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Here are some bits and pieces I highlighted for investors over the last few weeks. Thanks as always to BNP Paribas Cadiz Securities for allowing me to republish these snippets here … it is also a touch more information that most people require, but I post it here for the record, if nothing else.
I write these under considerable time pressure – deadline 06h30 0n Monday mornings. They can sometimes be a bit scrappy, but mostly (although with exceptions) still relevant a few weeks later. Where I say ‘yesterday’ or ‘today’ (or whatever) I mean: relative to the date in the highlighted headline above each section. The newest is on the top – stretching all the way back to the ancient history of Nkosazana Dlamini-Zuma at the US-Africa summit in Washington.
Lesotho, South Africa … and the Guptas
Lesotho Prime Minister, Thomas Thabane, was assisted by South African special forces soldiers to flee to South Africa in the face of a military backed ‘coup’ on early Saturday morning. The ‘coup’ (or ‘coup attempt’ – both terms are used extensively in the coverage) was allegedly orchestrated by Deputy Prime Minister Mothetjoa Metsing.
The key features of the event were the co-ordinated encircling of police barracks by the military, the disarming of the police and the seizing of the national broadcaster in the country’s capital Maseru on Saturday. (Sunday Times, Voice of America, City Press, Sunday Independent – 31/08/2014).
The Sunday Times story suggests the ‘coup’ was sparked by Friday’s firing of army chief Lieutenant-General Kennedy Kamoli by Lesotho’s King Letsie. The City Press reports that South African troops are on standby for further interventions.
Lesotho army spokesman Major Ntele Ntoi has denied there was a coup and says the army’s actions were purely to disarm police “who had been preparing to provide weapons to political parties” – Sunday Times.
Thabane, in a phone interview with Voice of America, said he was not going back until his safety was secured, that there was a situation of “total indiscipline” in the army and that soldiers were “running around the streets, threatening people” and “quite openly stating that they want my neck” – see here for VOA coverage.
This is almost too bizarre to type out, but here goes: a significant portion of the coverage of the event refers to the recent controversy surrounding the issuing by Thabane of diplomatic passports to the Gupta brothers (who we know better as key Zuma and ANC backers and funders, see Mail and Guardian coverage “The Grim Tales of the Brothers Gupta” for background).
At the time of the appointment Thobane said “(t)hese people (the Guptas) are good friends of the ANC and we have good relations with the ANC … I was introduced to them by ANC president [Jacob Zuma] and other ANC officials… I then appointed them to help scout for investment in my country. They have influence in a number of countries that can help Lesotho” – see here for that story.
In highly interpenetrated and interdependent systems of patronage and corruption, unsuccessful attempts to defend one part of the system can unravel the whole system and cause destabilisation throughout the linked networks.
Jacob Zuma’s Russian rest
Jacob Zuma visited Russia this week for six days. He had a light schedule and was, unusually, only accompanied by State Security Minister David Mahlabo and Deputy Minister of International Relations and Cooperation Nomaindia Mfeketo. There has been widespread but largely fruitless speculation about what the President was doing in Russia. (See City Press’s “Jacob Zuma’s mysterious mission to Russia” and former leader of the opposition DA Tony Leon in the Sunday Times in an opinion piece titled “How much more abuse can the constitution take from Zuma?” … unfortunately can’t find a link to that.)
The crisis faced by Russian President Putin is, by all accounts serious and urgent – and it might seem unlikely that he would have made time for a casual tête-à-tête with Jacob Zuma. Thus we can assume that Putin was in part motivated by wanting to demonstrate he still has friends in an increasingly chilly world. Also there is the sourcinig of agricultural products to fill the gaps left by European and US sanctions against Russia over Ukraine – a job South Africa could be well placed to do.
However Jacob Zuma appeared less to be representing South Africa and more on a personal visit – with several reports, including from government, that he would use the opportunity to rest.
It is difficult to escape the perception of two embattled leaders involved in a perhaps complicated exchange and attempting to secure their present and future:
- there is the upcoming ZAR850bn nuclear build programme that probably depends on Jacob Zuma staying at the helm in South Africa – Russia reportedly hopes to be central to that programme.
- Jacob Zuma’s key spy chiefs all reportedly resigned when he (Zuma) refused to allow them to investigate the Gupta brothers as a serious threat to national security (see back story on that here).
- Jacob Zuma faces unprecedented blowback at home, including the possibility of a public discussion around the original fraud, corruption and racketeering charges against him (see here) now that the famous Spy Tapes are to be handed to the Democratic Alliance in the official opposition’s attempts to have the National Prosecuting Authority’s decision not to charge Zuma reviewed.
- Also in yesterday’s Sunday Times was an important ‘leaked’ story that South Africa had sent a large group of intelligence officers to be trained in Russia and that “the Russians have recruited at least four of our people, which means we are sitting with double agents” – according to an unnamed source “with inside knowledge of the programme” – Sunday Times 31/08/2014.
It is not inconceivable or unreasonable to consider the possibility that Jacob Zuma is asking for intelligence and security coverage and offering in return nuclear contracts and public expressions of support. It’s not a perfect theory, but some kind of explanation is required.
Ruling alliance divides itself neatly on defending or attacking the public protector – is Jacob Zuma becoming a cost the ANC cannot bear much longer?
Zwelinzima Vavi, Cosatu general secretary, broke ranks with the ANC on Saturday arguing that the Public Protector’s recommendations on resolving the Nkandla dispute (in which over ZAR200 million of public money was spent irregularly on Jacob Zuma’s private house) should be implemented immediately … “all of them, without exception.” Vavi went on to say that criticism of Madonsela were “absolutely disgusting, to say the least”– Vavi in the Sunday Times 31/08/2014.
While the main structures of the ANC and its government attempt to close ranks around Jacob Zuma as the multiple scandals unfold and the threats against him grow, the hegemony is crumbling and the edges.
The ANC still has a comfortable electoral majority although as I have pointed out on many occasions, at least part of the electoral declines the ruling party experienced in May, especially in the sophisticated metropolitan areas of the economic heartland of Gauteng, have to do with perception of corruption and mismanagement at the top. It is difficult not to concur with the implicit meaning of the headline of Barney Mthombothi’s column in the Sunday Times yesterday which reads: “ANC courts its own destruction”.
We must consider that the cost of defending Zuma’s multiple infractions is starting to tell on the ANC (as it is telling on the party’s alliance with Cosatu).
I would reason that the ANC’s brand value is being seriously impacted by Jacob Zuma’s presidency and that, almost as a natural law, such a threat to value will call into being an attempt to defend the value by those who have the most to lose (other leaders and members of the ANC)
It’s the future, so I am guessing, but I think it is an even chance that Jacob Zuma will be moved into retirement within the next two years and that the official reasons will be related to his health.
