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Herewith is an extract from my weekly news summary/analysis of what I thought was important in the main weeklies.
Freedom Day, April 27 – nineteen years on from the first democratic election … a good story by-and-large
City Press has a useful op-ed page by the always excellent Ferial Haffajee (who is also the editor) based on the South African Institute of Race Relations (SAIRR) handbook 2012. Interestingly, while SAIRR has become an ever stronger critic of the ANC, CEO Frans Cronje acknowledges that “the last 20 years have seen a revolutionary improvement for all South Africans” – a fact that is apparent from the graphic representations (each one manually scanned from the City Press … so apologies for the quality) below.
Worries about an Arab spring, and social unrest are often based on the assumption of intractable negative social trends. Haffajee, a strong social and political critic of government herself, says: “Over the years of covering South Africa’s freedom, I’ve come to learn this about us: We don’t count our lucky stars often enough, nor do we give ourselves credit for the things we do well. Why this is, I am not sure. But the answer probably lies inherent in the way power was peacefully transferred, but not decisively won.” These graphs run counter to popular wisdom in a number of ways, perhaps the most important one to point out for domestic consumption is that the idea that whites are the new oppressed, and the losers in the last 19 years (as argued in powerful sections of the media and Solidarity trade union, for example) is obviously, even elaborately, wrong.
Businesses unanimous in condemning draft Licensing of Business Bill
A proposed bill will force small businesses and traders to register with, and be licenced by, local councils and municipalities (“every greengrocer, car dealer, pharmacy, and livestock seller … it includes every service provider, from lawyers to hospitals and hotels, car parks, airports, freight carriers and advertising agencies” – Free Market Foundation quoted in Business Report, the Sunday Independent’s business section). The report links the bill to the latest Global Entrepreneurship Monitor that shows SA entrepreneurship levels to be the lowest in sub-Saharan Africa.
The entrepreneurship survey is deeply disturbing – although not wholly surprising and we agree with Business Unity South Africa when it says (as quoted in the same story) that the bill “will … retard the growth and development of SMEs and further harm a sector which is presently struggling with a high business failure rate.” However, we understand the real target of the Department of Trade and Industry which is floating the legislation is to restrict illegal hawking, particularly of the flood of cheap, illegally imported manufactured goods. Legislation often has unintended consequences, which is the reasons there is extensive public consultation before laws are placed on the statue books. The DTI’s instincts are to fiddle in the economy, but its intention here is undoubtedly correct, it just needs to find the best mechanism.
Wage bargaining and the strikes season is upon us
The City Press business section says “major wage talks scheduled for the mining, motor manufacturing and chemical industries haven’t even begun properly.”
“A full blown teachers’ strike is now on the cards after teachers’ union Sadtu last week presented President Jacob Zuma with a 21-page mix of labour and political demands” – City Press (those demands include the removal of Basic Education Minister Angie Motshekga and her director-general Bobby Soobrayan.
The Motor Industry Bargaining Council (MIBC), where Numsa dominates sets wages for 160 000 workers in the sector and this year will open with a demand for a 20% across-the-board increase, an industry wide minimum of R6000.00 a month and a ban on labour brokers – later this week.
The Chemical Industry also starts next week (sectors involved are “fast moving consumer goods, glass, industrial chemicals and pharmaceuticals” – City Press.)
The most widely anticipated talks are those coming up in the Chamber of Mines for the gold mining industry (and concurrently in the coal sector) – the first since illegal strikes rearranged the labour landscape and ushered in a plethora of worker committees refusing to work through unions. “The handsome increases some of the mining strikes won last year, by bypassing the formal system, will exercise the minds of everyone at the table …” City Press.
The article also says “the Chamber of Mines is meeting with Amcu again this week to try and arrange its place in the forum … where Amcu will have to share Num’s mandate for the populous lower bands.”
“The plan for a new platinum forum echoing the gold and coal forums at the chamber has not made any progress. This while mining companies will see their standing wage agreements expire this year” – City Press.
South Africa has a predictable strike season, the timing of which coincides with the expiration of bargaining chamber agreements in different sectors of the economy. Every year it appears that a wave of strikes is enveloping the country, but at some time during the gloom, journalists twig to the fact that this happens every year – much of the flurry in normal and predictable. Strike action during these times can appear to cascade through the economy and we need to be clear what is ‘normal’ and what is ‘abnormal’. The platinum and agriculture strikes last year were abnormal and have, to an important degree, contributed to destabilising the system – by creating unrealistic base expectations and by encouraging workers to bargain outside of the unions and structures of the central bargaining system. This does lay the grounds for serious uncertainty this year. Adding to the tension is the apparent attempt of Zuma and his strategist and allies in Cosatu to get rid of popular Secretary General Zwelinzima Vavi. As we discuss below, this could contribute to serious disturbance in industrial relations this year – disturbances that are distinctly not part of the normal cycle.
The growing tension in the ruling alliance is putting Cosatu under intense strain
The Sunday Times says it has seen and analysed Cosatu’s schedule of rallies and official speakers for May 1 and argues: “May Day celebrations will once again expose the deep division in Cosatu” – a significant part of the tension concerns Num leaders refusing to address rallies in the Eastern Cape, an important labour sending area for platinum mines and likely strongholds of Amcu where Jacob Zuma’s Num allies are might to be embarrassed, heckled or driven from the stage.
City Press attempted to tote up the “for and against Vavi” unions indicating membership numbers – using figures drawn from the Cosatu 2012 national conference official ‘organisation report’- and it’s own insights into which groups of union leaders are Zuma allies/Vavi critics. It is not an extremely useful exercise because each union has for-and-against sections, with only Numsa and Num being large and significant unions with more clearly defined “for and against” positions. However the forces against Vavi appear to have the numbers if they need them, although it is not clear that this translates directly into votes in the forum that will make the decision.
This morning an opinion column written by this analyst exploring attempts by the Zuma allies to get rid of Zwelinzima Vavi will be published in the online newspaper The Daily Maverick. Here is an extract that contains the most salient “so what?” for financial markets:
“Shafting Vavi could conceivably split Cosatu – and even lead to the formation of a new left or worker-based political party. Take Numsa, all the other trade unions and bits of trade unions that support Vavi and add the individuals and organisations Vavi has been accused of flirting with (in the National Anti-Corruption Forum and earlier in the Civil Society Conference – October 27 2010) and dig out all those leftists long ago alienated from the ANC (think the brilliant and creative Zackie Achmat and those connected to him); go wild and add Amcu and some not yet indiscernible political formation emerging around Amcu or even around Agang … and you have the grounds for a real and serious challenge to the ANC. At the very least shafting of Vavi might not equal clearing Cosatu of his influence. It might equal clearing the ruling alliance of Cosatu … leaving Zuma Incorporated clinging to a fading Num and a few cronies.… it is a risky game. One of the by-products could be another catastrophic year on the industrial relations front. If Cosatu splits, it won’t be a neat division between different unions … the fault lines will run through individual unions and the disturbances generated by the Amcu/Num contest could become a model for the whole economy.”
