sulking Julius Malema on his way back to South Africa (from a conference of the World Federation of Democratic Youth taking place in downtown Caracas in April 2010)  to face his previous disciplinary hearing. She has been getting a lesson from Julius on the importance of matching the leather of his watch strap with his belt and his shoes.

Venezuela has never seen so many designer labels as it has these past 48 hours since the arrival of the South African young ones. They descended on the city with their expensive suitcases and travel bags, top-of-the-range baseball caps, flashy T-shirts, snazzy shoes and sneakers, sleek manbags and a string of other expensive accessories hanging out of them – and a bodyguard in tow – all dressed up for a socialist youth conference.

I have been wondering how they must appear in the eyes of the other youth who have flown in from all over the world, and who are also staying at the Avila. The three-star hotel is swarming with casually-dressed, young delegates and among them, to my mind at least, the South Africans seem to stand out a mile.

When we understand that these delegates are the very same people who have formulated the “Economic Freedom In Our Lifetime” slogan, the implacable opposition of the South African Communist Party to the campaign becomes  obvious.

The campaign is a classic attempt by a parasitic elite to manipulate those who are really poor and dispossessed so that these disenfranchised citizens become the battering ram and the lever through which that elite can capture even more resources and assets than it has already – through tender abuse and diversion of state resources into their own pockets.

So the dog is being beaten.

But we would be unwise not to think deeply and carefully about the nature and intentions of the owners that rush out to defend their animal.

In case anyone was wondering if I had disappeared into the ether: I have been seriously busy and have had no time to post on the blog.

If you were paying extra attention, you may have noticed that a post reviewing the nationalisation of mines debate appeared and disappeared a few weeks ago.

My mistake – it was bespoke for a month, and I jumped the gun. I am now able to publish it and you will find it below.

Meanwhile I am into my second reading of An Inconvenient Youth – Julius Malema and the ‘New” ANC by Fiona Forde. It is exceptionally good and I strongly recommend you go out and buy yourself a copy. I have begun a review which I will publish here during the course of the week.

But meanwhile, here is the month-old nationalisation update/review. My views haven’t changed much since I wrote it … and it is good to get it on the record … even if it is a little turgid and written in an overly formal tone.

Nationalisation update/review

The nationalisation of mines debate in South Africa is, as predicted, reaching new heights of sound and fury. Yesterday it appeared that Cosatu was officially supporting the Youth League call. This is a situation fraught with danger although I do not change my assessment that the ANC is unlikely to decide on mine nationalisation along anything like the lines proposed by its youth wing.

Summary bullets

  • Yesterday Cosatu economist Christopher Malikane argued that the ANC has accepted as fact that the mines would be nationalised and that it was only a question of “how” not “if”.
  • This does not imply significant new risk although the markets are likely to interpret it as such.
  • In reality Cosatu is significantly divided on the call and current shifts in Cosatu policy have more to do with (important) internal conflicts.
  • Cosatu does not have the final or even main say over ANC economic policy and its current flirtation with the Youth League is actually about frustration with not achieving its policy aims with the ANC.
  • The ANC and its left wing allies have been consistent and steadfast in their criticism of the call and I outline the history both of the Youth League call and of the critique of the call in this report.
  • The nationalisation call has consistently been deployed in political battles for power within the ANC and in government which both gives the call unrealistic political energy and makes the threat difficult to interpret or assess.
  • The ANC has set its Economic Transformation Committee the task of assessing the call and making proposals. I expect clarity to emerge in November this year but a final decision will only be made at the centenary national conference in December next year.
  • Cost, international agreement, the Bill of Rights and the constitution make it inconceivable that the ANC attempt to nationalise the mines.
  • However I think the party and government will use the threat as a stick to get a better deal out of the mining houses.
  • Between now and the final decision the “sound and fury” will keep the issue alive and the threat present.

Cosatu shifts towards the ANC Youth League

Yesterday  Congress of South African trade Unions economist Professor Christopher Malikane was reported to have said at a South African Chamber of Commerce and Industry forum that the group charged with discussing the nationalisation of mines in the ANC had moved beyond the issue of whether the mines should be nationalised and is now purely considering modalities to achieve this aim. “Investors are looking for certainty around the issue of nationalisation, well this is the certainty they need,” he said.

The ANC Youth League managed to place formally on the agenda of the ruling African National Congress (at the party’s National General Council in September 2010) the proposal that government consider nationalising a majority share of the mining industry – for report back and a decision at the party’s Mangaung elective centenary conference in December 2012.

The general noise gets louder

With the ANC and government leadership mired in controversy relating to poor service delivery, poor government performance and accusation of corruption – and the Zuma presidency as weak as it has ever been – the ANC Youth League and its supporters in government appear to have seized the initiative and are making all the running at a public level. Investors and other observers would be forgiven for thinking that the slogan “Economic Freedom in our lifetime!” and the calls to nationalise the mines, banks and the land (that last explicitly without compensation) were not government policy. I am of the view that owners of mining equity and other property in South Africa are starting to feel the heat.

My view

My view has been that the ANC is highly unlikely to decide to nationalise the mines – although uncertainty in this regard will persist right up until December 2012 (although some clarity is expected to emerge after the ANC committee examining this issue reports back some time in November this year).

I think that the party and government will attempt to use the populist surge to discipline the mining companies to fulfil their social and Black Economic Empowerment obligations under the Mining Charter (which arises out of the 2002 Mineral and Petroleum Resources Development Act).

Additionally government and the party are likely to use the opportunity to change the tax and royalty regime to extract more revenue from the sector – particularly with the imposition of a tax on windfall profits.

Finally I think it likely that new obligations will be placed on the mining companies – especially with regard to some form of obligatory contribution to the building and maintenance of transport and power infrastructure near where the mining operations are located.

Brief History of the nationalisation call

The ANC Youth League on nationalisation of mines

Soon after the current leadership of the ANC came to power at the landmark Polokwane conference in December 2007 the ANC Youth League elected Julius Malema as its president (in April 2008).