(This added as I post these comments here: the above several paragraphs might be wishful thinking. If you want to see a well reasoned opinion that takes the opposite view, see the interesting Daily Maverick column by Ranjeni Munusami arguing that Zuma will see out his second term. I suspect that I just can’t live in a world where the thugs get away with it for ever (this paragraph was edited after posting – Ed)
Ebola spreads to Senegal – World Health Organisation warns of ‘rapid hike’ in infections
The Ebola (haemorrhagic fever) epidemic ‘sweeping’ West Africa has killed approximately 1500 people and the first cases have been confirmed in Senegal, having up until now being confined in Sierra Leone, Liberia, Guinea and Nigeria.
Ebola was first identified in the north of the Democratic Republic of the Congo in 1976 and outbreaks have been common in Central and Western Africa since that time. The disease is isolated and confined to countries with weak public health systems and high levels of poverty. In all the news coverage, the headlines tend to be more alarming than the content of the stories. There are various experimental drugs in trial (including one made jointly by GlaxoSmithKline and the US government which has achieved high levels of success) – Sunday Independent – 31/08/2014.
Pay Back the Money … or we’ll huff and we’ll puff
Julius Malema and his cohorts in the National Assembly didn’t quite blow the House down on Thursday last week during President’s Question Time.
They disrupted parliament by demanding that Jacob Zuma pay back a portion of the costs of upgrades to his Nkandla home, as specified by the Public Protector Thuli Madonsela. Their chanted refusal to accept the stock brushoff from Zuma and the poor management of the showdown by Baleka Mbete, Parliamentary Speaker (and ANC National Chairperson), is the leading edge of yet another storm that concerns Jacob Zuma’s integrity – and the ability of the constitutional mechanisms to hold him to account. (Here for a useful and interesting take on festivities.)
But political theatre becomes something more serious as the Public Protector and the ANC and its allies go head-to-head on the issue
Several Sunday papers reported yesterday ( 24/08/2014) that the Public Protector Thuli Madonsela has sent a letter to Jacob Zuma criticising several aspects of his response to her Secure in Comfort report and specifically arguing that he (Zuma) did not have the constitutional right to set aside or review her findings or to allow Police Minister Thathi Nhleko to do so (in essence Zuma has asked Nhleko to determine what his – Zuma’s – financial obligations are with regard to the Nkandla security upgrades).
According to constitutional law expert Pierre de Vos Madonsela is well within her rights. “This is not legally controversial,” he says, quoted in today’s Business Day (25/08/2014). “The president is either receiving appallingly bad legal advice or he is wilfully abusing his power and thwarting the law to protect himself in order to unlawfully benefit financially from the state.”
Both the ANC and the SACP came out late yesterday afternoon strongly critical of Madonsela, arguing that she had overreached herself, especially as a parliamentary committee was currently dealing with the matter.
The clash in parliament on Thursday made a significant media impact and it seemed for a moment that the damage being done the ANC by the party endlessly having to defend its wayward leader could conceivably lead to some profound political realignment.
But that feeling was brief.
The EFF has 25 MPs in the National Assembly, to the ANC’s 249 and the DA’s 89. The chances are, the ANC in parliament will work out a set of rules that essentially disciplines the EFF (already MPs may be suspended for not more than 30 days and have their salary docked for the same period).
Jacob Zuma is a master at diverting crises like this into long (perhaps endless) processes that have a degree (or at least a semblance) of legitimacy and constitutionality. And there is a parliamentary process dealing with Nkandla underway and whether this process is an attempt to ‘set aside or review’ the Public Protector’s findings could be the subject of years’ of constitutional debate, such that many of the players will be long gone by the time it is resolved.
There is considerable stability in a system so tightly bound within itself through links of patronage and shared loyalties – although I suspect that when such a system eventually unwinds, it unwinds quickly and perhaps catastrophically.
Jacob Zuma is off for a week in Russia – to work and to rest – and the game will go on. “The visit will further strengthen the excellent bilateral relations with a view to consolidating and opening new avenues towards job creation, skills development, exchange and transfer of technology and trade and investment,” said the Department of International Relations yesterday.
There may be some future moment when the ANC could face electoral losses because of public perceptions about corruption of its leaders, but that day is still far enough ahead to not impact (in any meaningful way) upon behaviour in the present.
(So … that isn’t a direct contradiction on what Nic thought on September 1, but it is more than a little close. I strongly suspect it might be a biorhythm, or hormonal thing – Ed)
Julius Malema … how did he ‘Pay Back the Money’?
Julius Malema appears in court today to face questions about where he got the money to pay his R18 million tax bill. According to Rapport newspaper (24/08/2014) the South African Revenue Service (Sars), would ask for a two-month extension of Malema’s provisional sequestration to determine where he got the money to repay his tax debt each month. The newspaper reports that “impeccable sources” allege that “cigarette smuggler Andriano Mazzotti was helping to pay his tax debt” – as re-reported at the Independent Online 25/08/2014 – see here. (I don’t know the Afrikaans language Rapport newspaper well – it is part of Naspers’s Media24 stable – treat the claim with maximum caution). (Not because of Naspers of Media24 – for so are they all, all honourable men … the caution is purely because the claim is faintly outrageous, which doesn’t mean it’s not true – Ed)
While Julius Malema’s insistence that Jacob Zuma account to parliament is welcome, we should be careful to not lose our sense of discernment. Julius Malema himself has faced a long list of accusations similar to those he is making against the ANC and Jacob Zuma.
Land and wage reform – unintended consequences
Two interesting articles in the Sunday papers hint at some of the negative unintended consequences of attempts to protect the interests of the marginalised and vulnerable workers on South African farms.
Firstly, the Sunday Times (24/08/2014) has a colour piece titled “Good intentions pave the road to rural hell” in which the 1997 Extension of Security of Tenure Act is assessed as having “led to as many as a million farmworkers being evicted countrywide”.
Secondly, the Sunday Independent (24/08/2014) records an interesting discussion about the impact of ‘minimum wage’ determinations on employment. The article shares different views on the matter, but concludes that in SA agriculture “the impact was devastating: Employment fell from 819 048 jobs in 2002, just before the law came into effect, to 623 750 jobs in 2003 and continued to decline to 555 549 jobs in 2007 – a net loss of almost a third in five years.”