The SACP joins criticism of the National Planning Commission – final nails in Trevor Manuel’s coffin
To add to the general factional confusion in the Ruling Alliance, close Zuma allies, the SACP has published a discussion paper that has a “sharp, pointed and nuanced interrogation” of the NPC (which produced the much vaunted, in financial markets and by business, National Development Plan). “We cannot have a free-floating NPC, with an apparent presidential endorsement and using the budget of the presidency” says the SACP discussion document.
Actually, to my surprise, I agree with the main SACP criticism: the plan “does not have a strong organic link into government and its diverse planning apparatuses and processes.” Without such links, the NDP was always going to be a fig-leaf covering up the paucity of any actually strategy for economic development in the Zuma administration. The SACP can’t hide the fact that what it mostly dislikes about the NPC or the NDP is business’ participation in the formulation of the ideas and that Cosatu is starting to come out ever more critical of the document. I expect the NDP to go the way of a myriad similar (although never quite as thoroughly and carefully wrought) such plans from South Africa’s recent past.
Bits and pieces
- City Press spent a day in the DRC’s Eastern Region with the M23 guerrilla movement, meeting them in Bunagana on the Rwanda border. The UN is deploying a brigade as a result of UN resolution 2008, which accuses the M23 and other rebels of mass rape, murder sprees and of recruiting child soldiers. The M23 insisted to City Press that Khulubuse Zuma (a nephew of the president) won valuable oil concession on the shores of Lake Edward and in exchange Jacob Zuma has committed “elite troops and top-drawer fire power to the UN force to smash M23.” The M23 guerrilla movement is trying to play into South African politics by accusing Zuma – sounds like one group of wolves trying to accuse another to cover up their own predatory behaviour. I have seen no evidence to back the idea that the troops are being sent to protect the Zuma family’s interests.
- The Dina Pule saga continues to become ever more deeply incomprehensible. City Press claims Dina Pule has alleged that famous soccer club owner Jomo Sono is behind a smear campaign against her to attempt to blackmail her into awarding his (Sono’s) company a the multi-billion rand set-top-box decoder contract. Pule is due to appear before Parliaments ethics and member’s interests committee on Thursday or Friday and the sooner political clarity comes to the telecommunications sector, the better.
- Regional leaders are expected to hold a summit soon to discuss Zimbabwe’s readiness to hold elections, amid warnings that time is running out to ensure the poll is free, fair and credible – Sunday Independent. Lindiwe Zulu, President Jacob Zuma’s foreign policy adviser and a key member of his facilitation team in Zimbabwe confirmed that Zanu-PF had recently thrown up obstacles to ‘proper monitoring’ of the Zimbabwe negotiations. “But she said her team had persuaded Zanu-PF that as SADC was supervising negotiations, it had the right and obligation to attend whatever Jomic (Joint Monitoring and Implementation Committee) meeting it chose to. Zanu-PF conceded the point” – Sunday Independent.
- Senior managers at PetroSA have been accused in the Mail & Guardian of conspiring to loot billions from the national oil company. It is a big story, dense with details and looks extremely damaging to those who stand accused. I will be monitoring the implications.
My Sundays are spent combing through the Mail & Guardian, City Press, the Sunday Independent, the Sunday Times – and a host of online news sources.
I do this to compose a news review and analysis to be on the desks of my clients by 06h30 on Monday mornings.
It is an arduous task, made all the more so because to get to the good stories one has to plough through the turgid rubbish, misinterpreted rumours and exaggerated rehashes of corporate, government and party press releases.
There are many exceptions. Johnny Steinberg in the Sunday Times is peerless. Percy Mabandu’s Dashiki Dialogues in City Press is a welcome respite.
At least half of the content of the weeklies is good, solid stuff, written by thorough and skilled journalists (too numerous to name here) and many of them have been kind and helpful (those are slightly different things) to me over the years and I would hate to impugn their professionalism.
But it’s the other half of the content that makes my Sundays a gloomy, brooding time of the week – and there are moments when I feel a visceral antipathy to the physical presence of the newsprint scattered around my apartment.
Okay, I am glad I got that off my chest … anyway, here is an extract from yesterday’s news summary – obviously all of it taken from that part of the weeklies written and edited by the thorough, professional, kind and helpful journalists I was refering to earlier …
Notes on the weekend press 19.11.2012
There were some interesting and revealing leaks in the Sunday newspapers:
Confidential NPA communications raise questions about grounds on which Zuma corruption charges were dropped in 2009
The Sunday Times led with an exclusive based on 300 pages of leaked internal emails, memos and minutes of meetings of the National Prosecuting Authority (NPA) concerning the dropping of corruption charges against Jacob Zuma on 6 April 2009. The NPA failed to stop publication in a high court interdict on Saturday.
The story in the Sunday Times indicates that the senior state prosecutors felt they had a winnable case against Zuma and that attempts by Zuma’s legal team to use the ‘spy tapes’ to argue that the prosecution was politically motivated was “blackmail” – and that the prosecution should have gone ahead despite the threats from Zuma’s legal team.
So what? Good question. Zuma’s ‘Stalingrad Defence’ against the corruption charges (fighting door-to-door, street-by-street; retreating, but at enormous cost to the enemy) probably has years to run – pushing any possibility of a trial into the dark and distant future. Anyway, an ANC that uses its overwhelming parliamentary majority to block a motion of no-confidence in the president (as it did this week – see below) is unlikely to shrink from passing legislation that exempts its leader from the indignities and distraction of a corruption trial.
Internal reports of patronage, factionalism and vote-rigging
Two reports to the weekend meeting of the ANC NEC were leaked to the Sunday Independent and City Press, one from Nkosazana Dlamini-Zuma and one from Gwede Mantashe. They both paint a bleak picture of bitter struggles for power in the ANC.
Dlamini-Zuma’s report deals with 425 internal ANC complaints about the 2011 municipal elections – and concludes that a significant number of ANC councillors were fraudulently nominated. “In many cases”, she argues, “ANC branches and members are no longer viewed as living, dynamic units consisting of human beings … (They have become) membership forms that constitute a bulk commodity”.
Gwede Mantashe, in a draft of his secretary-general’s report, describes intense factionalism “bleeding the organisation”. He suggests the ANC Youth League has positioned itself as a “counterforce” and that “the determination of some members … to destabilise the organisation and disrupt meetings as a tactic to get what they want … is a clear sign of a revolutionary movement that has been infiltrated.”
So what? It is a plus for the ANC that its leadership is anxious and forthright about the battle for patronage and position that takes place within its ranks. It might even be a plus (for the ANC) that all that energy is going into ANC leadership contests – because it is an acknowledgement that the ANC remains, for most intents and purposes, the only show in town. However, at some point, voters are likely to become disillusioned if the party is better at ensuring economic advancement for its leaders than it is at getting the government to deliver services more effectively.
Finally, the fact that high-level confidential internal party reports like these keep finding their way into the press is an excellent demonstration of the ills those very reports rail against.
