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… which I entirely doubt will be made glorious summer by this sun of KZN when he gives his
5th nth State of the Nation Address this evening.
I am not, as my children might have said, very amped for this.
The only ray of light so far (I am watching on eNCA) was a brief interview with Floyd Shivambu who suggested it should be a ‘state of the resignation address’ … that if the President couldn’t make it to the Cabinet Lekgotla ‘then it would be best for him to just come here to explain that he is just too old and tired and to say goodbye’ – or words to that effect.
I thought I would use the time to publish some bits and pieces that I have sent to my clients over the last week.
The winter of our discontent – as the labour relations cycle meets a secular trend
Every year at this time South Africa is engulfed in strikes as annual wage agreements are traditionally renegotiated in several sectors of the economy. Every year analysts and journalists pontificate widely about the dire labour relations conditions – and the gloom deepens because this all takes place in winter.
Three factors this year are probably going to make the outlook more negative and threatening.
Firstly, the post national election winter has, since 1994, been characterised by spikes in service delivery protests. The causes of this phenomenon are not fully understood, but it is likely that:
- voters confronting a hostile winter and declining services levels – so soon after being promised the earth by politicians – are likely to be unsettled;
- local politicians who failed to make party lists begin mobilising factional support, perhaps to stand as candidates in 2016 local government elections, perhaps to discredit those whose positions they covet.
Secondly, the platinum strike is being driven by a number of ‘political’ factors – as discussed previously.
Thirdly Numsa is showing clear signs that its political aspirations are, as we predicted, going to drive deeper and more robust strikes and labour unrest. One sign is the growing violence as Numsa attempts to widen its action at the Ngqura container terminal in the Coega Industrial Development Zone in Port Elizabeth. The South African Transport and Allied Workers Union (a Cosatu union) is opposing the Numsa strike and is calling for its members to stay at work at the Transnet facility. However, both Transnet and Satawu were quoted on radio (SAFM 20h00 news broadcast 08/06/2014) as decrying the burning of houses and cars of the workers who were at work. The SATAWU spokesperson warned that the situation had similar dynamics to those that were present in the platinum sector in 2012 – that this ‘is just like what happened with Amcu (same broadcast).
Additionally, Numsa is preparing to lead 220,000 workers out on strike from the metals and engineering sector next month. “The bargaining negotiations have spectacularly failed to produce the desired outcomes as expected by the thousands of our members in the sector,” spokesman Castro Ngobese said in a statement quoted in The Herald (5/06/2014). Numsa’s core demands includes a 15% pay rise and a one-year bargaining agreement, the Steel and Engineering Industries Federation of SA (Seifsa, which represents 23 employer associations) has offered an inflation-linked increase of 6.1 percent.
This is the cycle meeting the secular trend, with each driving the other deeper than either would have been driven ordinarily. Numsa is in the process of breaking away from Cosatu and is beginning to vigorously compete with other Cosatu unions in overlapping sectors (container terminals, the big electricity generation projects and down and upstream mining and metallurgy operations). This is, at least partly, about Numsa preparing to set up a ‘left’ party to compete for votes in the future. Comparable (but not identical) dynamics are driving the platinum strike. A winter with ‘normally’ increased social and industrial unrest will probably become unusually bleak and unwelcoming in the months ahead. The impact on GDP growth and on the possibility of ratings downgrades are both important considerations.
Both Fitch and Standard & Poor made references on Friday (13/06/2014) to increased political risk when they changed their views on the South African government’s willingness and ability to pay the sovereign debt.
Fitch revised the outlook for South Africa to negative from stable and affirmed the country’s long-term foreign and local currency issuer default ratings at BBB and BBB+ respectively. S&P downgraded both the country’s local and foreign currency ratings by one notch from A- to BBB+ and BBB to BBB- respectively, but moved its outlook negative to stable. None of this is a catastrophe but of interest to us here is the central role of ‘politics’ in the given reasons for both Fitch’s and S&P’s changes.
Fitch says it most baldly in the press release announcing the change in outlook (my emphasis added):
“Following its election victory in May with 62% of the vote, the African National Congress government faces a challenging task to raise the country’s growth rate and improve social conditions, which has been made more difficult by the weaker growth performance and deteriorating trends in governance and corruption. This will require an acceleration of structural reforms, such as those set out in the comprehensive National Development Plan (NDP). In Fitch’s view, the track record of some key ministerial appointments and shortcomings in administrative capacity mean this is subject to downside risks.”
Fitch gives amongst the key drivers of its more negative outlook: “Increased strike activity, high wage demands and electricity constraints represent negative supply side shock.”
Standard and Poor’s downgrade was similarly motivated but adds some additional concerns:
“While we think that President Jacob Zuma’s newly elected administration will continue the policies of his first administration, which controlled fiscal expenditure and fostered broadly stable prices, we do not believe it will manage to undertake major labor or other economic reforms that will significantly boost GDP growth”.
My initial take on the new Cabinet is supportive of these motivations.
In addition both agencies made extensive reference to the negative industrial relations environment – and the negative impacts on GDP growth and government revenues. There is a significant political dimension driving industrial unrest – as I have argued above.
The validity of the actual ratings and ratings outlook of these agencies is much disputed but the issues they use to motivate their views are interesting because they (the agencies) are cautious; clinging to a sort of ‘average view’ of investors. So if political criticism makes its way into the text (as is the case in both these instances) we are obliged to consider that these may represent, or may come to represent, a general view in markets.
South Africa has a small open economy and liquid financial markets and the difference that policy makers can make to economic outcomes is limited. But even within those limitations too many political choices (certain cabinet appointments, corruption controls, delivery performance and the honest brokering of labour contestation) are either not helping or are actively negative.
No-one could have failed to notice the excoriating criticism of the credit rating agencies (CRAs) after their generalised failure to accurately assess the risks associated with the collateralised debt obligations allegedly because they were mostly issued by the CRAs biggest paying clients! However, it is the opposite with sovereigns: “It has also been suggested that the credit agencies are conflicted in assigning sovereign credit ratings since they have a political incentive to show they do not need stricter regulation by being overly critical in their assessment of governments they regulate.” http://en.wikipedia.org/wiki/Credit_rating_agency (accessed 13h56 16/06/2014.
The National Directorate of Public Prosecutions
I dealt with this issue last week, but it is making bigger and more anxiety provoking headlines than ever.
The NDPP was drawn into the fight between Mbeki and Zuma and since that time has limped along to the rhythm of one or other faction aligned to competing interests within the ANC seizing or losing power in the institution. This is not a situation in which one could safely choose one set of ‘good guys’ and back them against another set of ‘bad guys’. The situation is complex but relates primarily to the on-going struggle to either ensure that certain senior political leaders are brought to justice or to ensure that they are not.
The NDPP is one of the most important institutions of the justice system, and without certainty and stability here it is impossible to have certainty about the operating environment for any business in the country. This is a serious problem and it appears to be getting worse under the current administration.
(This is a bit dated, but you might be interested in my rude remarks about the new minister.)
“Government is ready to wash its hands of the protracted wage strike by platinum mineworkers in Rustenburg” according to the Sunday Independent 08/06/2014. Mines minister Ngoako Ramatlhodi threatened to pull out his inter-ministerial task team if a settlement was not reached at the last scheduled government facilitated meeting, which is due to take place today.
In addition, a formal ANC statement delivered by Gwede Mantashe at a press conference in Luthuli House in Johannesburg last night after the ANC weekend lekgotla characterised the strike in a way that seemed to destroy the remote possibility that Ramatlhodi could have made a difference anyway:
“The articulation of AMCU position by white foreign nationals, signalling interest of the foreign forces in the distabilisation (sic) of our economy.
The direct participation of EFF in the negotiations, and thus collaboration with the foreign forces.
These two factors led the lekgotla into cautioning the Ministry of Mineral Resources in handling the facilitation with care. There were questions about the role of the state in workplace disputes where there are clear rules guiding it.”
This statement is interesting precisely because it borders on the bizarre
The ANC statement indicates shows just why the new ANC minister cannot be an honest or effective broker in the negotiation – and it is therefore unsurprising that he is preparing to withdraw his team. The ANC is compelled to believe that this strike is only not ‘negotiable’ in the normal manner because the real issues driving it are political and not about wages at all. The ANC might be correct about the strike being ‘political’ but the party itself is culpable of having politicised the strike by attempting to defend its Num ally against the vigorously growing Amcu, by alienating workers by characterising their union as ‘vigilantes’ and by the ‘Marikana massacre itself.’ s – There was never any real possibility of this government mediating between the parties or influencing the outcome.
Concerns about property rights
The South African Institute of Race Relations and AfriBusiness (AfriSake) have recently released warnings about property rights in South Africa. A proper assessment of these warning would require specialist legal opinions, but our own assumptions have long been that the South African Constitution provides adequate protections for private property (see here) and the ANC government is unlikely to risk fiddling with these principles.
However it seems to be a basic due diligence requirement to keep an eye on the risk – perhaps more so since Jacob Zuma spelled out at his Cabinet announcement (reiterating many recent ANC and SACP statements) that we are entering a “more radical” phase of economic transformation.
With this is mind, we reproduce the basic summary of legal concerns AfriBusiness and the South African Institute of Race Relations have raised in their research (note that below is a direct quote from the AfriBusiness statement linked above):
- The National Development Plan has as its aim the transfer of 20% of the agricultural land in a district to black recipients, at only 50% of the value as determined by the state (in terms of the Property Valuation Bill).
- The verdict of the Constitutional Court in April 2013 in the case of AgriSA v the Minister of Minerals and Energy distinguishes between “deprivation” and “expropriation”. After the verdict the state is able to dispossess and redistribute property, as long as the state does not assume ownership of the property and act (sic) only as custodian.
- The Green Paper on Land Reform aims a radical redesign of property rights, with inter alia a type of freehold on land which will drastically limit the rights of owners. Within this context a Land Management Commission is proposed, which will have discretionary powers regarding disputes over title deeds.
- The policy proposal by the Minister of Land Reform, Gugile Nkwinti, for “Strengthening the rights of workers working the land” aims to transfer 50% of the land to the workers, commensurate with their term of service. No compensation will be paid to the owner.
- The Expropriation Bill poses that expropriation may be used for the public interest and public goal. The Bill is not only applicable to land but will cover all types of property. Public interest and public goal are determined in an ad hoc manner and both have restitution as aim.
- The Promotion and Protection of Investment Bill allows state intervention in investment processes. The Bill explicitly provides for expropriation at less than market value. All in the name of so-called restitution. Any property used for commercial purposes is targeted by the Bill.
- The Infrastructure Development Bill aims to eliminate so-called inequalities in infrastructure. The Presidential Infrastructure Coordinating Commission is granted the authority to expropriate in the public interest and for the public goal.
- The Spatial Planning and Management of Land Use Act aims at centralized planning of land ownership. It proposed so-called spatial justice by integrating low and high cost housing in residential developments.
- The Extension of the Security of Tenure Amendment Bill expands the rights of occupants and their dependents. Evictions are strictly controlled and the Amendment Bill means a significant loss in control over property.
- The Restitution of Land Rights Amendment Bill creates further political and economic uncertainty regarding the future of property rights.
- The Rental Housing Amendment Bill proposes stricter regulation of the rental property market. Rental Tribunals will be established to hear disputes and will be able to determine increases in rent.