The ANC has signalled an urgent desire to ‘get serious’ about land reform. As we have mentioned previously ‘the land question’ seems to suggest to the ANC an answer to a host of social needs: employment, housing, food security, and black economic empowerment, to name only the most obvious. Racially unequal land ownership patterns (it is generally quoted that SA had 87% of land in white hands at the 1994 transition and that less than 8% has been redistributed since – see here) are also a driver of political dissatisfaction, perhaps helping feed the growth of the EFF and other ‘radical’ forces emerging in the society.
For now government is preparing a host of new legislation and regulation all the while signalling to commercial agriculture that it wants to be met half-way. There will probably be unintended consequences of government’s land reform and rural development programme (including negative impacts) but the lessons from the banking sector (for example with regard to the formulation of the National Credit Act) is that it is always a better idea for the private sector to go out and engage with government and attempt to shape legislation than it is to wait and deal with the future when it is a fait accompli.
Mining, oil and gas sectors: legislative and regulatory drift and a scary audit
Mineral Resources Minister Ngoako Ramatlhodi didn’t calm nerves last week during his address to the third annual Mining Lekgotla. The minister is overseeing two significant regulatory processes causing anxiety in these sectors, namely a major audit of mining companies’ compliance with the 10 year targets of the Mining Charter and the signing into law of a bill amending the Mineral and Petroleum Development Act of 2002 (which the private sector thought it had essentially cautiously agreed to in exchange for it – the private sector – being consulted in detail about the regulations that would arise from the legislation).
With regard to the audit, Minister Ramathlodi said: “(w)hile the review process on the implementation of the Mining Charter is still under way, initial results suggest that whatever compliance we may have achieved, much more work still needs to be done” – Business Day -14/08/2014
With regard to the legislation the Minister said he had not been informed by the Presidency whether or when the bill would be signed into law. “There are legal teams that look at any legislation coming before the president and they advise him. When they do so we’ll act on that advice” – Business Day ibid. Download Minister Ramatlhodi’s full address at the DMR website here.
Firstly, the audit obliges the mining companies to meet various ‘transformation’ obligations and targets by 2014 e.g., 26% of the company must be owned, through “full shareholder rights”, by HDSA (Historically Disadvantaged South Africans) by the end of this year – as a precondition for the retention of the mining right. Go to www.dmr.gov.za to see the “Mining Charter” and the “Scorecard for the Broad-Based Socio-economic Empowerment Charter for the South African Mining Industry” to get a full view.
2014 is the year in which several definite obligations must be met by the mining companies and there is a degree of nervousness by investors and management as to how strict the audit will be, how much leeway the ministry will give and how severe the consequences of failure will be.
Purely the administrative aspects of the reporting process are enough to be a serious burden for smaller mining companies, according to Nic Dinham, Head of Resources at BNP Paribas Cadiz Securities
The apparent prevarication in signing the Mineral and Petroleum Resources Development Act Amendment Bill, after months of careful negotiations between the department and the mining companies, has caused the industry to worry that deals struck and compromises made might be up for renegotiation. There was a general expectation that the constitutionality of the amendments would need to be tested and examined (especially government’s 20% proposed free-carry interest in all new exploration and production rights in the oil and gas sector). It appears to me that the delays are adding to a more generalised sense of uncertainty about the growing regulatory burden and costs associated with continuing to mine in South Africa.
Amcu set to go on the offensive at Num’s last toeholds in the Platinum sector – non-cyclical risk factors in the SA labour environment escalate
Nic Dinham (BNP Paribas Cadiz Securities Head of Resources referred to in a previous section) said yesterday that in the platinum operations where Amcu is not (yet) the major union (at several mines, but including those operations at Aquarius Platinum and Northam Platinum) there were significant indications that Amcu was close to recognition thresholds (specific to each company) and that it was reasonable to expect increased labour unrest at the particular operations and companies where Num was clinging to a majority.
“During the recent result presentations, several companies reported that operations previously dominated by Num are showing signs of losing ground to Amcu, especially in the Rustenburg areas”, said Dinham.
“This is the case at Aquarius Platinum as well as at Northam where Amcu membership has risen to 30% and 15% respectively, just short of both companies’ recognition levels. Clearly, this could be the harbinger of more labour storms to come. At the same time, only small numbers of workers in the existing Amcu fortresses switched to NUM after the end of the strike. So, despite all the rational arguments about the financial impact of the strike on labour, Amcu appear to have won the propaganda war with the mining industry” – Nic Dinham, 20/08/2014.
There are a number of important implications, not least of which is the confirmation (and deepening) of the implicit defection of mineworkers in the Platinum sector from a key ANC aligned union (Num) and the continued disintegration of previously powerful trade union federation and ANC ally, Cosatu.
In some ways this frees the ANC (and government) to decide on economic policy without having to kowtow to Cosatu, but it will also raise anxieties in the ruling party about the narrowing of its base – and a diminishment of its hegemony and moral authority.
None of that is necessarily a bad thing. It is my opinion that our legislative and regulatory environment has tended to suffer from a lack of clarity and focus as a result of the ANC attempting to keep a number of different legacy constituencies (and sectional interests) happy and on-board.
However, it is also worth noting that my general expectation of a deteriorating labour environment is strengthened by concerns about labour unrest driven by further contestation between Amcu and Num. This, together with a coming trial of strength in all (or most) Cosatu unions that will accompany the impending Numsa split out of Cosatu will be a strong, non-cyclical, driver of labour unrest for the next 18 months. Jeff Schultz (BNP Paribas Cadiz Economist) and I recently suggested that these strands driving labour unrest, along with what we expect will be a major confrontation that will accompany the lead-up to the expiry of the current 3-year public sector wage agreement in March 2015, will keep labour risks at elevated levels in the South African investment environment for at least another 18 months.
Cyril Ramaphosa – a hard week down at the Commission
Deputy President Cyril Ramaphosa last week faced an avalanche of criticism and heckling at the Farlam Commission (which is investigating the killing of 44 people at Marikana on and before August 16 2012 in the context of the protracted strike at Lonmin mines in the Rustenburg area at that time).
Cyril Ramaphosa was called to the commission to explain his actions in the lead-up to the Marikana killings. Ramaphosa was on the Lonmin board at the time and in an email to Lonmin managers he said: “(t)he terrible events that have unfolded cannot be described as a labour dispute. They are plainly dastardly criminal and must be characterised as such. In line with this characterisation there needs to be concomitant action to address this situation.” In another email he urged then police minister Nathi Mthethwa to “take appropriate steps”. In both these cases I have added the emphasis.
At the Farlam Commission hecklers shouted “Blood on your hands” (City Press 11/08/2014) during Ramaphosa’s cross-examination. Hecklers wore T-shirts with several different slogans criticising Ramaphosa’s wealth, for example one showed a buffalo in reference to the fact that Ramaphosa bid – unsuccessfully as it turned out – R19.5 million for a buffalo cow and her calf at a wildlife auction a month after the Marikana killings in 2012.