By the end of that year Julius Malema and the Youth League began proposing that the mining industry be nationalised. This was the essential elements of that proposal:

* an immediate suspension of the issuing of mineral rights and permits;

* the establishment of a state owned mining company;

* the nationalisation – with or without compensation – of fifty percent of all mining operations;

* that licenses only be issued in future on the basis of a 60 percent equity stake being held by the state owned company.

The Youth League drew authority from the historic Freedom Charter document. The document, drawn up in a national consultative process led by the African National Congress in 1955 and adopted at the Congress of the People in Kliptown says of the economy:

“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”.

Criticism from the Left of the ANC Youth League call

The major critique of the ANC Youth League call was formulated by Jeremy Cronin, Deputy Minister of Transport and Deputy Secretary General of the South African Communist Party (and major ANC intellectual and ideologue).

It is my guess that Jeremy Cronin was deployed by the incumbent leadership of the ANC in the belief that a criticism of the nationalisation call articulated by leading communists would defuse the Youth Leagues claim of militancy and radicalism – and I therefore cover these arguments in detail here.

Cronin argued that the Freedom Charter passage 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” (all Cronin quotes in italics in this section from SACP’s Umsebenzi Online Volume 8, No. 20, 18 November 2009).

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 had 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 that the Youth Leagues proposal of 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”) points out that South Africa’s 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 bail-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.”

Opposition to and support of Youth League call

President Jacob Zuma, ANC Secretary General Gwede Mantashe (who is also SACP Chairman), and Minister of Mineral Resources Susan Shabangu have all explicitly rejected the ANC Youth League’s call – with Shabangu having famously said that the mines would only be nationalised “over my dead body”.

However despite this being the overwhelming position of the ANC and government, the Youth League scored a significant victory by having its proposal placed formally on the ANC’s policy agenda – achieved at the National General Council meeting in September last year.

At that conference Tokyo Sexwale (Mvelapanda Resources and Human Settlements minister) and Bridget Radebe (Mmakau Mining, wife of minister of Justice and Constitutional Development Jeff Radebe and sister of Patrice Motsepe) both came out in support of the ANC Youth League’s call – giving some weight to the now widespread allegation that the Youth League is operating with a hidden and funded agenda to have failing Black Economic Empowerment deals bailed out by government.

Arguing against the call were leading ANC intellectuals Joel Netshitenzhe, Jeremy Cronin and Trevor Manuel. However the ANC incumbent leadership failed to block the Youth League proposal and it is now formal policy of the ANC to investigate the matter and report back for a decision to be made at the centenary National Conference of the ANC which will be held at Mangaung (Bloem) in December 2012.

The ANC’s Economic Transformation Committee

The committee tasked with formulating the ANC’s position on the nationalisation of mines is the Economic Transformation Committee – which has the general brief of investigating the role of the state in economic development and is the natural forum in the ANC to develop a position on nationalisation.

There is not much in the public domain about the proceedings of the committee, but it is my information that Gwede Mantashe is overseeing the work of the committee which is formally headed by Enoch Godongwana (deputy minister of Economic Development and ANC NEC member).

The contributors thus far include those from the ANC Youth League, Joel Netshitenzhe, MZ Ngungunyane, Cosatu, Floyd Shivambu, Paul Jordaan and the National Union of Mineworkers. The full text of the initial contributions can be found in the last five issues of ANC’s internal discussion publication “Umrabulo” (find those on the ANC website at http://www.anc.org.za/list.php?t=Umrabulo).

It is my understanding that those opposed to the nationalisation call – for the reasons that have already been summarised in this report – are attempting to craft a compromise that will allow everyone to save face while allowing government to wrestle a better deal out of the mining companies – as stated in the “My view” section at the start of this report.

It is my understanding that the committee will report back in November this year and I expect the markets to get an indication of how the debate will pan out then. However, it should be borne in mind that the formal conclusion of this debate will only be reached at Mangaung in December 2012 and the noise is likely to continue right up until the last minute.

Cosatu’s shifting sands

The major change of external inputs into my assessment has been a struggle within the Congress of South African Trade Unions that has resulted in a shift away from the federation’s original position which was closely aligned with the view of the SACP and the incumbent leadership of the ANC – as articulated by Jeremy Cronin above.

The last unambiguous statement from Cosatu on this general issue came in the form of a joint communiqué with the SACP on the 24th of June 2011- I quote it here in full:

“… periods of capitalist crisis are also typically characterized by various forms of right-wing demagogic populist mobilization acting on behalf of various capitalist strata in crisis, but often masked behind a pseudo-left rhetoric. We believe that the same phenomenon is apparent in SA, finding a potential mass base amongst tens of thousands of unemployed and alienated youth in particular. However, behind this populism are often well-resourced business-people and politicians seeking to plunder public resources. We resolved as the SACP and COSATU to close ranks and to expose the true agenda of these tendencies and their connections to corruption and predatory behaviour in the state.”

However, at the Cosatu National Executive Committee meeting a week later a split appeared in Cosatu that has impacted on this debate.

The conflict is complicated but in a nutshell, it is between a faction led by powerful Cosatu Secretary General Zwelenzima Vavi and Irvin Jim of the National Union of Metal Workers (Numsa) of South Africa and a faction headed by leaders grouped around the National Union of Mineworkers (NUM) under Frans Baleni. Broadly the NUM/Baleni faction is supportive of the SACP and the Zuma leadership of the ANC while the Vavi/Jim/Numsa axis has become frustrated with broken promises (concerning both corruption and economic policy) of the Zuma/ANC leadership and would generally seek a more radical socialist or workerist political solution than is being offered by the ANC.

The Vavi/Jim/Numsa faction has over the last month begun courting the ANC Youth League, and attempting to harness the energy coming from this sector for its own ends. This is highly opportunistic as Vavi and Numsa have consistently characterized the Youth League leadership as “right-wing demagogic populist” and the League’s nationalisation call as fronting a corrupt BEE agenda looking to take a double bite out of resources available for transformation.

Rank opportunism or not, the crack in the Cosatu position is adding a new element to nationalisation debate. It is my understanding that the National Union of Mineworkers remains opposed to the ANC Youth League call, but the new element will undoubtedly add some confusion.