- The National Water Amendment Bill and Policy Review prohibits the trading of water rights and proposes a use-it-or-lose-it principle for water rights. Equality (including racial transformation) becomes the criterium (sic) for the allocation and re-allocation of water rights.
Consume that with the requisite amount of salt but keep an eye on the detail.
Sesotho loan word meaning court or community council meeting; used in the South African context a “lekgotla is a meeting called by government, Cabinet or the ANC to discuss strategy planning”. Wikipedia accessed 04h30 09/06/2014.
Below are my comments about Sunday’s cabinet announcement followed by my comments about the elections from a week or so earlier – a sort of trip back in time.
In both cases the originals were written under tight deadlines and in both cases my initial impressions have been moderated by time, drifting towards the insipid end of the spectrum.
But for those who might be interested these were my first, slightly more vivid, impressions …
(Sent out 06h00 Monday 26th May):
Jacob Zuma’s Cabinet 2014 – through a glass darkly
From a narrow ‘financial market’ perspective the Cabinet announcement by Jacob Zuma last night was disappointing and confusing.
(Note: it would be possible to find much good in this Cabinet and the strategy it implies, but because the announcement was so late – about 1900 hours last night – I have decided to focus almost exclusively on the risks and problems, mostly because they dominate. Apologies if this makes me sound whiny.)
The appointment is finally made. It’s largely a good thing from a financial market perspective – given his understanding of how business works. However, the damage done him by his comments before the Marikana massacre should not be underestimated (he called for greater police action against strikers – see here) and his power within the ANC should not be over-estimated (he has, essentially, played hand-maiden to Jacob Zuma from assuming office of the ANC deputy president at Mangaung in December 2013). However, Ramaphosa was a clever and powerful negotiator for the ANC at Codesa I and II. It is likely that Ramaphosa’s authority and influence will gradually increase in the next few years, possibly leading to his ascension to the ANC’s and the country’s presidency.
Nhlanhla Nene – Minister of Finance
Nene became Deputy Minister of Finance in November 2008 and served in that role till May 2014. He is technically competent and liked by the few in the markets and in business who have dealt with him. As chairman of parliament’s finance committee Nene urged in October 2008 that “utmost care should be taken that parliament does not undermine macroeconomic stability” – see here for that reference.
Issues, problems and basis for assessment
Nene is the ‘continuity candidate’ in the absence of Pravin Gordhan – but it is this absence that increases uncertainty. Nene is not well known in the markets and he is particularly ‘lightweight’ politically in terms of his seniority and influence in the ANC (as opposed to his predecessors Trevor Manuel and Pravin Gordhan).
This becomes more of a problem when GDP growth is as sluggish as it is in South Africa and when the President himself summarises his intentions (as he did prefacing his cabinet announcement): “I announced on Saturday that we have entered the second phase of our transition to a national democratic society. I also said this would be a radical phase of socio-economic transformation.”
One must assume such “a radical phase of socio-economic transformation” would put even greater spending pressures on the Finance Minister. Gordhan (and before that Trevor Manuel) had proven levels of toughness and authority in holding the fiscal line – although at least in Manuel’s case the ‘markets’ were nervous for some time after his appointment in 1996 (and Gordhan was not, initially on the ANC NEC when he was appointed).
The problem is made worse by the fact that DTI and EDD are unchanged
One of my early concerns with Zuma’s first Cabinet in 2009 was that it distributed economic policy-making power around government apparently (to me) as a gift to the SACP and Cosatu for having backed Jacob Zuma in his struggle against Mbeki. Thus Rob Davies in DTI and Ebrahim Patel in EDD have been left in place in yesterday’s cabinet announcement. As it turned out after 2009 Pravin Gordhan was eventually able to establish the Department of Finance as the centre of government’s economic policy-making function. Appointing Nhlanhla Nene to head the Treasury while leaving the other (now more experienced) economic Tsars in place rather reawakens the original concern.
If public sector wages and public service productivity are key variables for balancing government books …
The removal of independent and powerful Lindiwe Sisulu to the backwaters of Human Settlements (formally housing) and her replacement with the quiet and self-effacing Collins Chabane, previously of monitoring and evaluation in the Presidency, is another cause for concern. Again, he is admired and liked and should be given the chance to rise to the challenge of this key portfolio, but my first take is this is another weak appointment. The major negotiations for 3-year wage agreements in the public sector come up for renewal this year. I would have preferred someone in this post who had the political weight to stand up to the public sector unions (and various other political interests).
The key idea seems to be to house the NDP in a politically beefed up Presidency
The new ‘centre’ of economic policy making will actually be within the Presidency where Zuma has appointed Jeff Radebe as a sort of Prime Minister of the National Development Plan into which he (Zuma) has collapsed performance and monitoring as well as ‘youth development’.
Radebe swings a lot of weight – and a more general comment is that Jacob Zuma has made weak appointments throughout his cabinet but has very significantly strengthened his own office. There are several problems with this, but I will mention only that Jeff Radebe has never played a role where he has been required to establish or defend (or even understand) macro-economic policy stability, but he has played the role of party fixer, strongman and bully in the ANC. If these talents can be deployed in giving flesh to the NDP bones that will be a good thing.
The Governor of the South African Reserve Bank consistently has expressed concern about various ‘supply side’ constraints (see here for the Monetary Policy Committee statement of May 22nd).
These constraints include energy prices, labour unrest, transport bottlenecks, broadband penetration and regulation and failures in the education system among a host of issues.
So here are just a few of the appointments in this area:
Energy: After a disastrous term in Agriculture, Forestry and Fisheries, Minister Tina Joemat-Peterssen has been appointed Minister of Energy. She has been the subject of several Public Protector Investigations and she has courted a highly confrontational relationship with the fishing industry. However, she is strongly supported by Jacob Zuma. Her new department will be central to the decisions about the biggest public tender in South African history: R1-trillion worth of nuclear power stations.
Telecommunications and Communications: The functions have been split, with the Minister of State Security Siyabonga Cwele moving to Telecommunications and Postal Services. The bigger problem is how many changes have been made here, with the telecommunications industry having expressing the hope that Minister Yunus Carrim would stay in the post and finally move towards stabilising the policy framework under which the local loop would be unbundled and the sector regulated – after a long succession of disastrous appointments. There are no grounds to be confident that Cwele is up to this task. The only grounds that we can see for the appointment is if the sector is conceived of as an extension of the country’s state intelligence function.
Communications: Ms Faith Muthambi has been appointed to head this department which will include the functions of the independent regulator Icasa, the state broadcaster SABC and government information services, the GCIS. It still needs to be assessed whether the structural change and appointments here and in telecommunications will be positive for the industry, but on the face of it is peculiar, to say the least, to group the regulator of the private sector (Icasa) with the ‘marketing’ and ‘promotion’ capacity of the government and state.
(See here for the eviscerating comments on the ‘communications’ decisions in the cabinet from the SOS Coalition (‘trade unions, community media and content producers hoping to support quality public broadcasting’).
Education, transport and labour: It can have escaped no-one concerned with South Africa’s economic development that these functions of government are failing or significantly underperforming. But Jacob Zuma has left education and training with Blade Nzimande, basic education with Angie Motshekga (which, btw, some NGO’s and the DA reckon is a good thing), transport with Dipuo Peters and labour with Mildred Oliphant.
(Because I don’t know him that well, I didn’t discuss Adv Ngoako Ramathlodi as mining minister in that note. But here is the new minister in 2011 essentially arguing that the South African constitution was a compromise from weakness on the ANC’s part and the the courts need to passop stepping on toes of government, the ANC and the Executive’s …. and here is constitutional expert Pierre De Vos apoplectic response to Ramatlhodi’s disturbing views.)
(The Deputy President is Cyril Ramaphosa)
1. The Minister in the Presidency is Mr Jeff Radebe.
2. The Minister of Women in the Presidency is Ms Susan Shabangu.
3. The Minister of Justice and Correctional Services is Mr Michael Masutha.
4. The Minister of Public Service and Administration is Mr Collins Chabane.
5. The Minister of Defence and Military Veterans is Ms Nosiviwe Mapisa-Nqakula.
6. The Minister of Home Affairs is Mr Malusi Gigaba.
7. The Minister of Environmental Affairs is Ms Edna Molewa.
8. The Minister of State Security is Mr David Mahlobo.
9. The Minister of Telecommunications and Postal Services is Dr Siyabonga Cwele.
10. The Minister of Police is Mr Nkosinathi Nhleko.
11. The Minister of Trade and Industry is Dr Rob Davies.
12. The Minister of Finance is Mr Nhlanhla Nene.
13. The Minister of Agriculture, Forestry and Fisheries is Mr Senzeni Zokwana.
14. The Minister of Water and Sanitation is Ms Nomvula Mokonyane.
15. The Minister of Basic Education is Ms Angie Motshekga.
16. The Minister of Health is Dr Aaron Motsoaledi.
17. The Minister of International Relations and Cooperation is Ms Maite Nkoana-Mashabane.
18. The Minister of Rural Development and Land Reform is Mr Gugile Nkwinti.
19. The Minister of Higher Education and Training is Dr Bonginkosi “Blade” Nzimande.
20. The Minister of Economic Development is Mr Ebrahim Patel.
21. The Minister of Transport is Ms Dipuo Peters.
22. The Minister of Mineral Resources is Adv Ngoako Ramathlodi.
23. The Minister of Social Development is Ms Bathabile Dlamini.
24. The Minister of Public Enterprises is Ms Lyn Brown.
25. The Minister of Sport and Recreation is Mr Fikile Mbalula.
26. The Minister of Labour is Ms Mildred Oliphant.
27. The Minister of Arts and Culture is Mr Nathi Mthethwa.
28. The Minister of Public Works is Mr Thulas Nxesi.
29. The Minister of Small Business Development is Ms Lindiwe Zulu.
30. The Minister of Energy is Ms Tina Joemat-Peterssen.
31. The Minister of Science and Technology is Ms Naledi Pandor.
32. The Minister of Cooperative Governance and Traditional Affairs is Mr Pravin Gordhan.
33. The Minister of Communications is Ms Faith Muthambi.
34. The Minister of Human Settlements is Ms Lindiwe Sisulu.
35. The Minister of Tourism is Mr Derek Hanekom.
(And then this, sent out Monday 12 May 06h30)
Election 2014 results
South Africa’s Independent Electoral Commission (IEC) announced the following election results for the country’s National Assembly on Saturday 10 May 2014:
The ANC has 15 fewer National Assembly seats and the DA 22 more than they achieved in the 2009 election.
The provincial results followed a similar pattern, with the ANC winning 8 out of 9 provinces (with the Western Cape remaining in DA control). In three of those provinces the ANC increased its majority (Kwazulu-Natal, Eastern Cape and Northern Cape – and increasing its percentage of the vote in the Western Cape) and in five provinces the ANC majority was reduced.
ANC drop more significant in Gauteng and some other major cities
The most significant reduction in ANC support occurred in Gauteng, the country’s economic and industrial heartland and the province with the highest population and highest population density. In the provincial poll in Gauteng the ANC fell 10.45% to 53.59% from 64.04% in the 2009 election.
In the table below the trend is clearly revealed in the three major Gauteng metropolitan areas and is reproduced to some degree in Nelson Mandela Bay in the Eastern Cape:
(As an aside, News24’s coverage of the election as well as it’s app from which the above is a cut-and-paste was truly excellent – it’s set the new gold standard for election coverage in South Africa. To get a taste of that, visit here.)