There is a high level of speculation as to whether Cyril Ramaphosa will succeed Jacob Zuma as president (when the current presidential term expires in 2019 or at some earlier date due to Jacob Zuma’s purported ill health.) There appears to me to be a widespread assumption in the financial markets that Cyril Ramaphosa, as an experienced businessman and an experienced negotiator and conciliator who was central to easing the transition at Codesa 1 and 2 in the early 90s, would be more sensitive to the needs of the private sector, more compliant with global capital markets and, generally, run a cleaner and more efficient ship.
Implicit in that list of attributes is the person who Ramaphosa would be cleaner than, more conciliatory than, more understanding of private sector needs than, is Jacob Zuma. It is impossible to know either that Ramaphosa really has such attributes relative to Zuma or that it is really or primarily those attributes that make Ramaphosa a more attractive choice than Zuma for the financial markets … or, in fact, whether the ‘financial markets’ really makes these kinds of distinctions.
It is my impression that Jacob Zuma’s rise to power and performance as president has been accompanied (and in several cases directly caused) increased political risks associated with investing in the country. Almost any successor would probably be welcomed by the markets. However we would be cautious about seeing Ramaphosa as the knight in shining armour. He is badly damaged by his link to the Marikana killings (unfair as that may be) and he has not yet established a significant constituency within the ANC. The fact that he is a rich man can play both ways; it gives him resources to build his case but it makes him vulnerable to accusations of conspicuous consumption and being out of touch with common people. It is also inescapably true that his wealth has been accumulated more as a result of ‘empowerment deals’, the accumulation of large slices of equity, rather than the involvement in any of the underlying activities (mining, banking, health care etc).
More than anything we must keep front of mind that much ANC policy and politics is determined in the forums of the party – long in advance of such policies and politics becoming law and regulation. The particular character of leaders makes a difference, but in the South African case, not as big a difference as it might elsewhere.
The noise around land reform is (partly) bluster designed to get commercial agriculture to act voluntarily
Urging Commercial farmers to take voluntary steps ‘advancing the transformation project in the agriculture sector’, ANC Secretary General Gwede Mantashe said “change that is imposed is more painful” – Business Day 14/08/2014. Mantashe told attendees at a conference on land reform and food production that land reform was necessary if South Africa was to deal with the “ugly past of racial land dispossession of black people” and that farmers must never allow themselves “to be victims of change” – Business Day ibid.
We previously described in some detail some of the legislative initiatives around land reform and one of the points we made about assessing the risks associated with the land reform initiative is reinforced by Gwede Mantashe’s choice of words.
The ANC feels keenly its failure to successfully complete a significant process of land reform and redress – and is, in part, being punished for that failure by the (still slight) electoral traction achieved by the ostensibly more radical Economic Freedom Fighters on their debut in the general election on May 7 2014.
However, the ANC feels, at least as keenly, the threats to investment that would result if property rights were ever threatened by an unruly and uncertain ‘land reform’ process à la Zimbabwe.
Commercial farming does not have the handy (from the ANC’s point of view) equivalent to the mining sector’s mineral rights to attach to a number of ‘transformation’ objectives. The ANC would be extremely cautious about bluntly attaching a ‘licence to farm’ (or in fact a ‘licence to operate any business’) directly to ‘transformation objectives’. There is a line beyond which such rights and obligations could constitute a nationalisation in fact and might be both unconstitutional and, certainly, a serious barrier to future investment.
Thus the ANC, in the form of its secretary general, is snapping at the heels of domestic commercial agriculture, attempting to herd it towards the ‘transformation’ objective, putting the argument that this is the national good, but hinting that a bite on the ankle could be the laggard’s reward. It is an open question as to whether farmers would respond to such incentives with greater compliance or with resistance, both covert and overt. However, for now, we think the ANC’s (and therefore government’s) land reform bark is worse than its bite.
Bits and pieces
- Jacob Zuma put out a report last week which he and his spokespeople claim is a satisfactory response to the Public Protector Thuli Madonsela’s, “Secure in Comfort” report into the upgrades to the President’s private Nkandla residence in which she finds several faults with the President’s actions and inactions. The delay, over many months, of a response from Jacob Zuma to Thuli Madonsela was ostensibly as a result of him (Zuma) awaiting a report from the Special Investigating Unit. However, on Friday a spokesperson for the Public Protector said Zuma’s report was not a response, adequate or otherwise, to Secure in Comfort. ““That means a document that comments on the public protector’s report or indicates action taken or to be taken to implement remedial action in compliance with section 3(5) of the Executive Members Ethics Act must still be submitted to Parliament by the president” – my emphasis added.
- Jacob Zuma’s team is preparing to hang expense overruns and incorrect categorisation of some items as ‘security related’ on Jacob Zuma’s architect, Minenhle Makhanya. The Mail and Guardian reports that the “Special Investigating Unit has lodged a R155-million claim against Makhanya” – 15/08/2014.
- And in other news Bruce Koloane, the former chief of state protocol who was shouldered with the blame for the landing of a large private wedding party at a secure military base by the close Zuma allies and business partners the Gupta brothers and family last year, was nominated by Jacob Zuma as Ambassador to The Hague. In August last year, Koloane pleaded guilty to all charges relating to his involvement in authorising the controversial landing of the jet.
- It’s not (just) idle mischief putting these bullets together. If the President’s own actions around his accumulation of personal assets and special favours to his friends can impact on the formal judicial, disciplinary and constitutional oversight functions, if his party can go to extreme lengths to protect him from the consequences of his actions in accumulating personal wealth and influence, it is unlikely that private companies will be trustful of, or willingly and enthusiastically compliant with, the ‘transformation’ agenda emerging from the state, government and party he leads. Ultimately the private sector needs to believe that the value of its various social obligations ends up benefiting those who need the assistance the most. This is the price the private sector seems prepared to pay for stability and growth. Any sense that the public purse is hijacked or that equity transfers and affirmative action obligations have become a kind of asset that can be hoarded and dispensed as patronage by the politically powerful will cause the ‘transformation’ objective – and much else – to fail.
‘Cabinet leaning to break-up Eskom’ – Business Day 05/08/2014 … I would be extremely surprised
Business Day reported that the idea of breaking up Eskom and privatising some of its power stations “is starting to gain traction in government circles, as a team of cabinet ministers and government officials seeks ways to alleviate the company’s financial crisis and restructure its business” – Business Day 05/08/2014.