Motlanthe wanted no confidence vote to go ahead
The deputy president chairs the ANC’s political committee in parliamentary which gave the nod for the no-confidence in Zuma motion to be debated in the parliament. This was overruled by the party’s caucus the next day.
So what? This is being interpreted as another blow to Motlanthe’s electability at Mangaung. As always, Motlanthe actually took no view during the committee meeting – it was National Council of Provinces chairman Mninwa Mahlangu and parliamentary speaker Max Sisulu who were in favour of allowing the motion to be debated and ANC chief whip Mathole Motshekga who was opposed. Motshekga convened a special sitting of the ANC’s parliamentary caucus when he lost the argument and the caucus hastily overturned the decision. We think the impact of this matter on Motlanthe’s election chances is less interesting than the fact the ANC refused to allow such a debate to take place – a breach of the etiquette, if not the rules, of parliamentary democracy. The DA filed papers on Friday at the Western Cape High Court to seek an urgent interdict to compel the Speaker of the National Assembly “to uphold the constitutional right of the opposition to have this motion debated” (DA parliamentary leader Lindiwe Mazibuko in a statement on Saturday).
Farmworker conditions and unrest
All the newspapers reviewed here (Mail & Guardian, City Press, Sunday Independent and Sunday Times) had stories relating to the farm strikes and the unrest in the Hex River Valley, Ceres, Touws River and De Doorns areas. The M&G insisted the strikes were “organic” (occurring without any form of organisation), although it also ran the assertion by commercial farmers union AgriSA that “political forces have directed the strike”. Meanwhile, government (in the person of agriculture minister Joemat-Petterson) and Cosatu (in the person of provincial secretary Tony Ehrenreich) have unsuccessfully attempted to portray themselves as at the vanguard of the angry workers.
So what? Wage levels in the sector have come as something of a shock to much of the media (the sectoral determination sets the minimum wage for most of these striking workers at ZAR69 per day.) Clearly, Cosatu and the government are worried about a Marikana-type outcome, where workers turn on the union and government with as much – or even more – ferocity than they display to the employer. This is, ultimately, a wage strike that is part of the wave that started at Impala in January and is likely to burn all the way through the economy, especially in areas poorly represented by trade unions and in areas where wages are out of kilter with the rest of the economy. If there is a possibility of workers achieving better settlements outside of the collective bargaining system, that is the route they are likely to pursue. Already the government is reopening the minimum wage determination process for this sector – something that would not have happened without the strikes having lit a fire under the government and its trade union ally. The logic must be that the wave will continue to cascade until it has modified basic wages throughout the economy. This probably means that this driver of labour unrest will be present for at least the next 18 months.
In other news:
- Nkandlagate bubbles on – with several newspapers disputing Zuma’s claim that he is paying off a bond on his house. Last week Zuma went off-piste in the parliamentary debate about his Nkandla homestead and won many hearts with an emotional defence of his right to own a home – a home which in his case had twice been burned down in violence in the province. “My residence … has been paid for by the Zuma family,” he is quoted in the M&G. “All the buildings and every room we use … was built by ourselves as family and not by government. I have never asked government to build a home for me, and it has not done so.” The truth will be eventually out, but it appears that it will be an arduous and painful birth.
- City Press ran a fascinating extract on Doug Fosters book about “the younger Jacob Zuma”. Amongst the many interesting bits and pieces was the huge esteem in which Zuma is held by his family – and especially his brothers. The esteem comes, in part, from his early brilliance at stick-fighting, “a form of combat in which one turned the fury of an adversary back against him … Ukuxoshisa was a test of quickness, balance and misdirection. Winning blows were landed with whip-like motions, involving a sudden flip ….” Both Thabo Mbeki and Zuma’s current competitors should have benefited from this paragraph based on an interview with one of Zuma’s brother’s: “Sometimes, the young boy held his sticks casually, as if on a lark, as Mike remembered it. Occasionally, he even turned away from his opponent to crack a joke with other kids standing around. When his opponent dropped his guard or joined in the teasing, though, he would pivot swiftly and strike suddenly, sweeping his opponent off his feet.”
- Cosatu has come out, according to two of the papers, with a strong advice to Motlanthe to back off from challenging Zuma at Mangaung. They look set to join most ANC supporting structures in proposing Cyril Ramaphosa for deputy president in the event that Motlanthe doesn’t back off.
- The Democratic Alliance is due to hold its elective congress next weekend – and despite lots of minor contests, it looks like Helen Zille will be unopposed for party leader.
- Several news sources carried stories similar to the Business Times’: “Happy Xmas, Tokyo”. The assertion is “Human Settlements Minister Tokyo Sexwale and his partners in Mvelaphanda Holdings are set for a festive bonus of what could be R265-million on the sale of its stake in Absa.”
Here is something I wrote during the April general election - with a few minor edits. It is becoming increasingly relevant, as "the left" is backed into a corner and the Malema style populists seem to hold sway.
Bread and Circuses
Opinion polls indicate that the ruling African National Congress will shrug off five years of bitter leadership struggles and a sea of bad news to emerge from the election with a close to two-thirds majority.
This is a summary of my analysis of the news from of the weekend press (August 19) – and radio and TV commentary – concerning the events in which 34 striking miners were killed by police last Thursday (August 16) at Lonmin’s Marikana mine in Northwest Province. (Written Sunday night, so some new facts might have come to light that I haven’t included – especially not Julius Malema’s “breathtaking political coup yesterday” – see Carol Paton’s lead story on front page of Business Day today … here is a link.)
The police shootings came after a week (starting August 12) in which workers launched a violent wildcat strike reportedly demanding a wage increase to R12500.00 p/m – from the current average of about R4500.00 p/m for Rock Drill Operators, who were the main constituents of the approximately 3000 workers who had gone on strike (the wage demand issue was dissected here – a story that points out that the real wage differential between what the workers were demanding and what they were getting was actually much narrower.)
During the course of the strike, prior to the police decision to remove the workers from a nearby hill they had occupied, approximately 10 people had been killed, including members of the police force, security guards, and ordinary workers – perhaps strikebreakers, although this is still unclear.
Julius Malema visited the area on Saturday and addressed the strikers – and is the only political leader who has been welcomed to do so. (Since I wrote this Zuma also managed to address the strikers).
President Jacob Zuma’s office has announced that a (judicial) inquiry into what happened will be established (see terms of reference and other details here.)
Minister of Mineral Resources Susan Shabangu together with Minister of Labour Mildred Olifant announced on Saturday they will be establishing a “task force” to address the problems at Marikana and deal with wider problems in the platinum sector.