‘Racial voting’ patterns persist
A feature of South African voting trends is that, in general, the parties have quite distinct racial or ethnic support bases.
This trend clearly persists (from City Press 11/05/2014)
A close examination of ward data changes between 2009 and today reveals that there is a blurring of the racial voting patterns in Gauteng’s metropolitan areas – but only to a limited degree and only in the most developed urban centres. The persistence of ‘racialised’ voting patterns is unsurprising given the country’s history and the persistence of apartheid’s spacial planning and economic, demographic and cultural disparities in the present. The implication is that party support patterns are as suborn and persistent as other social patterns. From a financial market perspective this can mean both that the political environment is stable and predictable but also that such secure incumbency is likely to gradually increase patronage and complacency.
(You might want to temper these conclusion with the views of Pallo Jordan who wrote in a Business Day column: “Racial interpretations of voter behaviour might be very comforting for analysts who confuse public manifestations of discontent with the rejection of the governing party. Unless the coloured voters of the Northern Cape are being included in the “racial solidarity” African voters are accused of, their political choices can only be explained in terms of attractive policies”. I think Jordan’s argument is taking on something different to the points I make above, but I include them – Jordan’s comments – here in case I am missing something.)
The main implications: government, the ANC, the NDP, the middle ground and the EFF
These are, in my opinion, the main financial market implications of the election:
- The result is generally financial market positive: it leaves the ANC with a secure enough majority to be able continue ‘grasping the nettle’ of macro-economic policy stability, including fiscal consolidation.
- However, there may be just enough voter admonishment implicit in the ANC’s loss of 15 National Assembly seats and the more dizzying drops in the major metropolitan areas to cause the party to attempt a clean-up of the behaviour of some of its top leaders.
- My reading of the relative ANC losses in the main urban centres of Gauteng is that these were only partly driven by the introduction of unpopular e-tolling gantries in that province. A more fundamental divide is the kind of leadership Jacob Zuma has brought to the ANC: with his ‘rural big man’ characteristics, the casual diversion of public funds for the development of his Nkandla home, his backing of patriarchal legislation like the Traditional Courts Bill and his too cosy, mutually beneficial, relationships with business people like the Shaik and the Gupta families (see here and here). The most educated urban voters are the least likely to tolerate this kind of behaviour by the country’s top politician – and this is reflected in voting patterns.
- There is very little disagreement between the ANC and the DA (and most of the smaller opposition parties, except the EFF) as to the broad outlines of economic policy. Thus the National Development Plan and a broadly stable macro-economic policy platform is the consensus of over 90% of the political establishment.
- It has long been a feature of South African politics that ‘the real opposition’ and political contest is not in parliament, but actually within the ANC/SACP/Cosatu alliance itself. This alliance has not, since 1994, been less divided over economic policy. The SACP is firmly backing the Zuma government and Cosatu is in disarray, leaving the ANC/SACP to pursue the NDP and related policies.
- While I do not think the NDP is a panacea for South Africa’s myriad economic problems, the programme’s holistic approach to economic development, it’s emphasis on improving infrastructure and its greater reliance on market mechanisms for the allocation of capital (more so than previous such policies like Asgisa, IPAP 1 & II and the New Growth Path) make it broadly financial market positive.
- The ANC is signalling its intention to ratchet up Black Economic Empowerment and affirmative action in the workplace (through legislative, regulatory, political and state spending mechanisms.) This will get loud – and will become a more central feature of the valuation of companies and economic sectors in South Africa.
- The rise and vibrancy of Julius Malema’s Economic Freedom Fighters has been, perhaps, the most notable feature of this election. Malema faces a final sequestration hearing on May 26 – and if his provisional sequestration is upheld he will be barred from being a member of parliament.
- With or without its leader in parliament the EFF is already vigorously attempting to link up with striking platinum workers and with service delivery protesters. This will become an increasingly noisy feature of South African politics. The upside is the ANC will probably become less ambiguous in its attitude to such strikes and protests. The downside is there will now be a parliamentary pressure group backing the radical populist policies of land seizures and mine nationalisation. My view is this is, on the whole, a healthy development. The radical populist views have been present in the ruling alliance and the society more generally since 1994 anyway. Having those views directly represented by a minority party in parliament formalises the debate and contest within the democratic and constitutional structures of the country. Of course that doesn’t mean the EFF won’t constantly attempt to take its struggle to the streets, but it does mean that the ANC will be clear on where it stands in relation to those issues.
- All attention will now move to Jacob Zuma’s new cabinet (which will be announced soon after his inauguration – which I expect on the 24th of May) and to succession issues within the ANC.
A couple of asides as I tinker away at a framework for assessing Sunday’s Cabinet announcement.
The media noise surrounding Helen Zille’s putative attitude towards Lindiwe Mazibuko is interesting, but largely because it is so loud.
In the last hour I have been asked twice (by journalists) for an opinion on Mmusi Maimane‘s acceptance of nomination to the position of DA Parliamentary Leader.
Not long ago I would have (privately) filed news of DA power-struggles and leadership changes under ‘white mischief’ and forgotten about it – confident that no client or journalist would ask for an opinion.
Real politics, the stuff that actually made a difference to legislative or regulatory outcomes, happened within the Tripartite Alliance or in the interactions between the ANC and business.
I think that was a useful shorthand that saved me time in the past, but clearly I will have to break the habit.
The Alliance no longer contains its own opposition – and is therefore no longer the primary site of politics.
The EFF, Amcu, whatever Numsa finally initiates and the DA all (healthily in my view) strip out a sort of multi-polar disorder from the ANC.
Politics will now (tend to) happen where it is meant to: on the streets and in parliament … and not where it previously tended to happen: in back room deals and as a result of other shenanigans in the ANC-led alliance.
There is an obvious trade-off between clarity of government policy/structure and the broadness of the ANC’s alliances. As those alliances break or simplify or are otherwise transformed I expect some kind of dividend for governance and economic policy.
If I might add …
Another habit of thought I might soon have to break is my instinctive intellectual pessimism about politics.
By ‘pessimism’ I do not mean an automatic assumption that politician are corrupt or incompetent.
What I mean is that I tend to think that politics changes little in the world, but that the world changes the politics.
I think this might make me some kind of market fundamentalist. I am certain that to grow, the DA will have to become more like the ANC – in its policy and in the class and racial character of its leadership.
The assumption (and maybe error) I make is believing that the electorate purely aggregates the interests of broad groups of people and the political parties are compelled to reflect the character and interests of those groups.
So my ‘habit of thought” is that I assume that for a party to grow it will necessarily become more generic and bland.
Why this is ‘pessimistic’ (and I hope incorrect) is I tend to assume that our politics increasingly changes nothing (except to the negative) and parties endlessly drift towards a sort bland and generic centre in response to the ‘market’ of the bland and generic voters.
No wonder I was a secret reader of P J O’Rourke. He once observed in his normal right-wing, smug but hilarious way:
Now majority rule is a precious, sacred thing worth dying for. But like other precious, sacred things …. it’s not only worth dying for; it can make you wish you were dead. Imagine if all life were determined by majority rule. Every meal would be a pizza.
P. J. O’Rourke, Parliament of Whores, 1991
Why this is a bad habit
I worry that my instinctive attitude is a potentially serious error. I can see how this ‘political pessimism’ might be a useful short cut in relatively homogeneous and stable first-world countries.
The main parties in those countries blur into each other.
But recession and unemployment, even in those countries, is inevitably accompanied by a growing divergence in the political arena – a shrinking of the centre and growth of radical nationalists and/or populists.
Surely this is a better permanent model for understanding South Africa?
I suspect our calm transition and the stable predictability of the ANC and it’s comfortable electoral majority might have lulled me into a false sense of security.
Who could not smile at the jaunty red boiler-suits, gumboots and maid’s outfits adorning the mostly young EFF members being sworn in to parliament yesterday?
I am delighted the EFF are there and I think it is healthy for our politics that the ANC will have to contest with the EFF in the minds of voters and in the national and provincial assemblies.
Rather that than the nodding and winking and/or furious factional splits that have gone on up until now in the closed shop of the ANC.
But it should be front of mind that the ANC has to answer the challenge of the DA and of the EFF.
The ANC still has a safety margin and room for manoeuvre, but party leaders will have heard the howls in the night and are unlikely to just sit back staring into the fire hoping for the best.
Herewith an extract from my weekly news commentary* as of 06h30 yesterday.
‘A minefield of obstacles for Motlanthe’ – Sunday Independent
The Presidency, in the person of Deputy President Kgalema Motlanthe, launched the “Draft Framework Agreement for a Sustainable Mining Industry” on Friday. The document is based on an initial process of discussion with all interested parties (including, amongst others, Amcu, Num and the Chamber of Mines) and each party is expected (hoped) to ratify the agreement by June 26. The document essentially acknowledges the importance of the mining sector for investment, economic growth and employment. If it is ratified, all parties would be formally accepting the need to re-establish law-and-order in the sector, improve labour relations and address the housing and community needs of workers and their families, both near the mine and in the labour sending area. The document commits the government to ensuring “that the legislative and regulatory programmes provide predictability and certainty for the industry” including with regard to “tax policy” – those quotes from 6.1.4 and 6.2.1 of the draft document.
This initiative is no more than the minimum of what has been demanded of government, especially of the commanding heights of government, by most of those affected by the industrial relations crises in the platinum sector that began in early 2012. Thus, Jacob Zuma, and his deputy, Kgalema Motlanthe, are looking busy and engaged with the crises and that will come as a welcome relief after what has appeared to be endless dithering and mixed messages.
However, there should be no expectation that the initiative will miraculously resolve the deep conflicts, both within government and ruling party policy and between the contesting trade unions. The Sunday Independent correctly points out that there is a tension in the government and ANC policy and the newspaper ascribes (or personifies) the tension as being between Finance Minister Pravin Gordhan (concerned about investment, profitability and revenues) on the one hand and Minister of Mineral Resources Susan Shabangu as well as ANC Secretary General Gwede Mantashe (concerned that mining companies owe South Africa, particularly black workers, a historic debt).
It is neat (but only partly accurate) to think of the policy conflict as being about the views of different powerful politicians within the government and the ruling party. The reality is that the ANC (and therefore, government) is, and has been since 1994, fundamentally torn between the economic necessity to reassure (mining and other) investors and the political imperative to demand redress and redistribution for its aggrieved constituents. Does the Motlanthe fronted attempt to negotiate a new understanding and modus operandi between the different interest groups in the mining sector represent a qualitative reassessment of where the ANC’s priorities lie? I doubt it, especially not 10 months before a national election where the ANC is starting to feel beset on several fronts but clearly (from a purely numeric perspective) has the most to win and the most to lose in the majority constituency of poor black South Africans.
It is tempting to see Kgalema Motlanthe’s role in the efforts to settle the sector as preparation for him to replace Susan Shabangu in the Minister of Mineral Resources post. Shabangu has gained a reputation as being instinctively suspicious of resource companies – although, again, I would suggest that this is more a characteristic of the ANC itself than of any particular individual. Motlanthe is perceived as ‘a good guy’, a person open to compromise, a peace-maker and a humble and loyal public servant. That would probably be a good thing for sentiment in the sector, but it would be important not to confuse form with content.
Julius Malema to party on down?