The point to remember about Cosatu – a point reiterated by the ANC and government leadership time and again – is that the federation represents a sectional interest. There are obvious reasons why some elements in Cosatu would want the mines nationalised – who wouldn’t want a guaranteed job for life as a Greek style (up until recently) government employee?

It is to NUM’s credit that its president Senzani Zokwana said in November last year that the Youth League was being reckless with the industry and that the League’s call was inspired by rich Black Economic Empowerment recipients looking to get failing deals bailed out by the state and Frans Baleni a month ago reiterated: “It is not only the private sector that has invested (in mines), but the workers with their pension and provident funds have also invested. We should have maturity and the debate should not have political undertones.”

It’s the law!

A key motivator of my view has been that South Africa is bound both formally and informally to agreements – including in the Constitution – that make it impossible to nationalise the mines without full compensation. Nationalising 50 percent of the mines would cost in the region of $130bn. There is no conceivable advantage – and an almost endless downside – for the government to nationalise the mines. Therefore it is not going to happen – although the end result might look like a compromise and might entail the establishment of a state owned mining company, although one with a much smaller asset base and agenda than conceived in the Youth League’s call.

Nothing material has changed that would allow me to change the view – although my confident smile has assumed a slightly brittle quality. Cosatu was never going to be the determining factor in this debate but the weakness of the ANC leadership – in particular the weakness of Jacob Zuma’s presidency – means that I am no longer certain that the centre of the Ruling Alliance can hold.

From the start the nationalisation of mines call has, in part, been a stalking horse for leadership challenges within the ANC and government. I have argued elsewhere that the call has been central to Tokyo Sexwale’s political ambitions and that he has covertly supported the Youth League in this regard for some time.

Now we have an element of Cosatu attempting to forge some form of alliance with the Youth League around the call clearly as part of a strategy to shift the leadership balance within the ANC.

The Youth League itself is using the call for its popular mobilization potential to help push its own candidates (particularly Fikile Mbalula – currently minister of sport) for higher office.

In this environment it would be foolhardy to be overconfident about the call. However it is my opinion that predicting the success of the Youth League call would be the same as predicting the imminent failure of the South African democratic project and state – a view I believe is too extreme and alarmist.

In many ways what is happening now is very much as predicted: the situation will be full of sound and fury right up until a decision is made at the end of 2012.

Wouldn’t you want to have a job for life as a public servant, with guaranteed medical and benefits in a parastatal company that government would push up borrowing and taxation to keep afloat no matter what?

Of course you would – any of us would … just like the Greeks did up until very recently.

When Cosatu economist Chris Malekane argued as he did yesterday, stating with imperious certainty that the discussion about mine nationalisation was over – that the ANC NEC was unanimous and that it was not a question of if, it was a question of how – we should not be too surprised.

Malekane was talking the book of a particular faction of Cosatu – and his views are in stark contrast to views that had been expressed by leading member of the National Union of Mines.

While Malekane said Cosatu had encouraged the Youth League to place the debate on the agenda, National Union of Mineworkers president Senzani Zokwana said in November last year that the Youth League was being reckless with the industry and that their call was inspired by rich Black Economic Empowerment recipients looking to get failing deals bailed out by the state. “I believe that there’s no threat to any investor …. I don’t think that view (nationalising the mines) will fly given the facts at our disposal”, he said.

Frans Baleni NUM Secretary General said just a month ago: “It is not only the private sector that has invested (in mines), but the workers with their pension and provident funds have also invested. We should have maturity and the debate should not have political undertones.”

NUM has to care about the the state of the mining sector – it has members who would undoubtedly lose jobs if the mines were nationalised.

Additionally NUM is lead by the ANC/SACP supporting faction of Cosatu – with Vavi and NUMSA increasingly seeking ways forward around and beyond the ANC.

The ANC incumbents have done everything they can to stop or limit this debate – and they have been supported in this by the South African Communist Party. The president, cabinet ministers and senior party officials have argued that it was never ANC policy to interpret the Freedom Charter clause on the nationalisation of mines and “the commanding heights of the economy” in the crude and mechanistic was the Youth League has done.

I am convinced that it is entirely impossible that the ANC will nationalise the mines along the lines proposed by the Youth League. It would cost in the region of $130bn (see excellent Reuters article here) and it would break a long list of formal and informal obligations South Africa has with trading partners – as well as explicit reassurances the ANC gave at the time of the leaked mining charter in 2003. Finally, owning the mines would oblige government to take on the accumulated risks associated with environmental damage those mines have built up over the years as well as the risk associated with volatile resource demand.

Government’s task is to get the best possible value out of the non-renewable resources with which the country is endowed. I don’t see any scenario in which that could be achieved through the nationalisation of mines in the form described by the Youth League or that supported by a faction of Cosatu yesterday.

I am back from my travels where I spent much time discussing the ANC Youth League’s “nationalisation of mines” call with investors.

The long and the short of my views are that I don’t think the ANC will decide to nationalise the mines at its December 2012 elective conference in Mangaung. I do, however, think the ANC will attempt to use the populist surge to beat a better deal out of the miners (in terms of the companies’  social obligations, obligations to contribute to infrastructure development as well as the likely imposition as a special tax on windfall profits.)

However I also think that markets will remain anxious about nationalisation and will tend to counter-track the rise and fall of Malema’s personal fortunes.

With this in mind I think the Youth League and its President are in a degree of trouble.

Monday morning  one time radio show host, sometime actor and columnist Eric Miyeni was published in the Sowetan saying of Ferial Haffejee, editor of City Press:

Who the devil is she anyway if not a black snake in the grass, deployed by white capital to sow discord among blacks? In the 80s she’d probably have had a burning tyre around her neck.

That evening ANC Youth League spokesman Floyd Shivambu sent out a statement that read:

The ANC Youth League agrees with Eric Miyeni’s column … He should continue to be an honest, fearless activist who speaks his mind and not fall into the trap of those who blindly support interests of apartheid beneficiaries.