It would be difficult to overstate the depth and variety of impacts of this event. Every news source reviewed here took the position that what had happened at Marikana was impossible to explain through any one category of cause and thus a multiplicity of causes was the approach taken across the board – although usually ending with the statement that the society and its top political leaders must, ultimately, carry the responsibility. Thus the commentary will be broken into the categories most commonly used in the Mail & Guardian, City Press, Sunday Times and Sunday Independent:
Marikana as union rivalry
All the weeklies placed the rivalry between the mainstay Cosatu union, the National Union of Mineworkers (Num) and the Association of Mining and Construction Union (Amcu) as the central explanation of what happened at Marikana. The consensus was that Num is slipping throughout the mining sector, having become too close to management (I doubt this is something with which either the union or management would agree) and increasingly representative of white-collar workers – and not RDOs and their assistants, and others who do much of the difficult physical work deep underground. “Amcu leaders and members launched ferocious attacks on Num members who were not prepared to go on strike”, said the Sunday Times lead editorial, summarising the most popular explanation for the central cause of what happened at Marikana. This ‘inter-union rivalry prism’ has much deeper implications when we consider the fact that Num is the key element of support for Jacob Zuma’s re-election at Mangaung in December this year, and Cosatu itself is three weeks away from its National Congress where its own leadership struggles – which are likely to be deeply influenced by what happened at Marikana – are being driven by those within the ANC – a matter explored under a headline below.
Marikana as Lonmin management failure
All the news sources reviewed here expresses the view that wages were unacceptably low in the platinum sector and that management was in some way culpable of feeding the conflict in the workforce by having attempted to make a separate deal with Rock Drill Operators at Marikana. These stories also tended to quote a 5 year study by the independent, “faith based”, Bench Mark Foundation – by chance (according to the foundation) released during the strike – that is sharply critical of the platinum mining companies for having failed to fulfill social obligations to workers and surrounding communities. (Sunday Times, Mail & Guardian, City Press)
Marikana as policing failure
There was unanimity throughout all the news sources reviewed here that the police had handled the situation badly – and that deaths were, in part, a result of improperly armed (with automatic rifles) and poorly led police forces on the scene. Most accounts went to some effort to explain that the police had been fired on by strikers, that (at least one) member had been hacked to death by strikers during the course of the action (City Press, Sunday Independent) and that at least one shot came from the strikers during the confrontation – although the only weapons collected by police after the action were pangas, sticks and iron bars … no guns (Philip de Wet corrects this in the comments sections below, saying police found 6 guns including the one taken from the murdered policeman … I am looking for a link to the Phiyega statement and will put it here when I find it.)
Most of the sources agree that “They were armed to the teeth and advancing on the police. This is not to justify the killing, but we must be aware that today we could just as easily have been talking about the massacre of policemen” – Mondli Makhanya, Sunday Times. However, the Independent Police Investigative Directorate (IPID) has announced that it will investigate the killings and ”will seek to establish if the police action was proportional to the threat posed by the miners” – Pierre De Vos in Constitutionally Speaking.
Marikana as societal break-down – as a result of economic inequality
As mentioned, it is difficult to overstate the degree of anxiety and hand-wringing about the state of the South African democracy that came through in all the news sources reviewed here – and in television commentary throughout the weekend. The general point of concern was that the levels of inequality (raised in this case by low wages and poor working conditions of miners) will, here-on-out, be a constant destabilising element to this society. Commentary also focused on asserting that the mechanisms by which society negotiates clashes of interest – including the labour market collective bargaining regime – are broken (evidenced by this incident and the more-widespread-than-ever, and often violent, service delivery protests). Thus political stability was raised as a matter of concern in all 4 of the weeklies.
Marikana as driving exit of foreign investment
The business sections of the three Sunday newspapers all pointed out that the price of platinum rose sharply on the back of what had happened, but that Lonmin share prices fell precipitously. “Fear clashes will spread” was the lead Business Times headline and several stories suggested that “foreign investors” would exit because of endemic labour conflict and unrest. “The police killings … ‘have taken things to a new level, spreading the fear to currency and bond market investors’”, Business Times quoted Nomura’s Peter Montalt
Marikana through the prism of Mangaung.
Two issues lay the ground for Marikana to be perceived through the prism of the pervasive leadership contest in the ANC. The first is that Num itself is the key pillar of ANC support in the trade union movement (it’s the biggest union in Cosatu) and the force that swung Cosatu support for the ANC at the formation of the trade union federation in 1985. More specifically, Num, under the leadership of Frans Baleni, is backing Jacob Zuma’s bid for re-election at Mangaung in December. The powerful – and very left-wing – National Union of Metal Workers of South Africa (Numsa) under Irvin Jim – and backed by Cosatu Secretary General Zwelinzima Vavi – is opposed to giving carte blanche backing to Zuma (mostly because of corruption concerns) and it is speculated that this faction might back Kgalema Motlanthe against Zuma at, and in the lead-up to, Mangaung. Several newspapers – but particularly the better informed Mail & Guardian, suggested this dynamic will lead to an attempt (by pro-Zuma forces) to unseat Zwelinzima Vavi at Cosatu’s national congress in three weeks’ time.
Secondly, Julius Malema immediately stepped into the breach at Marikana – as he did at the comparable (because it was also driven by the Amcu/Num contest) Impala strike earlier this year. Speaking to the workers on Saturday 18 – and note he was the ONLY political leader who has been allowed, by the strikers, to address them and he received a warm reception – Malema called for the resignation of Nathi Mthethwa (Minister of Police and key Zuma ally) and Jacob Zuma himself.
The faction of which Malema is a part and the factions that have a tactical alliance with him are likely to make as much as possible of the Marikana killings, and attempt to lay the blame directly at Zuma’s door (as almost all news sources reported Malema doing on Saturday.)
- There is a risk that it spreads – to other platinum operations, to the mining sector more generally and even to the society at large. The transmission mechanisms would be Num trying to win back ground it is losing from Amcu as well as via the already restive squatter camps and township neighborhoods. Municipal IQ, an organisation that monitors various aspects of municipalities, but particularly service delivery protests, points out that we had already passed, in July, the highest yearly totals of such protests since 1994. This outcome would not be my first case scenario. What drove the violence and the series of errors (of commission and omission) of the unions, management, the police and government that led to the killings are unique to that incident. If it does spread, the most likely first stop would be other platinum mines, and therefore the first impacts would be on supply of the metal.
- The feed through into conflict between unions – obviously between Num and Amcu, but also within Cosatu, between Num and Numsa - could presage a generalised increase in levels of industrial unrest.
- Government is likely to turn its full attention to the “social” performance of the mining companies – under the Mining Charter. Expect a thicket of new regulations – and a generalised attempt to focus the blame on the companies.
- Jacob Zuma’s comfortable lead in the Mangaung contest (and this is purely my opinion) is gradually narrowing as we get closer to the December ANC National Conference. The Marikana incident is likely to weaken his position further – and this in the context of a series of defeats in the second biggest ANC province, the Eastern Cape – which until a year ago was considered safe ground for Zuma.
Nedbank chairman Reuel Khoza provides the lead headline in today’s Business Day as “warning of a rogue state future for SA”.
So imagine if you could, for a moment, that you are playing a sports game.
As in a dream, you suddenly realise you don’t know the rules; you don’t know how to score, who’s on your side or what the parameters of the field are.
This could be a comical situation – and I am sure I remember boys from my school days whose mystification on the rugby, cricket or hockey fields would bring a gentle smile to our (his team mates’) faces.