Malema has been explaining his decision to launch a new, yet to be formed, opposition party, the Economic Freedom Fighters. He yesterday described the ANC as “on a downward spiral ideologically, politically and morally” and under Zuma, as being characterised by “tribalism, regionalism, factionalism and corruption”, essentially “an association of careerists and neo-liberal bureaucrats whose sole mission and role was protecting the interests of white monopoly capital” – see what essentially looks like his draft manifesto on Politicsweb.co.za. At the heart of the expressed policy of the proposed new party (announced in the run up to June 16 Youth Day commemoration) is the demand (that Malema was central to codifying as President of the ANC Youth League) for the nationalisation of mines and the expropriation of white owned farm land.
Can Malema tap into the constituency of young black South Africans who feel abandoned by (or angry with) the ANC over its failure to affect more radical redress and redistribution measures? Can he win, as he promised last week, 5 million votes and thereby replace the Democratic Alliance as the official opposition? (Can he stay out of prison? – ed) Malema has an almost preternatural ability to identify, frame and play into the sense of disaffection amongst the most marginalised young black South Africans and he has the energy and charisma to at least make a go of forming a coherent opposition party. All his significant previous allies who have remained within the ANC (including Minister of Sport Fikile Mbalula and Limpopo Premier Cassel Mathale) came out strongly against of the former Youth League president over this last weekend. Whether or not Malema manages to form the proposed Economic Freedom Fighters in time for it to have an impact in national elections next year, he will probably succeed in creating a gravitational pole that will keep the ANC from drifting towards business and financial markets. This will not be a new role for him.
Zimbabwe elections – Mugabe agrees to seek short delay
A South African Development Community (SADC) extraordinary summit met in Maputo, Mozambique on Saturday and Robert Mugabe acceded to the pressure to attempt to shift-out the July 31 date that had been set for the election in Zimbabwe that will bring to a close the current power sharing arrangement with the opposition Movement for a Democratic Change. Jacob Zuma is the SADC facilitator attempting to radically reform the regulatory, governance and security framework that allowed widespread repression and cheating in the failed 2008 election. None of the parties are ready for an election (including Zanu-PF which, amongst other problems, is riven with division at a central level and in key provinces Masvingo, Bulawayo and Manicaland).
The key reforms that must be in place for an election to succeed in Zimbabwe relate to control of the security apparatuses and to ensuring impartiality of those apparatuses and to establishing the impartiality of the state-owned media. Also, voter registration and various administrative issues need to be completed or rectified before the election takes place if it is to be ‘free and fair’. Zimbabwe is experiencing the beginnings of an economic recovery. This might benefit the incumbents (Zanu-PF) but the opposition hopes that the growing spirit of optimism will lead voters into their fold. There are no reliable opinion polls, so we will have to wait and see. The significant natural mineral assets, the exceptional tourism possibilities and the fact that a huge but uncounted Zimbabwean diaspora is in South Africa are amongst the issues that make the outcomes of what happens in Zimbabwe important.
Bits and pieces
- City Press led with ‘War for Gaddafi billions’, based on the premise that two competing Libyan groups are in the country attempting to recover a fortune in gold, cash and diamonds that he (Gaddafi) allegedly stashed here – including a sizeable chunk “in gold bars in safe storage at OR Tambo International Airport” and in cash pallets held in the Reserve Bank. The story claims the Libyan factions are attempting to dangle the promise that the money will be used to buy South African manufactured armaments and that recovery of the many billions of dollars’ worth of assets would earn a 10% finder’s fee. The payload of the story comes in this paragraph: “According to Erasmus (a ‘controversial South African arms dealer’), Mphafudi (‘an ANC connected businessman’) and Maleka (‘the ANC security head’) were working with two Libyan investigators …. (Erasmus) claims that both South Africans accompanied the Libyans to see President Jacob Zuma at his Nkandla homestead.” (The Sunday Times reported that Zuma was accompanied by his cousin Deebo Mzobe during the meeting). Hmm. (Clarifications and emphasis in that quote from the City Press article added by me – ed).
- Telkom’s bid to sort out its ‘legacy issues’ – by the “write-off of R12 billion in defunct assets” and by the settlement of its various cases with the competition authority – got headline coverage in City Press. “Our key shareholders are frustrated, our customers are frustrated and I can promise that we will not repeat the same mistakes of the past,” said new broom CEO Sipho Maseko last week. Don’t hold your breath.
- Tina Joemat-Pettersson (Minister of Agriculture, Forestry and Fisheries) was directly accused on the front page of the Sunday Times of receiving a kickback of R100 000 in 2006 for her efforts in closing the purchase of Sunset Game Lodge, outside Douglas, while she was provincial minister in the Northern Cape. The allegation is serious, but as the story points out she is ‘the Teflon Minister’ and it is by no means clear that she will ever meet her comeuppance, no matter what she does or how badly she performs.
- “Waterkloof scapegoat on warpath” – reports the Mail & Guardian. Lieutenant Colonel Christine Anderson, the movement control officer at Waterkloof airbase who was accused of being one of two key rule breakers that allowed the now infamous Gupta wedding party to land and be ferried from the strategically important military base, is approaching the public protector for relief. The Gupta’s of Sahara Computing are friends and funders of Jacob Zuma and his family and it is widely assumed that there was tacit pressure placed on Anderson and other officials to let the friends of “Number One” pass. This is an ugly affair where the real wrongdoers, the powerful and abusive politicians and their friends, get off scot-free and loyal and faithful officials take the fall.
- Nelson Mandela’s health remains a key media topic (he’s still in hospital) and the symbol of the man is already deeply contested, especially between the ANC and the DA in the lead-up to next year’s elections. Mandela is an almost life-long ANC member and leader, but the DA is attempting (not altogether successfully) to argue that they are the true inheritor of his mantle while the ANC has drifted into a wilderness of incompetence and corruption. If Nelson Mandela dies between now and the national election next year, the essence of this contest would play itself out on perhaps the largest global stage in the history of human-kind.
* I write this news summary for clients of BNP Paribas Cadiz Securities and send it to them at 06h30 Mondays (Tuesday this week) and I occasionally republish it here a few days later if I think it might be of more general interest. I am, of course, grateful to BNP Paribas Cadiz Securities for allowing me to do this.
I am struggling to make up my mind whether there really is a small accumulation of good news, clearly visible against the looming night … or if I am just desperate. Today’s Business Day story by the always interesting Carol Paton looking at Manuel and Sisulu on a stern clean up the public service drive must be positive, surely?
… and several points in my take on the political news in the English language weeklies from last week are postive:
The Sunday Times says Jacob Zuma is planning to axe Dina Pule, Minister of Communications and Lulu Xingwana, Minister of Women, Children and People with Disabilities. Pule’s tenure has “limped from one scandal to another – including the questionable millions paid to her boyfriend from sponsorship money meant for the ICT Indaba last year” – Sunday Times.
The Department of Communications has failed to unbundle the local loop, missed innumerable opportunities with Telkom, under-resourced the regulator Icasa and generally failed to appoint/settle/keep senior management … and has had three ministers in 3 years. Fixing this is a priority area in the National Development Plan and one of the key ‘bottlenecks’ or ‘obstacles to economic growth’ that need to be removed. So Pule’s removal has (if it actually happens) to be seen as a good thing.
(Interesting – to me – speculation on the side is that Zuma might move Thulas Nxesi (Public Works) to replace Angie Motshekga (Basic Education) and have Motshekga replace Xingwana. This means that Jeremy Cronin (deputy minister in Public Works) might then replace Nxesi. But, as the Sunday Times says “there are concerns in the Zuma camp about whether he (Cronin) can be relied on to protect the president from the repercussions over the controversial R206-milliion Nkandla upgrade.”
Lindiwe Sisulu (Minister of Public Service and Administration) is quoted in the Sunday times about planned amendments to the Public Service Act setting in place ways of stopping senior administrators benefiting from government contracts. She also promised a “super-director-general’ who would ensure that all heads of department adhere to performances linked reward systems.
Cosatu’s Zwelinzima Vavi lauded Sisulu plans, saying this would stop the “looting” of public funds by government employees. “We can only say halala (congratulations) to that!” he is quoted in the Sunday Times. I have to agree with Vavi. The biggest political failure that is actually in control of government in South Africa is the poor performance and monitoring systems – and therefore delivery failure and corruption – in government and public sector institutions. Sisulu’s intentions are to be welcomed – and she probably has the steel to follow through. So another plus.
Ramphele wanted DA to be dissolved
The Sunday Times quoted several DA members essentially claiming that Mamphela Ramphele almost joined forces with the DA, but wanted the party to be dissolved first and for her to have an equal share of a new institution. “She wanted a new political party and not to join the DA … she came with nothing but wanted an equal share” said one unnamed source.
The week has been beset with rumours about the impending announcement by the respected academic and business person Mamphela Ramphele that she is to set up a new opposition party. Speculation reached a climax when it was announced that she had resigned as Chairperson of Goldfieds on Wednesday last week. Ramphele would make an excellent addition to opposition parliamentary politics in South Africa – but the idea that one person, with no party structure or obvious constituency in hand, will change the South African game is hopeful at best. However, on the balance, this is undoubtedly another positive. (That’s three in a row for those who are counting.)
Several of the weeklies reported that Zimbabwe’s President Robert Mugabe issued an official proclamation on Friday setting March 16 as the date for a referendum on a draft constitution. Most expressed concern that local activists felt that that gave very little time to explain the draft constitution (it took 3 years of bickering to cobble together) to voters and that the draconian Public Order and Security Act would need to be suspended or repealed before campaigning for a ‘Yes’ or a ‘No’ vote could take place. All opposition parties have called for a referendum ‘Yes’ vote to allow the constitution to be accepted and signed into law without any further changes.
Zimbabwe’s stability and growth prospects impact on South Africa in a myriad ways, for example in the floods of economic refugees and the shifting size of the export and investment markets in Zimbabwe. An interesting story in the Sunday Times by senior editor Mondli Makhanya argued that Zanu-PF is likely to benefit from opposition disarray and an improving economy. “With the elections just months away, Zanu-PF is smiling and looking forward to strolling to victory. After having brazenly stolen four parliamentary and presidential elections between 2000 and 2008 Zanu-PF will not have to resort to violence and skulduggery this time.” If Makhanya is correct (which he may well be) it is going to stick in a lot of craws that through a combination of looting, patronage networks, repression and the chasing of the urban poor into the arms of the South African informal economy and welfare system, Zanu-PF might remain in power.
New Iran claims hit MTN
The jailing of Iranian born US citizen Mohammad Hajian for supplying “sensitive and potentially dangerous equipment to MTN’s mobile network in Iran” (Mail & Guardian) deepens MTN’s woes in relation to its Iranian operations.
“The conviction is damning for the South African mobile giant, as it provides judicial corroboration that the company used sanctions-busting networks to beef up its technical infrastructure in Iran” (M&G).
State of the Nation Assessment
Most reviews pointed to the key absence of any binding theme in Jacob Zuma’s State of the Nation Address.
City Press probably had the best coverage.
- It (CP) correctly points out that there was a specific “shift on land reform” – with a move from “willing buyer, willing seller” to a “just and equitable” formulation. This refers to the establishment of a “valuer-general who intervenes on behalf of the state … who then oversees land valuation …to keep the price … affordable for the state to redress” – CP quotes Gugile Nkwinti (Minister of Rural Development and Land Reform).
- It argues that the youth wage subsidy has been swept aside and that government, business and labour in negotiations through Nedlac will announce a plan soon whereby “growth industries with young workforces will attract state support to hire the young and jobless … unskilled young people will also be offered a second chance to write their matric exams”. So no across-the-board subsidy … but a directed one, only in selected industries.