The governing ANC’s alliance partner, the Congress of South African Trade Unions (Cosatu) vowed the next day to fight any such privatisation “to the bitter end” arguing that electricity price inflation, driven by the ‘commercialisation’ of the utility in the first place, was “one of the key constraints” on economic growth and an important reason South Africa “is not creating decent jobs the country so desperately needs” (catch the full August 6 Cosatu statement here.)
On the same day Lynne Brown, the Minister of Public Enterprises, said “I want to indicate that there is a portfolio of options for the interministerial task team to consider. To my knowledge Cabinet has not discussed the matter of privatisation and there is no need to unnecessarily raise temperatures around this matter” – City Press Online, 06/08/2014. The ‘task team’ to which she refers was described (in the same story) as “representing energy, public enterprises and the treasury” and further, that the findings of the team had not yet been made public.
This is, supposedly, a defining issue for the ruling faction of the ANC and its allies in Cosatu and the SACP. Much of the motivation for backing Jacob Zuma (and ousting Thabo Mbeki) was – apparently – that Mbeki’s policies were a species of Thatcherism (especially the plan to privatise the major state utilities). The alliance backing Jacob Zuma defined its historical mission as the combating of this “1996 class project”, a catch-all phrase for neoliberalism, fiscal rectitude and the ‘Washington Consensus’.
It might well be true that the breaking up and privatisation of Eskom is an urgent necessity – or even a precondition for recovery from our dire economic state – but it is a political nonstarter, requiring the complete breakup of the alliance of groups that hold power, and is therefore vanishingly unlikely to happen, even symbolically.
National Prosecuting Authority in free fall and intelligence services are extensively deployed on behalf of senior politicians and criminals – and the storm is beginning to batter against the South African Revenue Service – this is as serious and urgent as it is confusing and complicated
There is an on-going meltdown at the heart of the criminal justice system which is increasing risks in doing business with, or in, the areas administered by the South African state.
Here are only a few of the most recent visible features of the (complex and confusing) disintegration:
- Jacob Zuma has asked the National Director of Public Prosecutions Mxolisi Nxasana to give reasons why he should not be suspended. The apparent motivation is that Nxasana has problems associated with his security clearance (owing to his brushes with the law, including a murder charge, when he was a younger man). However, almost all the coverage and analysis suggests that the ‘real reason’ is Nxasana has pursued investigations of key Zuma allies in the NPA and Crime Intelligence Division of the South African Police Service and his (Nxasana’s) actions threaten to lead, eventually, to fraud and corruption charges being reinstated against Jacob Zuma.
- Award winning journalist Mzilikazi wa Africa published his memoir last week which includes a detailed account of how Jacob Zuma and his allies vigorously undermined the credibility of the first National Director of Public Persecutions Bulelani Ngcuka by spreading the false information that he (Ngcuka) was an apartheid spy.(See an interesting examination of this thread from Business Day 07/08/2014 here.) In here is the source code of much of the chaos in the prosecuting authority and intelligence service: Bulelani Ngcuka led the original investigation into the allegations of fraud, corruption, money laundering and racketeering against the then Deputy President Zuma, concluding that there was “prima facie” evidence that Zuma was guilty, but not enough to win in court – a statement to which Zuma, not unreasonably, strongly objected.
- “Sex, SARS and rogue spies” announced the front page headline in City Press yesterday (10/08/2014). The accompanying stories allege that senior SARS official, Johan van Loggenberg, has been the subject of a ‘honey trap’ operation by the State Security Agency “Special Operations Unit”. The story is Byzantine, but the important bit is the detailed allegation that the secret spy unit operating against van Loggenberg has also been used to discredit and smear a ‘anti-Zuma’ camp in the NPA and in Crime Intelligence. Bizarrely, the Special Operations Unit supposedly includes drug dealer Glen Agliotti. (Read some of this story here and here … if you have the time or the patience.)
This level of political and criminal infiltration into key state institutions and functions, especially of the security services, the prosecuting authority and the South African Revenue Service raises real questions about judicial, regulatory and legislative certainty in the operating and investment environment. Uncertainty about the application of law, the integrity of the criminal justice system and the functioning of the revenue service must all be considered by anyone wanting to invest in South Africa or in assets regulated by South African institutions of state and law. Frankly, given the deep connections between the instability in these key sectors of the South Africa state and the rise to power of Jacob Zuma I am pessimistic that we have the capacity to fix this problem while the current administration is still in power.
The National Prosecuting Authority has appointed highly respected retired Constitutional Court judge Zak Yacoob to head an inquiry, or ‘fact finding mission’ into its dysfunctional state. Unfortunately Yacoob almost immediately (on Thursday last week while speaking at a workshop at the University of the Witwatersrand) happened to mention that he would have “set aside” the judgement that found Jacob Zuma not guilty of rape in 2006, because he would have put less emphasis on the alleged victim’s sexual history – see here. An outraged African National Congress said it learned of Yacoob’s comments “with shock and dismay” saying they “opened old wounds” and were “an attack on principles of our jurisprudence and the judiciary.” Yacoob attempted to clarify his comments here but either way he is no longer likely to be the instrument that cleans up the National Prosecuting Authority.
Cyril Ramaphosa at the Marikana Commission today as succession debate begins
Deputy President Cyril Ramaphosa will have to explain today at the Marikana Commission what he meant when emailed other senior Lonmin managers just before the August 12 2012 killing of 34 striking mineworkers at Marikana and said: “(t)he terrible events that have unfolded cannot be described as a labour dispute. They are plainly dastardly criminal and must be characterised as such. In line with this characterisation there needs to be concomitant action to address this situation.” In another email he urged then police minister Nathi Mthethwa to “take appropriate steps”.
It is unlikely that the Commission will find anything untoward in Rampahosa’s messages. He was, after all, doing nothing other than responding to the growing violence of the strikers and Lonmin’s increasing anxiety about the strike. We are of the view that there is some political harm done Ramaphosa by his identification with mine management and government – and the police killing of the 34 mineworkers. There is a considerable degree of unease within the broad structures of the ANC and the electorate about the Marikana killings. The ANC is obliged to stand with its Deputy President on this matter, but it can’t be comfortable. This will play against Ramaphosa (although perhaps not decisively) in the coming succession contest in the ANC.
Chairwoman of the African Union, fresh from pride of place at the US-Africa summit in Washington announced yesterday that she was undecided as to whether to stand for a second term in the AU (her current term expires in
2014 2016) This is inevitably raising questions about whether she will compete with Ramaphosa to succeed Jacob Zuma as president of the country.