On Sunday Julius Malema accused President Ian Khama of Botswana of being “a foot stool of imperialism, a security threat to Africa and always under constant puppetry of the United States” and further that the “ANC Youth League will also establish a Botswana command team, which will work towards uniting all oppositional forces in Botswana to oppose the puppet regime”.

On Tuesday Jackson Mthembu, ANC spokesman, said:

The ANC would like to totally reject and publicly rebuke the ANCYL on its extremely thoughtless and embarrassing pronouncements on ‘regime change’ in Botswana … This insult and disrespect to the President (Honourable Ian Khama), the government and the people of Botswana and a threat to destabilize and effect regime change in Botswana is a clear demonstration that the ANCYL’s ill discipline has clearly crossed the political line.

Surely we are into injury time by now – even the jellyfish Zuma leadership must have reached the end of its tolerance?

Two weeks ago previous key backer Tokyo Sexwale described Malema as a “loud-mouth young man”. Even Malema’s long term defender Mathews Phosa appeared to agree that the nationalisation debate had been handled badly and that the ANC had “dropped the ball” with regard to reconciliation and nation building.

Does this not leave Julius defended by only his organisation and a few wannabe intellectuals of the Miyeni stripe ?

Malema does not head an army of disenfranchised, unemployed and angry black youth. He has courted this crucial fraction of our society – usually as a deployed voice of the ANC itself – but in reality he lives a life of the überflash, so far removed from the unemployed and disenfranchised that his claims to the contrary smack of the worst and most dangerous forms of manipulative populism.

The point?

Markets should interpret what is happening as serious headwinds for the “Malema agenda” and that means much of the sound and fury will be removed from the nationalisation debate … a good thing for our politics and our economy.

Arrived late last night in New York from London (and Edinburgh and Frankfurt)  and the lag means I am only going to want to fall asleep at exactly the time it will be most unsuitable to do so.

I have been travelling (for Indian owned Religare Capital Markets, where I have a new berth) with the excellent Michael Kavanagh who is a mining and metals specialists. We have a story which interestingly balances the South African political risk (especially associated with nationalisation) and the long-term bullish outlook for  platinum. We are half way through a global tour talking to fund managers who specialise in investing either in mining stocks or emerging markets … or both.

South Africans at the point of weeping and pulling their hair out because of the latest ANC Youth League posture, or the newest tender scandal or Jacob Zuma’s increasingly hopeless grasp on the complexities need to spend a little time with people whose job it is to compare South Africa as an investment destination with its peers.

Oh yes, they worry faintly about Julius Malema’s antics but their universe of comparison is huge and diverse … and if the worst comes to the worst the money they manage can shift very easily and early.

(Our parochialism causes us to believe) we have no-one with whom to compare our populists, gangsters, thugs and incompetents.

Trust me (or rather trust the fund managers with whom I have been speaking), ours are no worse than the equivalents in Russia, Brazil, India, China … and a host of similar investment destinations between which the money flicks and flitters.

One of my slides that might not charm a domestic audience causes nothing more than a wry smile here. This is par for the course for investors who concentrate on global emerging markets; some light relief before going back to worrying about whether Israel is going to bomb the Iranian nuclear fuels development programme or not.

We might as well smile – both because we are not as bad as we could be, but also because when you look further than the grotesque, our earnestness is almost sweet and crazy … to my mind, anyway.

Sitting in a lobby between meetings with resource funds in Edinburgh – they want to know about the “nationalisation of mines” call and where I think that is going. I will try and give feedback about that as I go along (London tonight and USA next week.)

But meanwhile briefly: the Black Management Forum pull out from Business Unity South Africa?

“The Capitalists” have never been a unified block; but the split between what BMF and BUSA represent is important.

As I have said elsewhere, BMF (along with the Youth League and similar groups) want the goodies out of employment equity and black economic empowerment legislation and regulation for themselves. They do not care about the functionality of the parastatals or the state or legislation that encourages economic growth. They care about maximising their advantage from transformation – getting the top jobs in parastatals and getting access to control of the linked patronage networks.

BUSA represents productive business – that needs a functional state and needs working utilities. It needs the best management. Its interests are in direct opposition to the BMF’s -  which represents the most parasitic elements of the new elite and see the public sector (as well as their leveraged advantage in the private sector) as an opportunity for rent seeking and looting.

I am delighted that they have pulled out of BUSA. At some point in a struggle to persuade a group to see the bigger picture and take account of the broader set of interests (especially of the poor and unemployed) a line is crossed and a cartel morphs into a gang. Beyond that point the laws of engagement have changed.

If you could see the sneering disgust from a whole lot of fund mangers about cronyism and corruption in South Africa (that I am experiencing as I move around Europe and the UK), I think you would agree that it is past time for us to deal with those who have proven that all they are concerned about is looting and getting the best for themselves and their members.

Let them go into the wilderness and raid as the outlaws that they are.

Yesterday President Jacob Zuma met white farmers in the KwaZulu Natal Midlands and reassured them about nationalisation of mines and about land seizures.

He said: “What Malema said is neither the ANC’s nor the government’s policy … the farming community must not be shaken by his comments.”

A few moments ago the ANC Youth League responded – and I put the full statement below.

This morning I argued to my paying clients – mostly asset managers and pensions funds who are concerned about these issues:

The noise about uncompensated land seizures and mine nationalisation will continue up until the ANC’s Centenary Conference in Bloemfontein mid-year 2012 but current investor friendly policies are likely, in broad terms, to be reaffirmed at that conference.

This ANC Youth League statement does not change my view, but I am sure the financial markets can feel the heat:

ANC YOUTH LEAGUE NATIONAL WORKING COMMITTEE STATEMENT ON PRESIDENT JACOB ZUMA’S COMMENTS ABOUT LAND REFORM AND NATIONALISATION OF MINES.

12 May 2011

The ANC Youth League National Working Committee met on the Thursday, the 12th of May 2011. Amongst other issues, the NWC noted the comments of ANC President Jacob Zuma on Land Reform and Nationalisation of Mines in response to the questions by the people he addressed in KwaZulu Natal. In response to the fears and insecurities expressed by those people, particularly in relation to land reform, the President is reported to have amongst other things said, “Malema is on a learning curve and the farming community must not be shaken by his comments. What he says are simply his views”.