- It picks away at the infrastructure programme and the various roles that will be played by Malusi Gigaba (Minister of Public Enterprises) and Ebrahim Patel (Minister of Economic Development). City Press interviewed the ‘up-and-coming’ Gigaba and asked him if Ebrahim Patel had left him much of a role to play. Gigaba replied: ““Economic Development is responsible for a broader plan. My department is responsible for three big infrastructure projects: the roll out of broadband, electricity infrastructure and logistics like rail. Other departments are responsible for roads, transport and dams.”
The State of the Nation address is always over-anticipated and usually bitterly lamented as not having been specific or visionary enough. This year, not unexpectedly, Zuma enumerated the successes of government and hyped the plans. Much of what Zuma and his government will do and say in the next while will be focused on the national election in 2014 – and expectations likely to be disappointed.
Bits and Pieces
- City Press reports that the department of fisheries, headed by Tina Joemat Pettersson is in “total free fall” – raising serious concerns about government’s ability to conduct research required to determine quotas of ‘allowable catch’ for key species.
- Sunday Times business section reports that industrial unrest and violence at the Medupi construction site make the “chances of the R91bn power station feeding power into South Africa’s overstretched grid by the end of this year … slim”.
- Sunday Times reports Harmony Gold made history by making individual workers at its Kusasulethu mine sign a treaty with the company in order to lock individual workers into a contract with the company. “This is quite a revolutionary move … (it) means that individual workers can now be taken to task when stepping over the line” says Peter Major, Cadiz mining analyst. Major argues, according to the report, that if similar agreements had been put in place a year ago when trouble first started brewing on the mines at Impala Platinum, a “Marikana” might have been prevented.
(Added as an afterthought: I realise I haven’t made any kind of conclusion given that the opening paragraph suggests I was going to indicate either that I am more positive than negative or vice versa. Frankly, I can’t make up my mind. Which probably makes me a fairly bog standard South African.)
Sunday’s newspapers were more interesting from a political risk and investment point of views than normal.
This is what I thought mattered, as far as financial markets were concerned, in last week’s Mail & Guardian, the Sunday Times, Sunday Independent and City Press:
Construction industry – possible prosecution and fines for fraud and racketeering
Government and the national prosecuting authority are reported to be facing a dilemma: managers in at least 20 major constructions firms might be guilty of serious criminal practices relating to may years of in-industry collusion, but a successful prosecution of the guilty parties would rip the whole management level out of up to 20 top companies and thereby sink government’s infrastructure plans – Mail and Guardian.
The stories are covered in the Mail & Guardian and the City Press – both drawing their details from a series of leaked 2011 affidavits apparently produced by individual managers at Sefanutti Stocks when they (Stafanutti) realised that despite co-operating with a Competition Commission investigation, individual managers were likely to be liable for criminal prosecution (by the Hawks and the NPA) and that the punishment could include imprisonment.
Paul Ramaloko, Hawks spokesperson said “This case is bigger than people think. We are going to take our time and do a thorough investigation” (Mail & Guardian), but in City Press he says the investigation was in its “early stages” and that he would only comment once it had “matured”.
So What? Sounds like a political dilemma. The NPA and the Hawks are not (entirely) governed by the political priorities of government (despite apparently decisive co-ordination between the Hawks, SARS and the Public Protector in the Julius Malema fraud, money laundering and tax evasion investigation). However, government is likely to do what it can to make sure the companies survive intact – albeit compliantly chastened and grateful for leniency. Of course, the NPA and the Hawks might, alternatively, feel these managers would make good examples of how ‘old-order’ and ‘untransformed’ individuals and companies are as important sources of corruption as the ANC, its leaders, supports and structures.
Either way, the reputation and coherency of the companies concerned could be seriously impacted. However it is not clear from the news reports that there is any differentiation between, “winners and losers” … no-one appears more or less guilty than anyone else – which rather suggests the sector as a whole is risky, with no safe havens.
Key Jacob Zuma allies Atul and Rajesh Gupta (using family vehicle Oakbay Investments) are reported to be on the verge of adding a 24-hour continent-wide news channel to their media portfolio (which includes New Age newspaper) in partnership with Essel Media and an unnamed black empowerment firm. Multichoice will likely be providing the platform but purely on a commercial basis and is not expected to be partner in the venture (Mail & Guardian).
Well, one of the Guptas’ current empowerment partners is President Zuma’s son Duduzane and the Guptas themselves have become key ANC funders and power players in South African politics. The Mail & Guardian has a picture of Atul and Rajesh Gupta (who came to the country from India in the early 90’s) ensconced at the ANC’s elective conference in Mangaung in December. Obviously, the more the merrier on the news diversity front – and who says government and the ANC shouldn’t spend more money in the space? South Africa has a free and open media culture – to the point of government and ANC leadership spending a considerable amount of their time denying allegations and defending government policy against feisty attacks. It is unlikely to be harmful if government and the ANC strengthen their ability to put their point of view. Influence trading is always a feature of politics and is no worse or better in South Africa than it is in many countries across the world.
Telecommunications – new political upheavals on the cards
All the weeklies report that Communications Minister Dina Pule is about to be removed from her post in a cabinet reshuffle. At least part of the reason is because she is accused of “routing large sums of money to her alleged lover” – Sunday Independent. So many individuals are touted as possible replacements, but the one person who comes up time and against is Lindiwe Zulu. This is what the Mail and Guardian has to say about this close Zuma confidant: “Zulu has just been appointed head of the ANC’s communications and her star has been rising under Zuma. A government source said Zuma trusted her opinions. She is his adviser on international relations. ‘He likes her bravery. The way she’s handling the Zimbabwe issue in a fearless manner has impressed him.’ She is one of Zuma’s three envoys on that country.”
So what? Pule will be the third minister to exit this portfolio in four years and instability in the department has raised fears that SA will continue to wander in the policy wilderness as far as migration to digital TV, Telkom’s business plan chaos, spectrum allocation and unbundling of the local loop (to name but a few pressing policy mattings) are concerned.
Mining Indaba – policy confusion as rife as ever
The Business Times has a depressing few pages about the Mining Indaba that implied that if anything the industry is more concerned than ever about policy uncertainty. On the proposed Mineral and Petroleum Resources Development Amendment Bill: “The move has again flooded the country’s struggling mining sector with uncertainty” – Loni Prinsloo.
“On the exploration side” said Magnus Ericsson, Chairman of Raw Material Group, in the lead story, “I think it’s a general hesitation … if you find something in South Africa, what will be the BEE requirements? What are the other requirements? For some foreign investors they are seen as difficult”.
The same series of articles argues that the pressure to “quarantine” SA assets is becoming fierce. “A valuation by AngloGold Ashanti’s biggest shareholder, Paulson & Co, indicated that South Africa’s biggest gold miner could boost its share price by as much as 68% if it split out it local assets.” Elsewhere on the front page of the Business Times, the paper argues: “The true investor sentiment will be measured tomorrow (now yesterday– ed) when Sibanye (Gold Fields’ local assets – ed) lists separately.”
So what? To my mind regulatory uncertainty, especially in the minerals sector, remains the key politically driven investment risk in South Africa. The risk is being driven by pressures (felt by the ANC and government) to improve delivery and redistribution. These pressures will increase going forward and the increased regulatory burdens government is placing on private mining companies is unlikely to achieve any of government’s objectives … in fact, the reverse is more likely to be true. This is an unhappy environment for those searching for policy certainty.
Bits and pieces
- The brutal rape, torture and murder of Anene Booysen in Bredasdorp filled many column inches in all four weeklies – hoping to stimulate the kind of outrage against rape that swept India recently. Many of the stories point out that South Africa has the highest incidence of rape in the world.
- Ramphele – will she or wont she? The press is full of speculation about whether Mamphela Ramphele (former anti-apartheid activists and close friend of Steve Biko, a doctor, academic, successful businesswoman, a former director at the World Bank and former Vice-Chancellor at the University of Cape Town) will set up a political party and that that party will capture a significant percentage of urban black support. I think she might, but I doubt whether the party will make a dent on South Africa’s politics. The most likely scenario, to my mind, is Ramphele ends up in the Democratic Alliance.
- There was much speculation about what President Zuma might say in his State of the Nation address this Thursday – with a generally excited consensus emerging that Zuma is less beholden to special interest groups (post his decisive victory at Mangaung) than he was previously. I am not convinced this will lead to bold new steps. I am watching for tension between this speech and the National Budget on the 27th of February. I expect the political plans in Zuma’s State of the Nation to be at odds with Pravin Gordhan’s plans to balance the books … but I expect that tension to be hidden.
- The Mail & Guardian gave a list of who it thought is in Zuma’s inner circle: (Lakela Kaunda, Lindiwe Zulu, Mac Maharaj, Collins Shabane, Gwede Mantashe, Nathi Mthethwa and Batandwa Siswana), but then spoiled any special insight that might have given us by adding :
“Those privy to Zuma’s kitchen Cabinets say the president also has a high regard for Economic Development Minister Ebrahim Patel, National Planning Commission Minister Trevor Manuel and Justice and Constitutional Development Minister Jeff Radebe. Other key confidants include Rural Development Minister Gugile Nkwinti, Intelligence Minister Siyabonga Cwele, Cosatu president S’dumo Dlamini, Public Enterprises Minister Malusi Gigaba, KwaZulu-Natal Premier Zweli Mkhize, Finance Minister Pravin Gordhan and, to some extent, Higher Education Minister Blade Nzimande. People outside government who are in the president’s good books include businessperson Sandile Zungu, film producer Duma ka Ndlovu and businessperson Deebo Mzobe, widely considered the man behind the building of “Zumaville”, the town surrounding the president’s homestead.”
… hmmm, must have a pretty big kitchen.
Occasionally I publish slides from a current presentation series and here are a few from something I am busy with called: “The Second Transition – SA politics and policy somewhere twixt hither and yon”.
The general idea is the ANC government is determined to move beyond the ‘transitional’ arrangements that it agreed to in 1994 and strike out boldly towards some undefined, but more profoundly transformed future.
Then, taking some liberties, I summarise what the ANC is “really” (in my humble opinion) saying in motivating the documents:
I then set out on the difficult task of attempting to assess whether the ANC documents actually propose anything as thoroughgoing as the initial motivation implies.
Frankly, the answer is “no”; although the proposals are both worrying in tone and in how contradictory and “bitty” they are.
The best formulated document is the “Maximizing the Developmental Impact of the People’s Mineral Asset: State Intervention in the Minerals Sector (SIMS) – document (get a link to that here). It contains a thoroughgoing set of proposals that change the tax system for mining and propose a complicated set of upstream, downstream and sideways linkages for the industry that will create a new set of burdens and obligations (not all bad) for the mine owners. (My own feeling about mineral resources is that these are “non-renewables” and government is obliged to get the maximum developmental benefit out of them before they are lost forever – but that is just by the way.)
Almost every other document – and there are 12 in all – meanders between
- being meaningless wish-lists,
- statist and authoritarian blueprints to bully and control and
- well researched and argued guides to fixing key aspects of what is wrong with our society
Almost all the good stuff is lifted body and soul from the meticulously researched National Development Plan with its focus on the 9 challenges of
- widespread unemployment
- ailing infrastructure
- low standards of education
- exclusion of the poor from mainstream development
- a resource dependent economy
- a failing public health system with a large disease burden
- inept public service provision
- widespread corruption and
- societal divisions.