She is in the running – and is clean and capable. She is perhaps more of an insider in the ANC’s power elite than Cyril Ramaphosa and her winning this race might mean (unwelcome) continuities with the current administration. It’s too early to call it one way or another, but the ANC Women’s League has indicated that it could back Dlamini-Zuma (or Baleka Mbete) while the Gauteng ANC has indicated it could back Ramaphosa. Officially succession would only take place after elections in 2019, but there are constant rumours that Jacob Zuma might want to retire early (or be forced to do so due to failing health). An early retirement of Jacob Zuma would probably be a significant positive for perceptions about South African political risk, but the specific circumstances of such a move would determine whether it would, in fact, be positive, negative or natural.
It’s the 1st of April and I have already seen that Helen Zille has accepted an ‘elecnomination‘ to spend two weeks living in Khayelitsha, surviving on the minimum wage and using a bucket toilet. Good for her, I say.
In other news the DA has announced that the Western Cape government it is going to upgrade Zille’s private residence in Cape Town. They plan to spend R20 million, but have wisely put aside R246 million in case of overruns. Nothing wrong with that … as we have seen elsewhere.
In entirely unrelated news the Sunday Independent carried a story about some polling apparently undertaken by the legendary Stan Greenberg on behalf of the DA.
Just as an aside: the headline in the Sunday Indepent calls Greenberg the “De Niro of politics”.
This is a picture of Stan Greenberg:
This is a picture of Robert De Niro:
Oh yes, now I get it. They are both white men, over a certain age …. (oh leave it alone! It’s not important, why don’t you just let it go? And anyway maybe there is a joke here you just don’t get – Ed)
Hmm, okay, sorry …
The DA polling was something of an antidote to an Ipsos poll commissioned by the Sunday Times and published a week earlier.
First the antidote from Stan, the DA and their various minions:
Then the Sunday Times Ipsos poll published March 22:
I am not, actually, saying treat this sort of thing with the same caution as you would treat an April Fool’s story. Both the pollsters have defensible and explicable methodologies … but clearly they can’t both be right.
In general I treat the polling with a degree of caution. Results are often leaked or announced with the intention of impacting on the final outcomes (by, for example, scaring voters and supporters into getting out to the voting booths or by bolstering the flagging energies of party workers).
I have used, as a sort of deductive shorthand, a ‘below 60 percent’ versus an ‘above 60 percent’ for the ANC as an indicator of a ‘danger zone’ for Jacob Zuma.
Instinctively I think the ANC will lose votes because of the leader’s breathtakingly cavalier attitude to public money and resources. The alternative would be for me to believe things about the average South African voter that I would feel uncomfortable about admitting in public. The average ANC member voted for Jacob Zuma as president of the party at both Polokwane and Mangaung … so there is nothing I need to say about that.
So … as part of my weekly review of SA politics yesterday morning I tried to collate some of the responses to the Nkandla Report with the specific intention of using these as an heuristic tool to gain some deeper insight into what is going on.
That’s just a fancy way of saying that when I am unsure of what is going on then I look around at the responses of people I suspect do know what is happening and try and extrapolate from that a greater level of insight i.e. I am using the responses as a heuristic tool … although as you will see in the link ‘heuristic’ means more than just an investigative short cut. It didn’t achieve what I hoped, but here are my truncated efforts anyway:
Responses to the Public Protector’s Nkandla Report reveal much, but not enough
Responses to Public Protector, Thuli Madonsela, ruling that President Jacob Zuma and his family directly benefited from the improper use of state funds in the (approximately R230m) upgrade to his (Jacob Zuma’s) Nkandla homestead and that he “failed to act in protection of state resources” are flooding in from all directions.
Obviously all the major opposition parties are using the report to attack the ANC and Zuma – and are generally deifying the Public Protector. However, the diverging responses from within the broad membership and leadership of the ruling African National Congress are the most relevant and interesting.
The party itself (and the SACP and the formal structures of the divided Cosatu) are essentially defending the President and/or attacking Madonsela (or the manner in which her report was delivered).
Several news media have attempted to list the number of ANC leaders and widely respected ‘liberation heroes’ who have in some way expressed both support for the integrity of the Public Protector and support for her findings. The list has included previous President Thabo Mbeki, Deputy President Kgalema Motlanthe, Defence Minister Nosiviwe Mapisa-Nqakula (although her problems were primarily with the sexist language of some of the criticism … and up till now I have seen her as something of a Zuma loyalist, so I will have to do some homework on this one), ex-minister Pallo Jordan, ex-minister Ronnie Kasrils and a host of other individuals (e.g. Ben Turok and Marion Sparg) and particular branches of the party and parts of individual unions of trade union federation ally Cosatu which have in some way defended the Public Protector and supported her findings.
‘Nkandla’ is, on the face of it, small change compared to myriad similar scandals surrounding the President. The difference in this case is a ‘Chapter 9 institution’ (an institution established in terms of Chapter 9 of the South African Constitution to “strengthen constitutional democracy in the Republic”) has made findings that essentially allege that Jacob Zuma has improperly benefited from state spending and that while there is no proof that he engineered this outcome, he had a responsibility, according to the Public Protector, to be aware that it was happening. These might be ugly, but not exactly impeachable offences – unless you believe they are purely the tip of a much larger iceberg hidden through luck, trickery and a good legal strategy.
There are so many issues that this raises, but I will mention only 3:
Firstly, does the ANC lose votes because of this? More precisely: does the release of the report just over a month before the election lose the ANC more votes than it would have lost anyway as a result of its president’s … how should I put this … now very widespread reputation for poor judgement with regard to his private financial affairs? I would guess ‘yes’.
I have no doubt that there are vast groups of voters who see Madonsela’s report as just another attack on their candidate and who will be completely unmoved by the details. I also suspect that there is a large group that despise the ANC leadership choices but will stick with the party in the belief that it will self-correct sometime soon. However, there are obviously those for whom Madonsela’s report is the proverbial straw – but I suspect this is a marginal group. If the margin is between 60% and 59% then Madonsela’s report could make an important difference. If it is between 63% and 64% then, voting wise on May 7, it is not going to make much difference.
Secondly, the ANC has benefited from occupying the high-ground of moral authority. Whatever its failings it was always the party of national liberation, the party of Nelson Mandela, the party that embodied the majority of black South Africans’ struggle for self-determination and against apartheid – unimpeachable and morally irresistibly aspirations and goals. The voices of disquiet from within the party are beginning to suggest that this objective or record has been redeployed in a baser struggle.
Listen carefully to the coded and heavily portentous words of Thabo Mbeki talking at the 20th anniversary of Wiphold at Sun City on March 22 2014:
“Regrettably, today, a mere 20 years after our liberation, it is obvious that many in our society have forgotten or are oblivious of the human cost our freedom entailed. Accordingly, these abuse the gift of our liberation to abuse our precious freedom to do things for themselves whose only objective is personal aggrandisement – thus to use their access to state, corporate and social power radically and systemically to subvert the required sustained and speedy advance we need towards the realisation of the objective of a better life for all our people.”