But this is also the stuff of nightmares: an inscrutable world where what happens happens for reasons entirely mysterious, where people are motivated by incomprehensible impulses and the dread of the unknown builds and builds.
I am sure I am not alone in having worked in a dysfunctional institution?
I mean something worse than a j0b in which you are poorly paid and have a psychopath for a boss (entry level experience requirements for human adulthood as far as I can make out).
A dysfunctional institution is one in which the sum total of what the organisation achieves appears to be at-odds with its explicit mission.
I am suggesting something worse than an organisation that doesn’t achieve what it is designed to achieve. I am suggesting that in some instances a deeply dysfunctional organisation can, when everything is aggregated, achieve the very opposite to its stated purpose is.
Which brings me to the institutions of the South African state.
I am occasionally lucky enough to get hold of some excellent economic commentary written by Sanlam Group Economist Jac Laubscher and published on that company’s website. In his most recent contribution (which appears here) he takes some concepts from Why Nations Fail: the Origins of Power, Prosperity and Poverty by Daron Acemoglu and James A Robinson (book I haven’t yet read, but will do so on the back of Jac’s comments) and hints at how they might be applicable to South Africa.
According to Laubscher, Acemoglu and Robinson suggest that the dominance of “inclusive institutions” over “extractive institutions” is the difference between success or failure of nations.
Inclusive institutions harness and unleash human creativity and incentivise citizens and workers to give of their best.
As Jac Laubscher summarises:
Inclusive institutions are characterised by guaranteed property rights (vital for investment and productivity growth), an impartial legal system that upholds contracts, the effective provision of public services to create a level playing field, space to create new businesses, and the freedom to choose one’s career.
“Extractive institutions” in the words of Jac Laubscher:
… are aimed at extracting income and wealth from one section of society to the benefit of another section of society, usually the elite. In fact, extractive political institutions are the means by which the elite enrich themselves and consolidate their political dominance.
It is a fairly simple matter to demonstrate that to some degree key state and semi-state institutions and processes in South Africa have become mechanisms for extracting wealth by the politically connected elite.
But a key qualifier here is “to some degree”. I don’t think the state has yet, unambiguously, become an extractive tool of the political elite. But it is obvious that at least part of the political elite is struggling mightily to shape our institutions to and for that purpose.
Yesterday I listened to Trevor Manuel deliver the National Development Plan to a joint sitting of parliament. At the same time the the Constitutional Court was hearing an application by the Treasury and Sanral to set aside the April interim interdict granted by North Gauteng High Court halting e-tolling and mandating a full review of the system.
My views on both Trevor Manuel and e-tolling are ambiguous – they both have their good and bad points – but I appreciate the subtlety and complexity of what the National Planning Commission has tried to achieve … and I celebrate the fact that we have a Constitutional Court we can trust with decisions like the one it was busy with yesterday*.
But the institutions of our society are not yet the corridors of the predators’ labyrinth – but we’d be foolish to ignore the signs.
* The Concourt matter is important for a number of reasons, but the aspect that interests me professionally, is part of what is happening is driven by the fact that the Treasury feels the need to defend its credibility as a borrower. I suspect that the rating agencies are happy that the Treasury is fighting this matter but are anxious that they might lose. The lender wants to be certain that the entity to whom it lends is properly able to make the agreement to pay the money back. The Treasury is ultimately arguing that the North Gauteng High Court ruling means no lender to the South African government can be sure that the courts might not declare, in effect, that government was legally incompetent to make the decision in the first place – significantly increasing default risk.
Some of the things we think we know about revolts and revolutions - but that do not always apply:
- Where there are adequate elective processes dissatisfied people believe they can influence outcomes through voting and therefore are unlikely to make the sacrifices required of a revolution.
- Revolts are generally lead and organised by the middle classes - a degree of education is required - thus where the middle class is linked to the ruling elite through patronage or ethnicity, its members are less likely to lead a revolution.
A few days ago I published a link here to an e-tolling interview I did on CNBC Africa that someone put on YouTube.
The post received several interesting comments about an aside I made on more than one occasion during the interview that I thought users paying directly for infrastructure is probably a more efficient method than taking the funding out of the tax pool - with a long list of exceptions that had to do with social solidarity and making sure those who couldn’t pay were subsidised in some way.
I received several interesting comments and dragged myself out of bed early this morning to respond to those … but found, to my horror, my browser (Chrome) refused to visit my wordpress page, saying it contained “suspicious content”, perhaps even “malware” from something called “oulitnet.co.za”. Chrome further informed me that it had alerted the said site to the problem.
I decided to delete my last entry (to the YouTube link) and the problem seems to be gone.
I think “oulitnet.co.za” is a religious site of some kind and I have no idea why its content should have been connected to the YouTube video.
So instead of trying to work that all out I have just dumped the link and will, at some stage, return to the question of the most efficient way of paying for infrastructure … which I know is not a breathlessly exciting subject, but is probably important enough to warrant another post at some stage.
So apologies to anyone who attempted to visit that post and got the same scary warnings to stay away that I got this morning … they are gone now and it is safe to return to to the water …
You might be wondering why the Sunday papers were filled with conflicting version of the results from the municipal election.
The answer is contained in a decent story on Times Live written by Brendan Boyle:
The DA took 23.80% of the vote for ward candidates, 24.08% of the proportional representation vote for parties, 15.3% of the vote for ward councillors and 21.97% of all votes cast.
The ANC took 60.98% of the ward vote, 62.93% of the proportional representation vote, 69.43% of the district council vote and 63.65% of all votes cast.
So you can spin your version in a number of ways – and everyone has been furiously doing just that. See here for the DA using the proportional vote comparison which gives it 24.08 percent versus the ANC 62.93 percent and therefore casts its performance in the best possible light (something it is perfectly in its rights to do.)
(This added half an hour after publishing – it has been pointed out to me by some of the people I follow on Twitter – @Bruceps and @RyanCoetzee – that the only choice that all voters were offered that indicated their party preference is the proportional representation vote which gives the ANC 62.93 percent and the DA 24.08 – strongly persuasive that this is the number that most accurately indicates party support.)
The Sunday papers seems to have arbitrarily shifted from one usage to another.
I have used the figures from the IEC website for the overall total of votes cast for parties. Here they are (if you click on any one of the nine it will enlarge and become readable):
As of right now (this was 12.40 on May 20 2011) the ANC is sitting at 63.63 percent of the vote (66.35 in 2006), the DA at 22.1 (14.77), the IFP with 3.94 (8.05) – and newcomers to municipal elections COPE with 2.31 and the National Freedom Party with 2.54. The other important factor to consider is the ID got 2.02 percent in 2006 – which we must assume has mostly gone to the DA in this election.
The trends are important but are likely to be overlooked by the degree in which they were exaggerated before they appeared.
If anything the ANC is likely to continue to drift upwards and the DA downwards – because the constituencies in which the ANC is stronger are bigger and messier and therefore results take longer to come in.
The leader article in this morning’s Business Day points out that only 9.2 percent of South African’s are ‘white’ and with the Democratic Alliance running at about 22 percent of the vote the official opposition has already broken out of it’s racial ghetto.