My presentation itself does not make strong predictions on how far the ANC will get with its deliberations … although what is clear is that policy discussion this whole year will be drowned out by the Mangaung election noise. It is is going to be difficult to ascertain any real direction through the clamour of the struggle to re-elect Jacob Zuma.
Leaving aside all the slides that deal with the actual documents, I do, however conclude by asking some questions of our key players … and I include those slides here for your interest:
As the months go by, I will hopefully have time to flesh out some of those question.
But for now I am in the final days of the road show trying to make sense of the mess of proposals and hints in the documents, which span issues as diverse as fracking the Karoo, IDZ’s to SEZ’s, the Treasury versus EDD versus DTI, local procurement fantasies, some excellent fixes of BEE from Rob Davies, the lonely excellence of the Gordhan and Marcus and infrastructure looking more and more like the ANC’s one-trick-pony.
Anyone who reads this blog on a regular basis will have noticed two things.
The first is that the number of posts have tailed off. This is largely because my time has been taken up with paid work and the website has slipped down the list of priorities in the imperative to pay the bills.
I am, however, not yet ready to give up as so many of my friends who set up “free to air” websites in the last few years have done – usually because their work load became intolerable and the blog seemed to sit sulking on the edge of their consciousness and the bloggers became consumed with guilt and a sense of failure and eventually posted that final signoff: “its been fun – so long and thanks for all the fish … and catch you in the commercial media ….” or whatever.
I set the blog up in the darkest depths of the Great Recession as a way of marketing myself … and the strategy has worked. I get a trickle of briefs to write, analyse or speak for corporations and businesses via the About and Professional Services links and this has been part of how I have scraped by after the cataclysm of 2008. If anything the global economy is looking scarier than ever … I am not going to drop the blog just as the as the world looks as if it might fall into an even more boneless heap than it did in 2008.
But the second reason I am going to hang onto this forum is that it gives me a discipline and space to work out my views on what is happening in the political realm. I can go back – as can anyone else who may be interested – through the hundreds of posts and get a record of my thinking and I use that constantly to refresh my mind as to where we are in the South African political wrangle … I just have to post more regularly again, and this I undertake to do.
So the blog remains in place for now, and I am grateful to the 150 or so people who check every day to see if I have said anything or who end up at the website through various search engines. One day you will be the CEO or running the company’s staff training programme or heading the strategic planning department (or you may already be one of those) and you will know where to get hold of some excellently priced expertise … I look forward to your emails to email@example.com in this regard.
Now onto what I have missed posting here in the last 2 weeks – all of which adds up to something of a shy and tentative spring – a bright new world peeping around the corner to see if it is okay to skip happily into the garden … and whatever other cutesy optimistic metaphors I can cook up, because I am extremely tired of the dark cynicism that has taken root deep in my – and probably your – mind.
Jacob Zuma cleans up his act
This is what I said about the Cabinet reshuffle, the suspension of Bheki Cele and the institution of the judicial commission into the Arms Deal.
In one broad swipe President Jacob Zuma has addressed several of the key corruption and maladministration problems that have beset his administration. He has fired Public Works Minister Gwen Mahlangu-Nkabinde and Co-operative Governance and Traditional Affairs Minister Sicelo Shiceka and suspended police commissioner General Bheki Cele and appointed a commission of inquiry into the General’s actions in fiddling leases for police buildings. In the same announcement Zuma named the members of the commission to investigate the ‘arms deal” scandal and named a senior Supreme Court of Appeals judge to head the inquiry. He has also made extensive minor changes to the cabinet – mostly through knock-on effects from the two ministerial changes.
The president has taken his good time about addressing some of these issues and we expect some of the early commentary to be less than generous – and to comb the details for evidence that Jacob Zuma has used the opportunity to marginalise enemies and reward friends – and generally restructure government in a way that favours his bid for a second term at Mangaung.
My own view is that Zuma has finally responded to a plethora of criticism and he has done so in a thoroughgoing way and in a manner that considerably strengthens the administrative capacity and probity of government. An expectation that such a significant reshuffle would not be influenced by the power struggles within the ANC would be naive, but on an initial reading I am cautiously optimistic.
Julius Malema gets his comeuppance
And this is what I said about the ANC Disciplinary hearing yesterday:
The African National Congress disciplinary committee (DC) is just finishing its announcement of findings and sentencing in relation to the ANC Youth League leadership.
Julius Malema has been found guilty (in his personal capacity) of provoking serious division in the ruling party and he has been suspended from the ANC and the Youth League for a period of five years – and several other sentences have been handed out to Youth League leaders including the 3 years suspension of Floyd Shivambu, the Youth League spokesperson.
This is obviously good for the ANC – for its image, for its internal coherence and for the reputation of its leadership. The loutish and grandiose behaviour of the ANC Youth League and the individual leaders’ involvement in abuse of public sector finances and tendering process behind a façade of representing the interests of the poorest and most marginalised has deeply damaged the reputation and core values of the ANC.
Obviously much will depend on whether the leadership has the stomach – and spine – to follow the disciplinary process with a thoroughgoing implementation of the sentence throughout all forums of the organisation. We shouldn’t forget that important individuals and constituencies have backed Malema through this process – and as I write this Twitter is alive with ANC YL arrangements for emergency meetings to organise protests against these sentences this weekend. Will the sentence provoke a backlash, attempting to build opposition by portraying Malema as a victim? Obviously, but I think – and hope – that the grave tones and thorough approach of the ANC Disciplinary Committee might presage a process of repair and renewal in the ruling party.
I expect the situation to be unsettled – and even threatening – for the next week, but my best call is that this sentence is likely to stabilise the debate within the ANC and in the leadership and policy discussion in the lead up to Mangaung in December 2012.
So that’s my two cents of this morning. There are reasons for optimism. Obviously Jacob Zuma has not suddenly been transformed into an epitome of probity and eloquence … but things are looking up and I think it is important to say so.
Doesn’t the Julius Malema saga feel so familiar?
Remember how the Jacob Zuma campaign seemed to transform each new obstacle placed in his path into fuel for his political train that eventually steamed triumphant into Polokwane in December 2007?
The fact that he was known far and wide as hopelessly incapable of moderating his sexual behaviour and as being on the take from, at least, Shabir Shaik, seemed to make almost no difference to the eventual outcome … unless the legal and other processes to charge him actually strengthened his claim to the presidency.
He was the victim of Mbeki’s shenanigans and he was heading a column of pro-poor ANC alliance cadres that were coming to take the ANC back from the pro-monopoly capital “1996 class project” – and every deed or word against that was coming from the privileged few defending their privilege. The marching column was irresistible and Polokwane was its destiny. Or at least that was the narrative that seemed to win out.
With the benefit of hindsight it is clear that Zuma’s success was all about momentum – and its inevitability is a post hoc construction.
I remember a movie from my childhood where the hero escapes almost certain death (it was either Indiana Jones or one of the Bonds ) by running across about fifty metres of crocodile infested waters by … yes, you guessed it: stepping on the back of each starving crocodile but with such speed that he was on his way to the next one before they snapped at him or sunk.*
That is probably a better metaphor for Zuma’s perilous progress towards Polokwane than the one that has him steaming towards that conference as if it was his manifest destiny. The second post of this blog was called The Accidental President and in it I argued that Zuma’s presidency was a result of an unlikely set of circumstances and he was not a character that many could have previously imagined in the role.
On closer examination it becomes clear that Zuma, on several occasions, almost crashed and burned – and came close to going to prison. Ultimately it was only the forward momentum of his campaign that allowed him to escape the snapping crocodiles at his heals.
In fact, I would put it even more strongly: for Jacob Zuma the only way to avoid ignominy and prison was to win the presidency.
And that is where the comparison with Julius Malema becomes so compelling – especially in his weekend attempt to boost the Economic Freedom in Our Lifetime campaign into the mouths and minds of the genuinely marginalised and poverty-stricken in places like Diepsloot and Bantu Bonke.
Just as his disciplinary hearing comes to a head.
Just as his questionable personal finances start to be ‘put to the question’ by various authorities.
Just as he prepares to lead the marches on the Chamber of Mines and the Johannesburg Stock Exchange.
He told those audiences: “They [the whites] found us here. They did not bring any land nor did they bring any minerals.”
And: “”We are here for every one of you. We will not rest until you stop worrying about where your next meal will come from.”
Woven into every word and phrase is the argument that the incumbent leadership of the ANC has failed the poor. That Julius Malema’s fight against Jacob Zuma is actually a fight to have the needs of the poor and dispossessed met.
Can Julius Malema, engorged as he and his comrades apparently are from sucking the marrow from the bones of Limpopo’s (amongst others)
public purse skeletal public finances (some bad metaphors are impossible to fix – ed) hope to pull off this audacious argument?
Clearly he can.
Clearly he is betting on himself to be sitting up in the cab of a triumphant train steaming into Mangaung; to have turned all obstacles aside and spun the narrative of the little guy standing up against the incumbents, standing up for the poor and dispossessed.
The parallels are not perfect. Julius Malema is not the apex of a push for the presidency of the ANC – he is too young, untested and controversial to aspire to those lofty heights this time around. He is rather part of the campaign of other powerful contenders – although he hopes to be nested near the centre of a new ruling configuration of the ANC.
Finally, Zuma had the backing of the SACP, Cosatu and a host of ANC democrats exhausted by Mbeki’s stale centralism – as well as a swathe of aspirant BEE wannabes who felt excluded from the previous gravy train.
Julius Malema (and those who hope to benefit from his campaigning) have nothing like the mighty alliance of those disaffected by Mbeki’s presidency.
After yesterday’s radical cabinet reshuffle and Zuma’s apparent ability to reinvent himself as an anti-corruption and responsive president I would have to bet on the incumbents and against the invaders at the castle gate.
This is the week, however, when Malema’s gamble will either pay off or fail. On Wednesday his disciplinary hearing resumes. On Thursday and Friday the marches on the JSE and the Chamber of Mines will take place.
This is not an accident of timing.
This is about planning, planning by individuals and groups with large appetites for risk – especially when the prize is so rich and the price of failure so high.
*I have a terrible feeling that someone has used that metaphor for Zuma’s march to Polokwane before … so let me apologise in advance if I stole it … and while on the textual commentary – I found this in Wikipedia while trying to check if the image had, in fact, been used for Polokwane before:
“Ross Kanaga as James Bond used four crocodiles as stepping stones to reach safety on the other side. Kananga, who owned the crocodile farm seen in the film, and after whom the main villain is named, did the stunt five times wearing the same crocodile skin shoes as his character had chosen to wear. During the fourth attempt, the last crocodile bit through the shoe and into his foot.The fifth attempt is one seen on film, with the tied-down crocodiles snapping at his feet as he passed over them.”
It’s been a difficult week, and I started the following post on Monday soon after hearing the general tone of the press and analysts response to the cabinet reshuffle.
I wanted to publish while the accolades for Jacob Zuma were still glowing and, unfortunately for both the President and me, the corrective doubts and scepticism are starting to be discernible in the analysis that up until now has been characterised by the “a change is as good as a holiday” school of political commentary.
Anyway, this is what I wanted to say:
- outwits some enemies at the ANC NGC,
- announces (again) a process towards a (not very) New Growth Path,
- (his Minister of Finance releases) the Medium Term Expenditure Framework which emphasises continuity, and
- he shuffles his cabinet
and suddenly he’s a visionary, man of action, seizing the nettle of corruption and there’s a new spirit of optimism skipping through the land.