The Public Protector’s report is reverberating through the ANC (see key ANC intellectual and former cabinet minister Pallo Jordan’s column in the Business Day for another example) and forcing many of the ‘old guard’ to take a public stand. In almost all cases the criticism is unspecific and is being made by people who no longer occupy key positions in the party or state. However, there is a cumulative loss by those who hold central power in the ANC of moral authority. Without moral authority, hegemony must be won with patronage, manipulation, blackmail and force. The ANC is still close enough to its ‘liberation roots’ for such a changing of the guard to cause serious, even dramatic, ructions amongst the party faithful.
Finally, Jacob Zuma has been (significantly) responsible for growing ANC electoral support in Kwazulu-Natal from 33.33% in 1994 to 63.97% in 2009. The province has a population of 10 456 900 people (second to Gauteng which has 12 728 400 according to the 2011 census). Kwazulu-Natal is now a key ANC stronghold and the only province where the party’s electoral support grew during the 2011 municipal elections. More than a quarter of the party’s total membership comes from the province. “On Friday, thousands of ANC supporters wearing yellow T-shirts emblazoned with the words “Hands off Zuma’ marched in Port Shepstone on the south coast … after eThekwini did so earlier this month” – (City Press 30/03/2014). If, as we suspect, Jacob Zuma’s lifestyle and probity issues are losing the ANC a degree of support in many, especially urban, areas of the country but that his personal support is continuing to grow amongst isiZulu speakers in rural Kwazulu-Natal, the party will face the further corroding influences of regionalisation and tribalism. My suspicion is Zuma’s vote pulling power in Kwazulu-Natal peaked in 2011, but only May 7 will put that to rest one way or another.
Jacob Zuma’s financial advisor Shabir Shaik was sentenced to two 15 year terms in prison after he was found ‘guilty of corruption for paying Zuma 1.2 million Rand (US$185,000) to further their relationship and for soliciting a bribe from the French arms company Thomson-CSF, as well as guilty of fraud for writing off more than R1 million (US$154,000) of Zuma’s unpaid debts” – http://en.wikipedia.org/wiki/Schabir_Shaik_trial accessed on 30/03/2014 at 21h17 CAT
This is a quick aside before getting onto the more riveting topics of the May 7 elections, service delivery protests (and their search for a Gene Sharp handbook as well as the predictions of the Davies J-curve), the platinum strike, Julius Malema’s sequestration hearing in the North Gauteng High Court this morning (and the pressing matter of whether this could bar him from becoming a member of parliament in terms of section 47c of the Constitution) and the truly interesting Ipsos comparisons of the demographic characteristics of supporters of the ANC, the DA and the EFF.
Out of the mouths of babes and sucklings**
Over the weekend a young, close relative of mine wondered aloud why South Africans continued to vote for the ANC.
The child explained to me late on Saturday night that the ruling party was an institution so obviously bereft of redeeming features that only a person on drugs could possibly continue to vote for it.
“Why don’t they vote for another party?” asked the child in exasperation.
I have to admit that while I recognised the opportunity was begging for a cautious and loving Socratic exchange, I couldn’t raise the enthusiasm to give more than an exhausted ‘who’s they‘, followed by a quick retreat and request a continuation in the morning.
The next day, having completed the obligatory 52 hours (I think that’s about how long it takes?) of newspaper reading, I found myself sitting beside the same child watching Adventure Time on television.
When the charming, nuanced, off-beat and deeply intelligent (in comparison to other media I had been consuming that morning) cartoon was over, the child switched off the television, turned his angelic face towards me and asked: “so, about the ANC …?”
I cleared my throat and gathered my thoughts.
“White settlers from Holland” I began, gazing into the middle distance with a faintly sad expression on my face, as if watching the mournful parade of our history playing out in my mind, “first came to South Africa in 1652 and many bitter struggles were fought over land and cattle.”
Jumping ahead somewhat I went straight to the nub: “On January 8th 1912, chiefs, representatives of people`s and church organisations, and other prominent individuals gathered in Bloemfontein and formed the African National Congress. The ANC declared its aim to bring all Africans together as one people to defend their rights and freedoms.”
Okay, I’m messing with you … that’s a cut-and-paste from ‘a brief history of the ANC’ on the organisation’s website.
However, I find it significant that I had to open the web page and read some of the highlights from there. Somehow the essential story, the glorious history of the glorious struggle for freedom and democracy, the dead heroes, the banners, the flags and the songs, sounded tired and clichéd and faintly hackneyed as I ran through it without much real enthusiasm.
But I still argued the toss. It was not surprising that most black South Africans who were registered to vote would still be voting for the ANC (and, btw, ‘most black South Africans registered to vote’ was still probably ‘most South Africans of voting age’ given both our demographics and our 77% voter registration). The ANC led the fight against Apartheid. The ANC has presided over massive and ongoing redress in favour of black South Africans since 1994! A few bad eggs in the leadership do not change that.
The child raised a litany of objections: ‘Zuma’, ‘Nkandla’, ‘the arms deal’, ‘police violence’, ‘judicial – and other – appointments’, ‘the diversion of billions of rand into the coffers of fat cats and the party itself’, ‘governance failures’, ‘the Traditional Courts Bill’, ‘borderline homophobia’, ‘the impending Zuma/Putin nuclear caper’, ‘growing intra-ANC violence in contestation for increasingly lucrative political jobs’ and ‘increasing state sanctioned violence’ – duh!
(I suspect the ‘child’ is imaginary, a clunky rhetorical device … also, ‘duh’ means ‘give me a break’, or ‘don’t waste my time with the stupid and obvious’ – Ed)
The child’s arguments asserting the extremely putrid state of the ruling party became louder as did my insistence that the majority of voters were not brain-dead zombies acting out a destructive and unconscious impulse.
From the vantage point of this Monday afternoon I worry that I sounded a little like a master of ANC Apologetics ; but the child, delightfully, sounded like a shorter, skinnier, cleverer and more charming Wilmot James.
I obviously didn’t answer the question why do the majority of South Africans still vote for the ANC? to the satisfaction of he who asked it – although I am equally satisfied that I can understand why a majority of normal, sane black South Africans, acting in their enlightened self-interest, might vote for the ANC.
However what I didn’t say in the argument with the child is that I am also sure that along the path down which the ANC is currently travelling, with Nkandla (the political/economic/security faction rather than the homestead) leading the way, awaits a place or a moment at which the ANC will lose the support of the majority of free thinking, free voting* South Africans. Of this I am convinced. I think that moment is some distance ahead – only conceivably first appearing in 2019.