I think this is the correct way to spin it.
Some DA supporters might be feeling disappointed – it looks like they have only one metro (Cape Town); but my feeling is anything more than this was hopeless optimism.
The DA talking up its game was always going to end in tears.
The fact is the party has done extraordinarily well – particularly in the metropolitan areas.
The ANC has won with reduced majorities almost everywhere and the DA is up an astonishing 8 percent on its performance in 2006.
These are the significant trends in the election and the statisticians will be furiously projecting forward to 2014 – although you should note that the ruling party tends to do worse in the municipal vote (a global trend).
The ANC is giving hints that it takes the criticism and promises to fix the three areas that have contributed to the reduction of its margins: candidate selection, poor service delivery and widespread corruption in local councils.
Were this to happen the results, as they are running, are the best they could be.
I am feeling the welcome pressure of a flood of paid work.
The only drawback to this happy state of affairs is I have not been able to put as much effort into updating this website as I would like.
In future I will generally be posting the quirkier side of politics and investment risk – occasionally from a more personal perspective.
I will not be telling you about what I had for breakfast, my deep and interesting views on Islay single malts or the fascinating behaviour of my small brown dog. I expect more posts to have the character of Saturday’s Rowan Atkinson skit – which could have been made for this election – or this one from a few months ago on celebrity culture and the rise of grandiosity in our politics.
Meanwhile here is a summary of some of my views on the lead-up to Wednesday’s vote.
(Note: just before the dog ate my homework my finger slipped on a small streak of high dudgeon that had somehow spilled on my keyboard and I pressed the “publish” link before I had a chance to edit the following piece. I have now cleaned it up slightly, but feel free to email me at email@example.com to point out any mistakes I missed – or to engage me about the article.)
If the ANC Youth League president was a stock traded on the JSE I would be calling: “buy, buy, buy - fill your boots! “
He’s under-priced because of the hammering he has taken over the last 6 months, and the market – as reflected in what the ANC likes to call “the print media” – has not adequately woken to the fact that he is the star of the election.
I have argued before that Malema is the coming man in the ANC and, perhaps, the country. I will not be entirely charmed to have been proven right – although a lot can go awry ‘twixt now and the time of full accounting. But let there be no mistaking or underestimating Malema’s current cachet.
He appears to have done the hard work – personally, in his own name and own voice – in mobilising the constituencies most likely not to have bothered to vote on Wednesday.
This doesn’t even have to be true. It appears to be true, and that is all that matters.
He stuck one in the eye of ‘the madams’ and ‘the masters’ and, as difficult as it is for me to swallow, I am fairly certain that for this reason alone there are millions of South Africans whose hearts swell with pride as they think about their Juju’s audacity and bravery.
Whatever else happens he will be remembered by the loyal party workers and bureaucrats as having turned pro when the going got tough – and taking the fight to the Democratic Alliance just as the Official Opposition was looking scary.
And this was all building on – and in addition to – the enormous public relations coup of the “kill the boer” trial – which united the party, its leaders and its faithful behind him.
I do think that a party and a country in which a young populist of the streak and character of Julius Malema is so strongly ascendant is in all kinds of trouble in the long term … but that, so to speak, is another story.
I also think financial market sentiment – particularly as effected by the ‘nationalisation of mines’ debate – will counter track his rising and falling fortunes.
Jacob Zuma has had a fair to good election. This activity is his strength and as with Malema he has earned loyalty points from the party faithful for his tireless commitment and skill in working the crowd.
I am interested in the nature and extent of pressure that he appears to be under – particularly pressure emanating from the Youth League and those that hope to ride that organisation to power and even greater wealth.
President Zuma, to my mind, is awkwardly caught in a relationship of mutual dependence with the sections of the Ruling Alliance with whom he shares the least ideological and cultural ground.
Zuma is the natural Nkandla patriarch, dispensing largesse and spreading his seed in as a wide a circle as possible. These are the attributes that Cosatu and the ANC’s leftwing most despise yet Zuma is their champion and they his.
The confirmation of post-Polokwane populism
I miss the arrogant and austere Thabo Mbeki who would have been ashamed to use the kind of underhand tactics implicit in some of the ANC election posters – I am assured this one is the genuine article, but I still have difficulty believing it.
For me the word “populism” has a meaning that implies a combination of characteristics, including clever mixing of fact and fiction, appealing to the most base human emotions as well as the manipulation of the fears, greed and anger of oppressed and vulnerable people.
At first this image made me laugh out loud – it is a photograph, so inescapably true, as well as being strangely familiar. Until I paused and realised how manipulative and abusive it actually is – using the image of happy children playing together (in circumstances we cannot know but are encouraged to imagine) to evoke hatred, rage and fear.
The ANC conducted the 2009 election campaign in the style of a televangelical rally spiced with hotdogs and wet t-shirts.
It is probably arrogant and elitist to hate this kind of politics as profoundly as I do – but I would rather have that defence than for there to be any possibility of being swept up into either the sexy razzmatazz or into the fear and hatred.
This election has given the faintest hint of what a cornered ANC might be capable of and the kinds of appeals it might be prepared to make to the most base elements of its constituency.
Not, mind you, that the DA is guiltless of softer versions of both the ‘sexy razzmatazz’ and the ‘fear and loathing’ populism. But the “Fight Back”slogan seems to have receded and Helen Zille’s sex appeal is such a specialist taste that I am less bothered by the DA’s mass-marketing strategy than I am by the ANC’s.
Helen Zille also rises
My own view is that Helen Zille, for all her preppy awkwardness, jolly-hockey sticks enthusiasm and excruciating body language, is the Iron Lady of our recent history and has struck at the heart of ANC complacency and tolerance for corruption and failure.
Whatever happens to the DA’s feisty campaign in this election, Helen Zille herself has achieved an extraordinary place in our history. She has personally shaped her party and pushed it into new territory – against history and against personal limitations – where it is, in my estimation, going to play a growing role in the politics of a post-Apartheid South Africa. This would be a phenomenal and transcending achievement for party that originated in the last white parliament.
Results – counting chickens and pigs in pokes
I strongly suspect that ANC panic and DA overreach is going to leave a lot of people slightly shamefaced or deeply relieved.
There is no realistic or publicly available polling data but my thumbsuck guess – unlike that of Allister Sparks – is that the DA does less well than the hype has led us to believe and that the ANC does not go much below 60 % no matter how big the stayaway vote from the party’s angry and disillusioned supporters.
The DA seems to have set its supporters and party workers up for disappointment. Who cannot think that the party will not do considerably better than it did in the 2009 General Election or the Municipal vote in 2006? But the way it is being spun, anything short of 4 metros and 40 percent of the vote (a vanishingly unlikely outcome) is going to feel like defeat.
Will the ANC lose enough urban African support to scare it into cleaning up its act?
I am ever hopeful, but I am breathing while I wait.
The cacophony – let it stop!!
It is perhaps slightly pretentious to hate exclamation marks as much as I claim to – but I think the sheer awfulness and triviality of the the political debate deep into election time calls for more than one of the flashy little symbols of overstatement and hyperbole.