It’s obviously exhausting to have to read the same old strands in our news media day in and day out: incompetence, lack of vision, cronyism and inability to overcome endemic conflict in the ruling alliance.
So I understand the need to seize on a sign, any sign, as the first swallow of summer, but I think a little restraint is called for.
What leads the official opposition to conclude that the cabinet reshuffle is first and foremost “a positive indication of renewed focus on accountability’, when the far more obvious explanation is Jacob Zuma is using the reshuffle as part of his own agenda to stay in office beyond 2014?
Jacob Zuma is no fool and those who forget that he has played inner-ring ANC politics as head of Mbokodo, the ANC internal intelligence organisation, will constantly be led to make mistakes of analysis. He did, after all, defeat the acknowledged master of palace politics, Thabo Mbeki – and if this was a swords and sorcery story we would understand that he now has the previous master’s powers at his disposal.
A whole range of benefits and protections accrue to Jacob Zuma and his backers from him remaining president of the country. But to remain president, he needs to use a cabinet reshuffle to do four things:
- He must ensure that his cabinet is seen to be busy with the job of optimising delivery to the poorest South Africans (the constituencies he is talking to here are made up of the voting poor themselves and the various elites who feel threatened by those poor South Africans and who pay their taxes and various formal and informal levies towards the upliftment of the poor – and who cannot countenance that protection money being stolen or squandered by the political middle-man);
- Linked but separate is the need to be seen to be fighting against government corruption and cronyism. This is slightly difficult when one of the features of his presidency is the degree to which his own family is making oodles of money out of his good name, but a major cabinet reshuffle gives him an excellent opportunity to sacrifice the biggest and fattest offenders and offer them up to the uncritical daily media as grist to the mill of their learned analysis.
- Forming the cabinet allows him to woo individuals who belong to camps which oppose him. This is either in preparation for alligning with those camps around particular issues in future or it is part of an attempt to weaken the coeherency of the opposition.
- Finally cabinet posts and and especially the more amorphous post of deputy minister are excellent ways of building a corps of supporters to back him during future transitions.
Thus some of the major aspects of the reshuffle could be undertood as follows (and I quote myself from a recent research report);
The firing of General Nyanda
Zuma and the ANC has been under the cosh of public opinion – and negative opinion of Alliance leaders, particularly Cosatu’s Zwelinzima Vavi – for the tender abuse and rampant corruption of senior politicians. No-one represents this better (along with a very in-your-face approach to the ministerial car fleet) than the good General. Nyanda is powerful and wily, but his usefulness as an ally has gradually been outweighed by his usefulness as a sacrifice to prove that the President is serious about corruption. The fact that telecommunications policy has been a consistent political failure for the ANC (right back to the days of the awful but sweet Ivy Matsepe-Casaburri) makes it easier to throw Nyanda to the wolves.
Barbara Hogan has been a growing problem for the ANC. Liked and respected by business and the media and largely regarded as competent, her incipient ideological rebellion has been deeply threatening to the ANC and since her criticisms of the refusal to grant a visa to the Dalai Lama the party has been looking for strategy to getting her out of the way before she does something really embarrassing. Also, the position of Minister of Public Enterprises is a real plumb. Hogan represents no power constituency in the ANC and therefore the ‘patronage resource’ of the position is wasted on her. Public Enterprises is a massive area of political oversight. Hogan was a gifted and thorough minister, but moving her out of this portfolio is not going to make much difference to government performance in this arena. Finally, she has conflicted with Nyanda (and Zuma) and removing Hogan and Nyanda at the same time allows Zuma to sell the act as ‘even-handed’. She will be missed.
Malusi Gigaba, Fikile Mbalula and Paul Mashitile
This is slightly more Byzantine, but the promotion of Malusi Gigaba to public enterprises and Fikile Mbalula to sports and recreation and Paul Mashitile to arts and culture (and to a lesser extent Ngoako Ramathlodi to deputy in correctional services) is both an attempt to keep in with a key and potentially competing faction and also to place those competitors in positions that will be demanding and time consuming, but will not be a base from which to launch attacks. The leading figure in this faction is probably Tokyo Sexwale. Now all the key members are up to their necks in Cabinet jobs that will keep them out of trouble. At the same time Zuma may benefit by drawing them all into the heart of government, bound by its discipline and codes and directly under his authority. It is now only Julius Malema who is still outside the tent, with an independent base, able to make a noise and engage and challenge Zuma publically.
One of the ways to ensure power and influence is to woo particular and defined constituencies. ANC Women’s League stalwart Bathabile Dlamini to social development is an obvious example of wooing the voting block of the League. Also, the South African Democratic Teachers Union has already expressed its delight at the appointment of its previous General Secretary Thulas Nxesi as deputy in rural developement.
The slew of deputy ministers
In general the pushing up of cabinet numbers works to the benefit of Zuma. The more largesse he can dispense the more power he will have when it comes to the lead-up to the ANC’s centenary conference. Each deputy appointment provides the opportunity to reward some, make promises of future greatness to others and bring potential enemies closer.
I am sure it would be possible to run a similar analysis on every appointment or shift and the guiding analysitical principles would prove fruitful.
An interesting point to note is that President Zuma has left untouched the key economic departments which are part of a broader alliance process and the security departments, which were the first areas he put firmly under his own control.
In conclusion let me reiterate: Zuma is great on tactics and strategy – it is the arena of principles that he leaves something to be desired. His presidency has not been a great advance on Thabo Mbeki’s, but, in general, his priorities have led him to appoint people better equipped for the tasks set for them.
The cabinet reshuffle has not significantly changed the overall capacity of this government , but it does leave the Nkandla team stronger than at any time since Polokwane and a second term for Jacob Gedleyihlekisa Zuma is looking more likely than ever.
My sister was a famous model and in that capacity was invited to judge the Miss World competition at Sun City in 1995.
She asked me to accompany her as her official partner for a whole weekend of glitzy celebration and judging.
The event was interesting to me for a number of different reasons but the only aspect that might apply to a column on politics and investment risk is the astonishing effect that being treated as a celebrity can have on one’s moral and intellectual soul.
I had been living alone on a farm in the Southern Cape for 5 years when Josie invited me to accompany her to the competition.
I had spent the 1980’s involved in “the struggle” in various capacities. By 1990 I’d had enough and I left politics and my myriad comrades and friends as they got on with the business of negotiating the peace and then running the country.
Of course I had some contact from afar with previous friends, but those who had moved into the ethereal realms of Mandela’s first cabinet seemed to have been lifted body and soul out of the social networks they had previously occupied .
I would only meet again those of my old friends who had become senior politicians in government a year and a half after the Miss World competition when I returned to ‘civilisation’ to become a father and take up a permanent position as a political analyst for a Cape Town based investment broker.
At the Miss World competition we stayed in the The Palace of the Lost City at Sun City (a big step for me because we had spent the 1980’s promoting the boycott of the resort that was built in the then bantustan of Bophuthatswana).
The point I wanted to make about all of this is that from early morning to late at night the organisers of the event and the hotel treated me as if I was a celebrity. It was a peculiar but not altogether unpleasant experience. I couldn’t walk out of my room without a dapper assistant type person reaching for my arm to accompany me to waiting vehicles or parties of fabulously beautiful women sipping at drinks.
Every second of the day there was someone right beside me nodding with interest at everything I said and did. Everything was paid for. It was like being in a dream where the lights swirl around you and you are the centre of the attention of some vast organisation of doormen, waiters and compliant and beautiful people.
An air-conditioned limousine (there really is such a thing – it is not just a cliché in bad spy novels) delivered me to Jan Smuts airport for my trip back to the farm after the celebrations were finally over.
What I remember most vividly about the whole weekend was standing alone with my bag just in the entrance to the airport.
“Hello!” I might have thought shrilly to myself . “Excuse me? I’m here – where the hell is everybody?”
Two years later I met again, mostly in their formal capacities, my previous friends who had become ministers and deputy ministers, ambassadors and persons of similar august standing in society.
I was never shocked and surprised at the grandiosity and extraordinary pomposity most of them came to exhibit.
I have since sat around tables with men I had previously watched fight Apartheid police with their fists and feet and watched as they lean back from the table, eyes closed, their voices drawling as their massive new brains formulate positions that keep all of those present silent as the great man speaks.
I have sat with ambassadors at formal dinners where the guest are subjected to a reading by the said ambassador of her extremely bad poetry. We all sit in silence and most nod in awed approval.
This is a different world they inhabit.
Their whole lives, every moment of the waking day, is spent surrounded by a system that takes them extremely seriously. They travel first class and they are met at the plane by luxury vehicles driven by people trained to give the impression that this is the most precious cargo they have ever carried.
Everyone they interact with confirms the lived reality that they are, in fact, a different kind of person: cleverer, more interesting and more valuable.
There is often a faux gentleness and compassion that goes along with this kind of celebrity. When someone with whom you might once have thrown stones at the police as you dodged through billowing clouds of tear gas puts her hand on your arm and looks into your eyes and says “we really appreciate the work you are doing” you don’t screw up your face and ask “what work?” You just nod.
I believe there is something intrinsically harmful to ourselves and our society in the way we elevate our politicians. I recommend taking every opportunity to deflate the individuals, prick the bubble that we have surrounded them with.
I do not think it is inevitable that politicians, ministers or even super models become pompous wind bags but I can name very few who have escaped the corroding effects of celebrity and power.
I still see Jeremy Cronin flying with real people on the plane and chatting like a normal human being (what will we do if that stalwart ever goes over to the dark side?)
And my lovely sister Josie seems to have escaped with her humility and charm intact – although I rather suspect that is because even as whole restaurants full of New Yorkers would break into spontaneous applause as she entered in the 1980’s she never quite lost the sense that there had been some huge and embarrassing mistake – one she was just too polite and sweet to correct.
*from the poem: Heron Rex by Michael Ondaatje in The Cinnamon Peeler – Selected Poems – 1989 … my long time favourite collection of poetry.
Just when all hope flees, as the last good politician still within government leaves his/her post to join the feeding frenzy and as the last decent officials trying to do a public service throw up their hands in disgust; and as the striking workers blockade the last functional HIV/AIDS clinic and trash the streets again; and as the broken bits of the Ruling Alliance go for the kill in their eye gouging, groin stamping gutter fight – just as all hope flees, whose silhouette is it that appears, backlit and heroic, flying in low over the horizon?
Is it a plane?
Is it a bird?
No, it’s … hmm, I’m not really sure.
When things are going as badly wrong as they are going for us, the person to look out for is the one who seems to have been sent by history itself as the solution to all of our problems.
I am not suggesting, as my old Granny used to say: don’t worry, cometh the moment, cometh the man or all’s well that ends well. I am suggesting the very opposite.
This is more of a warning to be careful about decisions we make when we are desperate than it is anything else.
Societies, political parties and whole nations are uniquely vulnerable at times like these. Our desperate need is for someone who can raise an anti-corruption army, is prepared to control the unions, able to fix service delivery and able to make the difficult decisions that will allow job rich economic growth.
The darker and more dire things become – and goodness knows they are as dark and dire as anyone can remember – the stronger our wish fulfilment drive becomes.
Where is the good-looking one, with the strong jaw and the easy, comforting manner, and the very firm but gentle eye and the plan and the promise and the words – and the record, or at least one you can, in your desperation, convince yourself of?