The ANC Youth League is concerned by the manner in which President Jacob Zuma addresses policy issues contained in the discussion documents of the ANC Youth League towards the 24th National Congress. The question of expropriation of land without compensation is a policy proposal contained in ANC Youth League discussion documents for the 24th National Congress, and not “simply his [President Julius Malema] views”. Attributing the views expressed in the discussion document to ANC Youth League President Julius Malema is not helpful and can only serve to isolate him from the organisation. The views expressed in the 24th National Congress discussion documents have gone through the processes of the ANC National Working and Executive Committees and never personal views of ANC Youth League President.

The ANC Youth League is concerned because we believe it is appropriate for all members of the Movement to engage the ANC Youth League on its policy positions and not isolate any of its leaders. This assists all communities the ANC engages to appropriately understand the policy making processes of the ANC, which the ANC Youth League participates in. We believe that the manner in which the issue of land reform was responded to is not consistent with this principle. The President of the ANC Youth League is expressing views contained in the ANC Youth League discussion document, which is inspired by the ANC 52nd National Conference’s observation which says “We have only succeeded in redistributing 4% of agricultural land since 1994, while more than 80% of agricultural land remains in the hands of fewer than 50,000 white farmers and agribusinesses. The willing-seller, willing-buyer approach to land acquisition has constrained the pace and efficacy of land reform. It is clear from our experience, that the market is unable to effectively alter the patterns of land ownership in favour of an equitable and efficient distribution of land”.

The ANC Youth League on further concerned on how the question of Nationalisation of Mines is responded to because the ANC has a resolution on how the question of Nationalisation of Mines should be approached, in line with the ANC National General Council’s “greater consensus on nationalisation of Mines and other strategic sectors of the economy” and the Freedom Charter. The ANC has put in place a process on how best the issue of Nationalisation of Mines and other strategic sectors of the economy should be approached. The ANC Youth League is of the view that the response by ANC President to the farmers is not consistent with the resolution of the ANC National General Council and what the National Executive Committee instructed should happen.

Once again, the ANC Youth League calls on all South Africans—black and white, members and leaders of all ANC led alliance structures, all leaders of the ANC and all people concerned about the future of South Africa to read ANC Youth League discussion documents and ANC 52nd National Conference resolutions and engage the issues raised there. This will benefit those who want to engage us and sharpen the perspectives of the ANC Youth League towards the ANC YL 24th National Congress and ANC 53rd National Conference.

Issued by the ANC Youth League National Working Committee

This is the first of three articles that look at the political and policy bloodline of the New Growth Path and the main criticisms that have emerged about the policy in the public domain over the last few days.

This first post is a summary – using quotes and paraphrasing – of Ruling Alliance statements about macro-economic policy since 1990.

To understand the policy we have to understand:

  • firstly how the policy fits into the discussion/dog fight in the Alliance over the last 20 years;
  • and secondly the fact that the policy comes from Minister of Economic Development, Ebrahim Patel, whose department and position, in my opinion, was a last-minute structural compromise to reward Cosatu (and to a lesser degree the SACP) for having backed Jacob Zuma against Mbeki.

So the big bulls (ANC and the SACP) have been butting heads for 20 years (see below) and now the little bull is trying to horn in on the action.

20 years in the trenches of the ideological squabble

Since the release of Mandela from prison in 1990 (and, in fact, well before that – mostly behind closed doors) different factions of the ANC, the SACP and Cosatu have had a sometimes productive and sometimes vicious policy debate about economic policy. At issue has always been the stance the state should take towards private business and the appropriate amount of persuasion and coercion required to achieve redress and redistribution.

The first sign of things to come was the speech Nelson Mandela made on his release from prison in 1990.  After the excerpt from Mandela’s speech I will let the comments flow and tell their own story of the conflict within the Ruling Alliance.

A history of the conflict in quotes and paraphrases

“The nationalisation of mines, banks and monopoly industry is the policy of the ANC and the change or modification of our views in this regard is inconceivable”

Nelson Mandela paraphrasing the Freedom Charter on his release from prison in 1990

“We are convinced that neither a commandist central planning system nor an unfettered free market system can provide adequate solutions.”

The 48th ANC National Conference, July 1991 from a conference resolution

“It was a demand-led and internal infrastructural development proposal, which envisaged less immediate concern with budget deficit reduction and inflation.”

African Communist No 147, third quarter 1997 discussing the Macro Economic Research Group’s (MERG’s) proposals from 1993

“Of particular importance was the proposal to restructure the economy by way of a policy of ‘growth through redistribution in which redistribution acts as a spur to growth and in which the fruits of growth are redistributed to satisfy basic needs’. This proposal was predicated on the central policy idea that the state needed to boost demand, primarily by ensuring that greater amounts of income would be received by the poorer sections of the population, which in turn would stimulate output and hence economic growth.”

Dennis Davis in From the Freedom Charter to the Washington Consensus 2002 discussing the RDP proposal of 1993

“Despite its ideology while in opposition, once in power the ANC government implemented an orthodox macroeconomic policy which stressed deficit reduction and a tight monetary policy, combined with trade liberalisation. The stated purpose of this package (the Growth, Employment, and Redistribution programme, or GEAR) was to increase economic growth, with a 4.2% rate programmed for 1996-2000. At mid-term of the programme, growth remained far below this target. The GEAR’s lack of success cannot be explained by unfavourable external factors; rather, the disappointing performance seemed the result of fiscal contraction and excessively high interest rates”

A standard left criticism of GEAR from: Stuck in Low GEAR? Macroeconomic Policy in South Africa, 1996-98 John Weeks Cambridge Journal of Economics, 1999, vol. 23, issue 6, pages 795-811

“Faced with deepening unemployment, poverty, and inequality, and with disappointing growth and investment, the GEAR policy framework has met with persisting criticism from COSATU and the SACP in particular. From the side of its principal proponents within the government, there have been several adjustments in the face of disappointment. Increasingly, GEAR has been redefined as a conjunctural stabilization program and not what its acronym suggested it once aspired to be (a growth, employment and redistribution strategy). In this rereading, GEAR was necessitated by global turbulence and by a very precarious foreign currency reserve situation in 1996. Its “success” is now measured not in terms of growth, employment, and redistribution outcomes, but anecdotally and by way of comparison—“whatever our problems, South Africa’s economy is not in the same predicament as Argentina, or Turkey, or Zimbabwe,” or “GEAR has helped us to survive the worst of global turbulence” (which may not be completely incorrect).”