I refuse to discuss the toilets any further. I promise I will never talk about the ANC’s leaders ‘snuffling’, ‘grunting’ or ‘squealing’ at the trough ever again, no matter how extreme the provocation.
It is an arms race of metaphor and hyperbole and eventually the language cannot adequately express the appropriate range of feelings.
I look forward to a period of calm understatement, starting next week Monday, as we recover from Sunday’s last gush of whining, triumphalism and sage and important thoughts from the analytic establishment.
- The business of government becomes the business of enriching the governors … rather than the business of governing and thereby serving the electorate’s overarching interests?
- The extremely rich rewards to be gained from holding political office cause the party list process – especially in the ANC – to become one of mayhem and murder, endlessly chaotic and contested?
- All classes of South Africans whose interests are inimical to the looting of the state, political patronage, ransacking the parastatals, incompetent government and tenderpreneurial activity of all kinds (the black and white middle classes, the industrial working class and the urban poor who are dependent on service delivery as well as big and small business, which both need a functional state, stable rules and the rule of law) begin to shift their support to opposition parties, social movements and trade unions?
- In turn this puts pressure on the Ruling Alliance as Cosatu and ANC democrats start pushing against the tide.
- The ANC withdraws into governing through systems of patronage and razzmatazz populism as its class base shifts to the rural poor, unemployed urban youth, the state sector and the political/economic elite and fast-and- loose forms of international capital and organised criminals (the last two categories are experts in dealing with this kind of politics)?
I think this is the way the cookie crumbles. With the proviso that no-one knows the future – and it is always more unexpected than not - and I think the cookie crumbling in the way that I have described means:
- The Democratic Alliance continues to transform its racial profile (in electoral support as well as leadership) and strengthens its support in urban constituencies throughout the country in the May18 national municipal election.
- There is a significant showing in that election by other opposition parties and independents.
- Cosatu begins to plan for the inevitability of either ‘a coup’ within the ANC or a withdrawal from the Ruling Alliance and the establishment of a viable alternative political home.
- The backlash within the ANC after the election will be severe leading to very high levels of contestation before and during the 2012 elective centenary conference.
That’s the way I see it, although I might be wrong.
If I am right, the next few months is the last chance for the ANC to be saved from the future its current leaders are securing for it.
A rescue job will have to reject the Nkandla style patronage networks as well as the ANC YL style technocratic tenderpreneurialism and those who back it. That doesn’t leave much political room for a challenge or much of an internal constituency in which to nestle it – other than on the left.
Just thought I would mention that in passing … I am now so busy with paid work (hurrah!) that “in passing” is the only time I will have for a while.
A guest post from my friend and colleague Sandra Gordon. Sandra is a respected financial market economist and we increasingly present work as a team in what is often called “a dog and pony show” … although in our case there is some disagreement over who will be the dog and who will be the pony. Sandra is an excellent market commentator and I have known and respected her views since she was my client on the “buy side” at Nedcor Investment Bank Asset Management (Nibam) in the mid-90s.
Over to Sandra:
If there was one message from this year’s budget it is that, despite all the hype that economic transformation has finally arrived (the dreaded “shift to the left” which tends to give the financial market types sleepless nights), it’s actually probably more of a case of business as usual.
In the wake of the global financial crisis, there was serious debate worldwide about the merits of various economic growth models. In the 2010/11 Budget, Minister Gordhan noted: “The recent crisis and its aftermath have led to a serious introspection and rethinking of what were thought to be robust and superior economic models.” With the Washington Consensus in disgrace, South Africa was able to signal its intention of shifting towards a “developmental state” (essentially a more active role for government in the economy).
So it seemed South Africa was headed for a developmental state and real economic transformation. The new model was finally outlined by the New Growth Path (NGP), which was released by Minister Patel late last year. The primary aim of the NGP was the creation of five million new jobs by 2020.
This theme was echoed in the recent State of the Nation address, in which President Zuma announced a range of measures to encourage job creation.
Yet, despite all the talk of economic transformation – and the ongoing tsunami of change in the global environment – this year’s budget is essentially unchanged from the previous. The critical issues facing our economy were again identified as the twin evils of unemployment and poverty, while the best way to address them is to focus on job creation and encouraging growth in those sectors most likely to generate employment.
Admittedly this year’s budget had a greater focus on jobs than last year – with a grocery list of programmes and measures totalling R150 billion over the next three years. A key difference was also the absence of any mention of the “developmental state” – with government’s role limited to the provision of incentives and the creation of an environment conducive to growth – such as the easing of transport and logistic bottlenecks etc. Other than that, the key measures were familiar – more social spending to support the poor, huge sums for investment in infrastructure and a focus on skills development and training.
Essentially the budget delivered on the priorities laid out by the NGP – with one glaring exception: demands for a weaker rand. Minister Gordhan neatly sidestepped this particularly contentious issue by noting that government had already responded to excessive rand strength by easing exchange controls and accelerating the accumulation of foreign exchange reserves in October last year. Beyond those measures, Treasury will be “monitoring” the measures adopted by other countries – including Brazil and Thailand – which have had similar struggles with massive capital inflows and excessive currency strength. So effectively, “we’re looking into it.”
The other political hot potato that was neatly avoided in the budget was the issue of the National Health Insurance. This year’s budget included measures which “lay the foundations” for NHI. The implementation progress is going to take time – but things are undoubtedly going to get more interesting when the debate shifts to how the NHI is to be funded. Gordhan listed a range of possible funding sources including a VAT hike, a surcharge on personal income or a payroll tax. None of those options are likely to be particularly well received.
Essentially then, Gordhan was able to address all the priorities outlined in the NGP (barring rand weakness), while maintaining an element of fiscal discipline. With the deficit remaining at 5.3% of GDP in the new fiscal year – in line with the previous fiscal year but above expectations – debt servicing is now the fastest growing spending category.
While we are in a far better position than countries like America, the UK and various European economies which are slashing government spending and raising taxes, it could well be that this is our last chance to really get the economy moving. If the measures in this year’s budget deliver growth, tax revenues will ultimately rise and fiscal discipline will be maintained.
If, however, growth stagnates – perhaps due to a deterioration in the external environment – the state may find its finances stressed, providing less scope for social spending and job creation initiatives. As one analyst put it in the press this morning, this could be “the last throw of the dice”.
And it is on this front that the news is a little less reassuring.
It is positive that – amidst the global turmoil – the centre is holding and our basic economic policies remain on course. But our key weakness has always been not our policies but our inability to implement those measures. So for all the good news in this year’s budget regarding measures to encourage job creation and infrastructure investment, there have been no developments which would lead one to think that there is going to be any significant improvement in implementation and delivery.
In an increasingly unstable global environment, it is becoming ever more important that we finally start making significant progress on reducing our unemployment rate and pervasive poverty. We have the money, for now, but the ability to implement and deliver is becoming ever more critical.
With so much at stake, it looks set to be another interesting year.