This is the moment in which nice Germans welcomed Adolf Hitler and Spaniards General Franco. King Constantine II of Greece inducted the awful “Regime of the Colonels” in 1967 saying he was “certain they had acted in order to save the country” and there was a (brief) Argentinian sigh of relief when Brigadier-General Jorge Videla overthrew the execrable, incompetent and authoritarian regime of “Evita” – as popular culture has dubbed Isabel Martínez de Perón.
I am not suggesting that a fascist opportunist and criminal is about to present him or herself as the saviour from our woes – or that things are so bad that we risk losing our judgement and welcoming him/her into the stockade. Well, not yet.
But explicitly and implicitly various political factions and individuals have presented themselves as alternatives, and the solution to our current problems.
There’s Zwelinzima Vavi – and whatever kind of workerist paradise he represents – who heroically criticised the media appeals tribunal and has laid about himself with a stout cudgel at all the worst of the cabinet ministers and officials trying to stuff the last tasty bits of the family roast into their distended bellies. And he’s available next year.
Deputy Minister of Police Fikile Mbalula suggested (of criminals) we should “shoot the bastards!” and in so doing presents a kind of law-and-order (and anti-communist) alternative, clearly being supported by the ANC Youth League and tenderpreneurs everywhere.
Lindiwe Sisulu dresses nicely and would be excellent if we ever panicked enough to need a kind of Cleopatra/Boadicea empress to save us.
Tokyo Sexwale is getting the kind of press that suggests he is an effective anti-corruption campaigner and an excellent Minister of Human Settlements i.e. he’s clean and gives good service delivery – and he’s bright, presentable, charming, good-looking and available – very available.
(This added as an afterthought: don’t discount Kgalema Motlanthe as a sort of leftish compromise that we have grown used to and, obviously, Mathews Phosa with his charming Afrikaans poetry and his friendly demeanour and his market friendly comments and his bitter struggle with ANC leader and communist Gwede Mantashe. Also consider a scenario, one I discuss elsewhere, where none of the contending factions achieves dominance and everyone agrees to stick with the burdensome incumbent … all is still possible.)
The National General Council of the African National Congress (to be held in Durban from 20 – 24 September) will reveal the main factions and their key representatives for leadership. The last NGC resulted in a rebellion against Mbeki and foretold his rout at Polokwane. This one is likely to be as instructive.
The point I wish to make here is a simple one. Those who appear to offer solutions must be judged in terms of who they are, what they have done and what they really represent. Just because we are in trouble does not mean we can afford to lose our critical faculties. My long gone Granny would have had two more things to say on the subject: don’t throw the baby out with the bath water, and don’t jump from the frying pan into the fire.
* The title of this post comes from the glorious “Thunder Road” by the inimitable Bruce Springsteen (it doesn’t really fit the story … but I really love the song:
You can hide `neath your covers
And study your pain
Make crosses from your lovers
Throw roses in the rain
Waste your summer praying in vain
For a saviour to rise from these streets
Well now Im no hero
All the redemption I can offer, girl
Is beneath this dirty hood
With a chance to make it good somehow
Hey what else can we do now?
How to explain the decision to start a review of the parastatals by a presidential committee just as Public Enterprises minister Barbara Hogan was busy with that job?
When anything in our country seems confusing it is always useful to abide by the famous injunction from Watergate’s ‘Deep Throat‘: follow the money.
The raison d’être of the new political/economic elite – the thing that brought it into being and the thing that sustains and grows it – is the opportunity to take rents out of the economy. The overwhelming bulk of the low-hanging fruit in this endeavour is in the public sector – specifically in senior management positions and the multi billion dollar expenditure of the Parastatals.
Now if what you are/what you do is sheep stealing you don’t want an independent and famously incorruptible shepherd tending the flock. Far easier to give the job to a few of your wolf mates.
There are times and places when history feels like it is just meandering along minding its own business.
South Africa today is not one of those places or times. Here history is being driven and whipped along by an evil monkey on its back.
This particular evil monkey is none other than the squabble to harness the state to the task of personal accumulation.
Karl Marx and Frederick Engels, writing in The Communist Manifesto in 1848 said:
The history of all hitherto existing society is the history of class struggle.
The “class struggle” shaping our course would have seemed a little eccentric to Karl Marx. There is no simple division into proletariat, bourgeoisie, petit-bourgeoisie – with the aristocracy fading into oblivion and the lumpen-proletariat skulking along the edges.
Here you have an elite that has emerged through leveraging political power – in exactly the same way as the local representatives of the previous political oppressors (the Afrikaner Nationalists) did from 1948.
The Afrikaner nationalists began to lose young Afrikaners (at a greater rate than before) from the early 80’s. The reasons are complex but using the state to advance the economic interests of a political/ethnic group deadens creativity, grows authoritarianism and the stultifying effects of patronage drowns cultural growth.
I suspect exactly the same thing is happening in the ruling party.
For an excellent review of the shenanigans in Public Enterprises read Christelle Terreblanche’s article from the Sunday Independent here. For a brilliant – and quite moving – overview of the growth of what I elsewhere call Vampire Capitalism, read Moeletsi Mbeki’s Architects of Poverty – which I review here.
Short of an angry and vindictive divorce you don’t really get a more serious breakdown between previous partners than described by the amazingly revealing Cosatu’s press statement yesterday threatening the end of the ruling alliance because ANC has laid disciplinary charges against Cosatu secretary general Zwelinzima Vavi.
This is what the statement reveals:
- The powerful National Working Committee (here‘s a list of members of that august body) of the African National Congress has decided to lay disciplinary charges against Vavi;
- Cosatu suspects (or knows) that the charges relate to a Cosatu statement, delivered by Vavi, in which the trade union federation criticises, amongst other things the fact that “newspapers continue to carry stories of allegations of corruption against Ministers and we are still to hear the President or Cabinet announcing that these allegations will be subjected to investigation ….” and further: “Perceptions … runs deep in our communities, that government is soft on corruption, in particular if it is committed by members of the cabinet and/or senior party leaders or officials.”
- The original Cosatu statement is a devastating critique of the Jacob Zuma led ANC and it was just a matter of time before those who believed they were the “members of the cabinet and/or senior party leaders or officials” singled out hit back;
- The Cosatu statement (catch it here) accuses these “cabinet and/or senior party leaders or officials” of sneaking the attack on Vavi into the NWC meeting by waiting until those who would have stopped left.
- The statement strongly implies that Zwelinzima Vavi is entering the leadership race for 2012 and that this somehow must be read together with the ANCYL push to get rid of Gwede Mantashe and promote Fikile Mbalula.
Business Day has a quote from Malesela Maleka of the SACP that perfectly summarised what is actually going on:
There is a small grouping in the ANC that is in a hurry to gain power, and alliance leaders stand in the way of their get-rich-quick scheme.
It cannot be such a small group if only “alliance leaders” are standing in the way, but this is succinctly put and reeks of the ugly truth.
Herewith a note I wrote a week ago for a South African client concerning a recent whip around the London fund management industry
Foreign fund managers perceptions of South African political risk
I recently had an opportunity to interact with a few London-based global emerging market fund managers. These were generally from long-only equity funds, but included a smattering of everything else.
The main lessons I learned were
- not to be overwhelmed by the negative news flow;
- always think in relative terms – a negative and obsessive focus on South Africa is meaningless without realistic peer comparisons.
This was brought home to me again as the weekend news of the brutal killing of Eugene Terre’Blanche hit the local and international press. The media focus alone seemed to suggest that this was a potentially destabilising event. However the story has quickly descended into the squalid domestic tale it really is, and the over-the-top alarmism should be faintly embarrassing to those who trumpeted it over the holiday weekend.
Here are the main questions I raised in London and the main responses I received*:
The news explosion around Jacob Zuma’s latest romantic and similar engagements does not drive capital flows
This point did not need emphasising with the fund managers I saw. If anything they were faintly puzzled as to why I would bother to raise it. For them the emerging market universe has much colourful (and sometimes ugly) personal behaviour by the political leadership and other powerful members of society. Zuma’s polygamy and latest love child are way down the list of “transgressions” in that universe.
Conflict over economic policy making the investment and operating environment difficult
The point I was making was that Pravin Gordhan’s budget speech differed in important ways from both the DTI’s Rob Davies’ Industrial Policy Action Plan II and Ebrahim Patel’s Two Year Strategic Plan. My issue with this was that Jacob Zuma had not settled important policy conflicts within his cabinet.
The different emphases could be summarised as follows:
- Pravin Gordhan supported fiscal restraint, inflation targeting, a segmented labour market and a competitive and unprotected manufacturing sector – and for this he was heavily criticised by Cosatu.
- The policies espoused in IPAP 2 and the Two Year Strategic Plan from the Department of Economic Development implicitly called for monetary easing, a weaker currency and a vigorous programme of interventions into the domestic economy through the use of tariffs and taxes – policies strongly supported by Cosatu.
Several of the fund managers that I interacted with had recently (within the last few months) met with all the ministers concerned either as part of a marketing tour led by Jacob Zuma or while in South Africa themselves. The detailed interactions with all these departments had convinced them that the policies of government were the policies as espoused by Pravin Gordhan and further that the more activist policies from Patel and Davies were not uncommon in emerging markets and at least did not include new capital controls.
I am not convinced the policy confusion is ‘investment neutral’ – although I do not think is catastrophic. Cosatu and the SACP clearly believe they have a chance to set policy – including monetary and industrial policy – through the DTI and the new Department of Economic Development. Thus Jacob Zuma seems to be clearer and more decisive about these issues in front of foreign fund managers than he ever is in front of a domestic audience. He will reap high resistance and anger from Cosatu and “the left” when they realise they have been lied to again. I think it is clear we are seeing the first signs of this realisation – in, for example, the threatened strikes during the World Cup against Eskom increases.
Julius Malema and the Nationalisation of the Mines
Julius Malema provokes a lot of reaction wherever he is discussed. Not many fund managers take him seriously and again it is because they have met and dealt with senior government and party officials who have spoken of Malema with patronising indulgence and a touch of exasperation.
Susan Shabangu, Minister of Mining, has done good work in assuring fund managers throughout the world that there is no possibility that the South African government will consider the nationalisation of mines as a serious policy option; and I came across several people who had met her and been convinced by her assurances.
Cronyism and tenderpreneurial flair – the threat to service delivery, stability, the functioning of the parastatals
Continuing on the theme of Jacob Zuma’s inability to solve the big conflicts in his government I argued that cronyism, nepotism and tender abuse are:
- important contributing reasons for the poor functioning of the State Owned Enterprises – the Eskom example reveals that enrichment agendas in tendering and the appointment of senior personnel damages the utility’s ability to do the job;
- key to understanding the failures of local government and hence the ongoing violence of the service delivery protests.
There were few fund managers I met who disagreed with this assessment, although some, yet again, argued that in the universe that includes Russia, the Middle East and Brazil, South Africa stands out less than we would imagine.
The World Cup and the waiting Hangover
It is perverse to argue that the downside of the World Cup includes:
- it could become the focus terrorist attacks;
- it could be targeted by organised labour and taxi operators to strengthen their hand against government or employers;
- it will inevitably entail a let-down or ‘hangover” period.
This would be a little like arguing that the downside of life is death and that it should therefore be avoided.
I never met a fund manager in London, or elsewhere for that matter, who disagreed.
*Please note that this is a subjective process, over determined by my own interpretation and by a selection processes out of my control. Any real collation of “the views” of fund managers must theoretically translate into their holdings and the prices at which they buy and sell.