Jeremy Cronin rephrasing GEAR as a conjectural stabilisation strategy – 1998

In an address to the Socialist International October 2003 and then in various speeches in 2004, Thabo Mbeki argued that solving unemployment, poverty and low levels of black participation in ownership and control of the economy had become very urgent. Further, he argued that to solve these problems an effective, strong and interventionist developmental state was needed – just proving that there is nothing new in heaven and earth. He put the case for improving the public service and extending the state’s influence and ability to lead the economy. “Influence” meant keeping hold of strategic state assets (and therefore a partial withdrawal from the privatisation specified in GEAR) as well as a detailing of micro-reforms including BEE. He placed a strong emphasis on private public partnerships as well as on galvanising a collective consciousness about the “common good”. From this shift the Accelerated and Shared Growth Initiative for South Africa (AsgiSA) was codified in 2005/2006. While it set targets for growth and employment, Asgisa was primarily an infrastructure investment programme combined with various (mostly supply-side) measures to remove impediments to growth – much of which the economy continues to benefit from today.

My own summary of Thabo Mbeki’s initial motivations for AsgiSA

In the lead up to Polokwane this was the definitive statement from ‘the left’ attacking the direction that the Mbeki government had taken: “The post-1996 class project” was led by a “technocratic vanguardist” state with the mission for “a restoration of the conditions for capitalist profit accumulation on a new and supposedly sustainable basis” (as opposed to “a revolutionary … transformation … to resolve the .. contradictions in favour of .. the working class ..”). The document argued that “The post-1996 class project” rests on three pillars: Firstly, the ANC leadership has mistakenly bought into a myth of a gentler, kinder world, but imperialism is stronger and more hostile to popular democracy than ever; secondly, to fit into this world “the second pillar of the project is a powerful presidential centre” that necessarily installs a top state/ leadership group of state managers and ‘technocratically’-inclined ministers and (often overlapping with them) a new generation of black private sector BEE; and finally, the project calls for the organisational modernisation of the ANC … “to transform the ANC from a mobilising mass movement into a ‘modern’, centre- left, electoral party”. There is a “manifest inability of capitalist stabilisation and growth to resolve the deep-seated social and economic crises of unemployment, poverty and radical inequality in our society. The ravages to the ANC’s organisational capacity and coherence (are caused by) “the attempts to assert a managerialist, technocratic control over a mass movement, and in the crises of corruption, factionalism and personal careerism inherent in trying to build a leading cadre based on (explicit or implicit) capitalist values and on a symbiosis between the leading echelons of the state and emerging black capital.”

My paraphrasing of the SACP Central Committee Discussion Document. Bua Komanisi – Volume 5, Issue No1 May 2006 – difficult to read but a perfect summary of the position that exists to this day in the SACP

Then came the answer to the ‘left critique’ from the central ANC leadership: “…the trapeze act here is to co-opt the ANC, formally, as an organisation pursuing socialism; and then condemn it as having betrayed the socialist project”. First, and most importantly the ANC denies that it ever was or should have been an organisation whose objectives was to achieve socialism. The ANC, the document claims, is the organic result of the struggle of black South Africans for national liberation and redress for what they suffered and lost under Apartheid. Additionally the ANC prioritises the poor and the working class. Once this point is made, the ANC argues, all the rest of the SACP critique falls away. The ANC accuses the authors of the SACP document of “ahistoricism, subjectivism and voluntarism”. This is more than just name calling. In the argument of the authors of this document:  ahistoricism refers to the SACP’s alleged  failure to understand what led to the present conditions as well as the character of the historical moment in which they find themselves, subjectivism means that the SACP has used its own preconceptions to guide its views and has seen the world as they wish it to be rather than how it really is; voluntarism  means the SACP believes that through pure force of will, hard work and determination it can achieve socialism in South Africa, whatever limitations the domestic or global environment and balance of forces, especially the strength of global capital markets, impose on possible outcomes.

Managing National Democratic Transformation – ANC response to SACP discussion document – probably the last time the ANC spoke plainly and confidently about economics and the class struggle – 19 June 2006 the official NWC response to the above quoted SACP Central Committee discussion document

The next post will summarise the actual policy contest (from an economists point of view) of the last 15 years. This will essentially be the actual macro-economic policy of the ANC (run from the Treasury) and the SACP’s consistent “industrialisation” alternative (proposed from the Department of Trade and Industry).

I phrase it like that deliberately to suggest that the Department of Economic Development and the New Growth Path Framework represents a new political assertion even if the policy formulation ultimately turns out to be a hodgepodge of previous proposals – as suggested by my summary of Thabo Mbeki’s AsgiSA policy above.

I occasionally publish slides that I have used for clients as part of my attempt to examine political and investment risks to them.

Below are 3 from a presentation I delivered soon after the ANC NGC.

See if you can identify all the people concerned – a sort of politics general knowledge test ( you know the ones: if you score 10 you are probably a CIA/MI5 agent; if you score 9, then get a life and stop obsessing about politics …. if you score 2 you are living in a special care facility etc.)

As an aid here is a link to Stalking horses at the NGC – the blog I posted at the time. To help refresh your memory ‘the NOM’ was meant to describe the group that had coalesced around the ANC Youth League’s call for the nationalisation of mines.

I have been sickly and trying to pay the bills.

All my ‘paid for’ commentary on the NGC is done and I can finally get back to home ground where I feel more comfortable to make some wild accusations – and I will, finally, be more explicit in this post about who I think the bad guys are and who I think the less bad guys are.