Busy, busy … and everything is slower; the brain and hands struggle with what they did with alacrity before the December holiday.
It is becoming clear that South African Investment Risk is going to be all about the New Growth Path (NGP) this year. So picking up from where I left off from the two pieces I wrote last year about the NGP, here and here – I did promise a third and, I suppose, this is it.
I get irritated by those those interminable news features reviewing or predicting the calender year as if it was a natural unit of history into which discreet trends neatly fit themselves and await their unpacking by news organisations short of December and January copy.
But then that means I failed to point out one of the most interesting features of 2010, namely the peculiar arc described by Jacob Zuma’s fortunes over the course of last year.
Remember how badly the year started for him?
He stumbled from crisis to crisis and the consequences of his sexual behaviour (consequences we are going to feel again this year) began to make even his most fervent backers nervous.
The second phase was the World Cup and the apparent surrendering of his position to Blatter and his merry band of soccer thieves. That phase ended with the gathering woes of the public sector strike and a serious challenge from “the right” at the NGC.
That is the moment he turned it all around, to everyone’s surprise – mine included.
His administration managed to negotiate an end to the public sector strike and secure Cosatu’s aid to stop the political challenge from the right (fronted by Julius Malema, but emanating from higher up the ANC/New Elite food chain – I cover that – exhaustingly if not exhaustively - here.)
As I discuss in the previous link, it is my contention that he secured the victory by making policy concessions to the left and Cosatu (which are essentially contained within the NGP document – clearly not acceding to the left’s full agenda but going some of the way) and this sets much of the tone for a discussion about political risk in 2011.
The New Growth Path (NGP)
The New Growth Path (NGP) document was produced by the Department of Economic Development (23/11/2010), an institution that came into being as a direct reward to Cosatu for having backed Jacob Zuma’s rise to power at Polokwane and which is headed by a minister who hails from the heart of Cosatu’s leadership.
The origins of the NGP might be closely linked to Cosatu, but the fact that it is a real attempt to address unemployment that has been formulated in government (i.e. outside of the priority Cosatu objective of protecting the interests of the already employed) means it is full of suggestions that Cosatu has found itself unable to support.
But Cosatu’s doctrinaire and sectarian self-interest based criticism aside (see those here), this proposal is far closer to the policies of Cosatu than any macro and micro economic framework that has emanated from the ANC and government since 1996 – and this is because the document forms part of the payback to the trade union movement and herein is contained some of the risks associated with the policy.
The Activist Developmental State
The NGP is more than just a statement committing government to various broad economic interventions designed to achieve job rich economic growth. It calls for a fundamentally new approach to the administration of all aspects the economy and is highly interventionist and proposes that the the Department of Economic Development plays the lead role.
One of the most interesting critiques of the policy comes from the Chief Economist of the Sanlam group
It wants to regulate wages and salaries in the labour market, prices in the goods market, the rate of exchange in the currency market, interest rates in the money and capital markets, and dividend policies and therefore by extension equity prices. It even hints at rent control in its desire to reduce rentals for small businesses in shopping centres. (The New Growth Path – Does it really take us forward? – Jac Laubscher, Sanlam Group Economist – 01/12/2010 catch the full text of that interesting critique here).
The premise is that markets left to their own devises will not solve the problems, particularly of unemployment. Unemployment (as well as the full range of social ills in South Africa), in this paradigm (the paradigm of the NGP, not the paradigm of Sanlam or Jac Laubscher!), can only be addressed by vigorous state intervention.
The conventional or orthodox view in economics tends, in principle, to be wary of over regulation of the economy and markets by even the most efficient, vigorous and rigorous state or government agency. The potential for misallocation of resources, bureaucratic drag, distortions and inefficiencies (and therefore reduced growth) must be significantly increased when a new, untested and under-resourced agency nested in a national administration known for high levels of dysfunction is charged with leading interventions at every level into the economy.
Looser monetary, tighter fiscal policy
The stability and predictability of macro-economic policy has been one the great successes of post-1994 policy making in South Africa.
The NGP makes constant reference to achieving a “more competitive” currency – through the mechanism of “a looser monetary policy and a more restrictive fiscal policy backed by microeconomic measures to contain inflationary pressures and enhance competitiveness” (page 16 , The New Growth path – The framework – 23/11/2010).
Thus this policy holds out the hope/promise of stimulating the manufacturing sector (by making exports more competitive) but proposes to help control the danger of inflation inherent in this strategy by reducing state expenditure.
I do not expect government to either change the inflation target for the SARB or its general mandate “to protect the value of the currency in the interest of balanced and sustainable economic growth” (Constitution of the Republic of South Africa 1996/1996/2009-04-17/Chapter 13 – Finance), but the assumption must be – at least – that there will be downward pressure on the currency.
Labour markets and wages – the source of the conflict with Cosatu
What is fascinating about the NGP is that it calls for wage restraint and is, inevitably, starting a serious discussion in government and the ANC about the conflict between “quality jobs” and any jobs at all. Charged with creating employment, the NGP is inevitably going to come into conflict with the labour regime established after 1995 that so profoundly strengthened the interest of workers inside the system against the interests of the unemployed outside the system.
2011 is going to be the year that government finally shifts beyond the set of macro-economic policies enshrined in the Growth, Employment and Redistribution document that defined the Mbeki leadership – and so angered Cosatu, the SACP and the ANC’s own left wing.
Political analysis for this year is going to have a strong economic focus. We will have the national local government elections (the rumour I hear is May 18) and the never ending cycle of tenderpreneurial abuse by party and government figures.
All of that will continue to provide grist to our mill, but the big story for this year is all about government economic policy. Will they go too far for the financial markets and other investors? Can a government, any government, do anything to fundamentally alter the content and direction of economic growth? Can the Ruling Alliance hold itself together if the ANC grasps the nettle of the labour market? These are the big questions for the year.
Those who know me would expect me to profess that I would rather eat broken glass than say anything sentimental and upbeat for the sake of Christmas cheer.
They would also know that I often fail: that a sort of “jolly hockey-sticks” optimism can sometimes creep into my disposition, that the studiously steely eyes often mist over at the occasional heart-warming story – usually about children, dogs, down trodden people pulling themselves up by their own bootstraps (whatever that means) and politicians being hoisted by their own petards or any other suitable handle.
A bit lame I know, but that’s the way it is.
Anyway, nothing too mawkish this time – but still using every edge I can to generate interest.
Craig Tyson, my friend and the fine Editor of that excellent men’s magazine GQ, has agreed to my publishing in these humble electronic pages something of mine he has only recently paid for and placed in the December issue of his paper and ink magazine – which also has an excellent website you can catch here.
As I did previously: here is the cover of the GQ. Click on the nose of the gorgeous Gisela Calitz and you will be whipped through to my article arguing that it is, ultimately, unsurprising that political risk increased this year.
Only joking. You can click anywhere on the picture – I momentarily liked the thought of lots of people carefully resting the cursor on her perfect nose and giving it a little click, but I am over it now.
Oh, and buy the magazine. It’s a wonderful gift for the season of giving … oops.
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.