At the outset, forgive me; this is long and requires a degree of effort to plough through. I believe your efforts will be rewarded in the end – but I would think that, wouldn’t I?

The NGC, just like the world itself,  becomes a cacophony, impossible to follow and impossible to interpret, without a guiding theory or a framing shape to look through.

The “theory” I am going to use here is that the NGC was the terrain on which two broad factions in the ruling alliance clashed. How you slice-and-dice a thing, conceptually, is always important for what you conclude, so much of what appears below is an attempt to unpick what and who those ‘factions’ consist of.

To think that what was happening at the NGC was “about” the nationalisation of mines call will lead to ‘error’ (you can see Lenin in my heritage when I use terms like that). Instead the NGC was “about” a more fundamental and complex power struggle.

The picture is additionally complicated when we consider that there were over 2000 delegates at the NGC (1500 from branches, 500 from the leagues/Cosatu/SACP/SANCO/PECs and 800 deployees/non-NEC ministers/DGs/premiers/CEO’s of SOE’s) and the interplay was vast and varied.

So instead of trying to cover everything I am going to look through the prism of an alleged power struggle between two broad factions or groups of interest.  This will ultimately be another attempt to “follow the money”.

Here then is the prism through which I believe it is most useful to look:

  1. The ‘nationalisation of mines’ (NOM) call was always a “stalking horse”. The term “stalking horse”  refers originally to  “a horse behind which a hunter hides while stalking game” (WordNet) and is defined in Wikipedia as “a person who tests a concept with someone or mounts a challenge against them on behalf of an anonymous third-party … if the idea proves viable and/or popular, the anonymous figure can then declare their interest and advance the concept with little risk of failure … if the concept fails, the anonymous party will not be tainted by association and can either drop the idea completely or bide their time and wait until a better moment for launching an attack.”  Oh yes, I love the language.
  2. The ‘nationalisation of mines’ call (hereafter called NOM because in fact, it has less do with policy and more to do with power) is best understood as the political platform of a particular alliance of groups and individuals and interests that has as its objective the winning  to power in the commanding heights of the ANC and the South African State. The NOM is therefore something more (and less) than a policy proposal. It is a contingent strategy for winning power – and getting the ANC to nationalise the mines would be a desirable side-affect for some of the participants.
  3. The first part of the NOM is the Youth League’s own specific ambitions, which have most obviously been expressed as a campaign to elevate Fikile Mbalula to the position of Secretary General of the ANC – the position currently occupied by Gwede Mantashe. Mantashe is despised by the League for a number of reasons, but mainly because he is part of those who believe the ANC Youth League is part of an ambitious rent seeking agenda. The League considers itself to be a “king maker” in ANC electoral processes and the organisation has energy and mobility and time to move quickly around the country to influence decisions at a branch and provincial level – a feature it demonstrated successfully at and in the lead-up to Polokwane.
  4. The second part of the NOM are those mining tycoons who want their BEE deals bailed out by the taxpayer. Who could have failed to notice the unified voices of those gleaming billionaire siblings Patrice Motsepe and Bridget Radebe as well as Minister of Housing Tokyo Sexwale backing the NOM in the lead-up to the NGC or at the conference itself?
  5. The third part of the NOM is the election campaign of Tokyo Sexwale to succeed Jacob Zuma. Has he specifically funded and backed the ANC Youth League so that it can be deployed in its traditional role of “king-maker” on his behalf – or because he wants his BEE deals bailed out … or both? It is impossible to prove – either that he has passed money/business/tenders the way of the League or why he might have done so – but that he has done so – with the intention of becoming president – is clearly the view of most of “the left” in the tripartite alliance.
  6. The clearest unifying principle behind the NOM and the most distinct characteristics of its participants is that they are first in the queue to gouge a rent out of the ANC’s economic transformation agenda. The nationalisation of mines call is tailor-made for the broader agenda of the NOM:  there are real material benefits for the backers, it allows the policy bereft Youth League to appear radical and pro-poor – and anti-white capitalist – to its potential supporters; it forces the current top leadership under Zuma (for the sake of investment and economic stability) to deploy itself to defend against something that would naturally appeal to the rank-and- file’s populist instincts.
  7. So who is the NOM challenging? Essentially “the incumbents”, which at one level just means Jacob Zuma, but at another level means everyone who has assumed a leadership role in government, party and the Tripartite Alliance as a consequence of Jacob Zuma’s elevation as well as the ideas and policies that have come to be crafted by that incumbent group.
  8. The “incumbents” should also be conceived of as including all those tenderprenuers, Nkandla hangers-on and Zuma family members whose fortunes are linked to the fortunes of the incumbent leadership.
  9. Do the members of the NOM even know who they are or what they are part of? Mostly they do – because there is an increasingly bitter conflict, for example, between the ANC Youth League and the SACP. When powerful factions clash, they strengthen themselves, make themselves more defined; they force anyone and any issue into the framework of their clash. We saw this in the Cold War, but more recently and specific to the groups here, we saw this in the struggle to stop Mbeki and elevate Zuma. eventually everyone knew whether they were “for” or “against” the motion. Attempts to stay sane, principled and above the fray are inevitably MIA in this kind of overblown factional dispute.

Given that framework, what actually happened?

NOM preparation

Firstly, the NOM did extensive (but insufficient) spade work around the policy that fronts their agenda. Julius Malema and Floyd Shivambu have been on an extended road trip, selling the idea for over a year. They have written for newspapers and addressed conferences. Malema threatened to withdraw Youth League support from any leader who did not support the call. The Youth League attended all provincial preparation conferences for the NGC and was successful in getting its view represented in every delegation from every part of the country. There are extensive reports that members were instructed to infiltrate ANC branches and emerge later as NGC delegates. The style associated with “winning” this view at various conferences was a combination of exclusive focus on the issue and heckling, booing and threatening any opposition – in the now time-honoured traditions of the League and its members.

What the financial backers of the NOM and members of the broader NOM agenda were doing in the lead-up to the NGC should not be underestimated. Individual backers of the NOM have extremely extensive resources. Such wealth and power gives individuals the ability to reach people and process far from themselves – and snap them like a twig.

Incumbent preparation

It is difficult to say how much work the incumbents did. I have made the assumption that securing the Tripartite Alliance was key to the incumbents preparing for the onslaught they knew was coming at the NGC. In this context the brokering of the ending of the public sector strike and the carefully worded apology from Cosatu to the Zuma/government for the language workers and their leaders had used during the strike was, in part, an attempt to establish the ground for a united front against the NOM agenda at the NGC. Comprises and certain concession were probably made to “the left” – but I will discuss this in the conclusion.

The NGC opening – political and organisational reports

Jacob Zuma’s Political Report and Gwede Mantashe’s organisational report were interesting for a number of important reasons but what is relevant for this post is both reports were correctly interpreted as a significant shot across the bows of the NOM. We can all delight in the fact that Winnie Mandela had to physically comfort the distraught Julius Malema after the dressing down he received during Jacob Zuma’s opening Political Report and take to heart her now immortal words ” … every parent is allowed to talk to their children … Every organisation is like a parent.”

Commission 5 victory and then plenary defeat

The sighs of relief ‘the incumbents’ might have breathed after the NOM’s early humiliation were soon replaced by anxiety when the NOM decided to put all of its eggs in one basket (this is one time that cliché is justified) by sending 45 of the Youth League’s 66 delegates to the Wednesday economic transformation commission. It appears that all supporters of the NOM including Tokyo Sexwale and several other BEE mining tycoons flooded the commission to ensure a particular outcome. The best article in the public domain I have seen about the commission is by Moipone Malefane and Caiphus Kgosana in The Sunday Times of September 26 – catch it here.

Joel Netshitezhe , Lesetja Kganyago  (DG in the Treasury),Trevor Manuel, Enoch Godongwana (Deputy Minister Public Enterprises) and old stalwart on this issue, Jeremy Cronin, were amongst the key ANC intellectual and economic thinkers who tried to hold the line at the meeting. Their appeal for thoughtfulness and care around an issue likely to costs government hundreds of billions of Rand were reportedly overwhelmed with bullying, heckling and unthinking repetition of the demand: adopt the call, as we have defined it, as policy!

Without having seen the exact statement that emerged from this commission it is clear that the Youth League (and everyone else present) was under the impression that they had scored a clear victory and the inner cabal reportedly headed off to the Hilton Hotel to celebrate victory in the style to which they had become accustomed.

The ANC Youth League’s (and the NOM’s) celebration was premature. The next day at the plenary session of the NGC Minister Geoff Radebe (husband of Patrice Motsepe’s sister, Bridget, and someone who had expressed support for the basic premise of NOM earlier) delivered a watered down version of the results of Commission 5 – and the ANC Youth League leaders exploded, ultimately sealing their fate by appearing to storm the stage in an aggressive manner.

Conclusion

Ultimately, through the support of delegates from across the alliance at the plenary, a watered down version of Commission 5 carried – essentially calling for thorough cross-country comparison and analysis of nationalisation as part of government’s ability to influence economic growth patterns in favour of the poor and unemployed. This study was mandated to report back to the 2012 Bloemfontein/Mangaung 100th centenary elective National Conference.

In the end it was not ‘the incumbents’ that were overwhelmed by the “shock and awe” campaign of the NOM. In the end it was the NOM that lost the skirmish – they overestimated the efficacy of their own preparation and they underestimated the coherency of the opposition – as well as degree of anger that is now widespread towards the ANC YL and its leaders.

The paucity of facts in the public domain does not relieve us of the obligation to think about what may be going on and develop a view as to the potential risks involved in any situation. Wile E Coyote might have said ‘what we don’t know can’t hurt us’, as he wandered over another cliff, but in the real world what we don’t know can sometimes be deeply threatening. So the explanations I have given here are my best attempts to muster an explanation for as much of the story as possible. I am sure that at some point in the future some of the guesswork and necessary assumptions might prove misguided – but that is life in the threat analysis business.

Three final points;

Firstly, it is okay to delight in the set-back of a particularly voracious self-enrichment agenda at the ANC NGC. But it is important not forget that the conference left unscathed similar agendas in many other places in ANC and affiliated ranks, including in the Zuma family itself.

Secondly, the defeat of the NOM is a tactical, tangential issue. Like the Governator, they’ll be back.

Finally, the victory was bought at the expense of some kind of compromise with “the left”. I expect the upcoming Cabinet review of a New Growth Path to be more sympathetic to a host of issues traditionally seen as part of an SACP or Cosatu platform (including Rand policy, inflation targeting, downward pressure on interest rates, nationalisation of the SARB, tax on short-term capital flows, industrial policy, National Health Insurance and the establishment of a state-owned bank.) The consensus within “the incumbents” is inexorably moving towards a rejection of some of the basic tenants of the Growth, Employment and Redistribution Macro-Economic Policy as defined by Mbeki and Manuel.

Our future is full of as yet undefined state intervention. I wouldn’t feel so bad about this if I didn’t agree with Cosatu that this state, in this place and time, is rapidly becoming a predator.

Cosatu has released its long awaited document in which it provides the facts (as it sees them) and theoretical underpinnings for “A Growth Path Towards Full Employment” – and in doing so attempts to align its views with those emanating from Minister Ebrahim Patel’s Department of Economic Planning (the Two Year Strategic Plan) as well as Minister Rob Davies of DTI’s (IPAP2).

Stephen Grootes at the Daily Maverick has done an exemplary quick analysis (catch that here). I am not quite certain I am as gung-ho capitalist as the guys down at the the DM are … although I am as clear as Grootes is that Cosatu’s main planks of policy would turn us into a wasteland in two flicks of a lamb’s tail – as not even my old Granny was prissy enough to say.

I saved a copy of Cosatu’s full document here and hope to give it a more thorough treatment than the cursory skim I gave it in the middle of last night. Whatever I conclude will be faithfully reported on these pages.

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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