But who walks blindly towards catastrophe, when it is visible, predicted by one’s own forecasting, evident in every stumble along the deteriorating path?
Think about the ANC as having a brand value. Think about the forces that operate within the ANC as a kind of political market. I am hopefully expectant that that market will automatically self-correct … that the brand is so valuable that the threat of its loss will trigger a protective impulse, will mobilise the many who have much to lose if their asset continues to be led and used in the manner it is being led and used by its incumbent central leadership.
Obviously the incumbent leaders of the ANC will not willingly lose control. The consequences for this particular crew would be more negative and profound than, for example, a similar loss of control was for Thabo Mbeki. Also the incumbent leadership has a security/intelligence/street-fighter thing going that could make it a vicious and dangerous opponent of any serious movement for renewal within the party.
Finally, I imagine that the fewer votes the ANC receives in the May 7 election (which I don’t see being fewer than 60% of the total) the more likely and vigorous will be an attempt to change the organisation’s current trajectory and leadership.
(I am not going to run all of that passed the aforementioned child – he will, with some justification, roll his eyes and say whatever.)
* I use the “free thinking, free voting” qualification because it is not an eternal given that we will remain, as we have been (only briefly, since 1994) free, or relatively so, to think and vote as we please.
**’Out of the mouths of babes and sucklings’ comes from Matthew (21:16) recalling the words of Jesus, who was in turn referring to Psalm 8 – from the King James Version, a widely admired (for its literary value) English translation of the Christian Bible … that’s for any readers in a geographical, cultural and/or technological location so remote that even Google cannot help them as it has helped me fake that I knew the full origin of the phrase before I sat down to write this morning.
Some of my recent news coverage and commentary:
E-tolling and the DA’s cruel billboards
Last week Jacob Zuma signed into law the Transport Laws and Related Matters Amendment Bill – meaning the unpopular e-tolling can begin on certain Gauteng highways.
I was impressed that the President did the necessary – despite the fact that this will cost the ANC votes in the 2014 poll especially in the closely contested Gauteng and especially amongst the class of people the ANC is, supposedly, at risk of losing to opposition parties.
Of course failure to sign the law might have led to downgrades by rating agencies and an even more hostile report from the IMF … but good for him anyway!
The interesting aside is that last week huge billboards sprung up along those highways saying things like: “E-tolling – Proudly brought to you by the ANC”.
Of course that campaign is funded by the Democratic Alliance snapping with its sharp little teeth at the ruling party’s heals .
Or perhaps it is more like being savaged by a duck?
Whatever, it’s all part of the razzmatazz that is going to be seriously tiring in about four months’ time but for the moment is mildly entertaining.
Election 2014 – the Zuma swings and the Zuma roundabouts
The major weeklies continued their faintly mindless coverage of Election2014.
City Press ran with two stories about how the ANC had decided to put Jacob Zuma delivering 50 specific and successful infrastructure projects at the centre of the ruling party’s election campaign. Not quite the shock the screaming headlines claim it to be.
All the Sunday Papers covered the fact that last weekend’s National Executive Committee of the ANC nullified the previous week’s Provincial General Council of the ANC in Gauteng. At issue was that the ANC in Gauteng is clearly not delighted to have to front itself with this particular president and believes its supposedly more urbane, sophisticated urban voters would be better wooed by Thabo Mbeki, Cyril Ramaphosa and/or Kgalema Motlanthe.
Deep behind the chatter is the growing view that the Zuma-face of the ANC is unlikely to charm the middle classes. The basic reasons, according to feisty City Press editor Ferial Haffajee, are made explicit in the Gupta wedding scandal cover-up:
“(it was not) the first time the party has been damaged by our president’s careless ways and friendships, which morph too easily into cronyism and patronage. There is a long line of infractions, stretching from the arms deal and his relationship with Schabir Shaik, to the rape trial he faced (the president was acquitted), the news of a child born out of wedlock with Sonono Khoza, the splurge at Nkandla and the game-playing with the courts around the spy tapes.” (Said the delightful, clever and middle-class Ferial Haffajee in her column in City Press on 06/10/2013)
The rumour mill is constantly hinting that in certain constituencies the ANC will lose votes because of perceptions about Jacob Zuma’s cronyism and his traditionalist lifestyle choices. The hints usually suggest that the ANC’s own polling information confirm the view.
Frankly it would hardly be a big surprise if certain middle class constituencies are not enamoured with Jacob Zuma. Previous elections strongly indicate that the president is wildly popular in poorer and rural communities, so things are likely to balance out for the ANC.
What would be a surprise is if government got its act together with regard to infrastructure delivery in any meaningful way before Election2014. While a burst of energy can only be a good thing, do not expect a miraculous improvement in infrastructure delivery to result from the ANC’s election campaign.
Microlending falls from favour
Microlending as a business took a number of hits this past week. Nobel Peace Prize winner and founder of the microcredit lender Grameen Bank, Muhammad Yunus, warned that microlending to finance consumption could lock the poor into a life of poverty.
More importantly from a local perspective, Futuregrowth Asset Management’s Andrew Canter was quoted in the Business Times (06/102013) saying the company would “wind down” its exposure to microlenders, including Capitec, African Bank and other unsecured lenders on “moral grounds” (unfortunately the story doesn’t specify if Canter was purely referring to Futuregrowth’s SRI funds – which would be my expectation.) Canter, according to the paper, said: “We have always backed the responsible firms, but the industry structure has provoked industry behaviours that are not good for consumers, or in our view, the nation” … but, he said, Futuregrowth would not make a “panic exit”. “If industry practices improve, or particular players create more sustainable lending products, we will look to back them.”
The microcredit industry has always been controversial and becomes more so when consumers are struggling to make repayments in declining economic conditions. With the link having been drawn between the Marikana tragedy and the extent to which the strikers where in dire straits with regard to loan repayments, it was only a matter of time before sentiment towards the lenders would sour. With sentiment this negative, government is likely to further tighten regulatory control of the sector, especially in an election build-up.
The judiciary – it’s that Jacob Zuma problem again
In a matter almost as impenetrable as it is serious, a judicial tribunal appointed to probe Western Cape Judge President John Hlophe’s alleged attempt to influence two Constitutional Court judges to rule in President Jacob Zuma’s favour when he was fending off serious allegations of corruption got under way last week.
Amongst the complicating factors is that the two judges Hlophe allegedly tried to influence, Chris Jafta and Bess Nkabinde, have indicated they do not wish to proceed with the complaint.
I am not going to pretend to be able to analyse adequately what is going on here. Follow Pierre De Vos at his excellent blog Constitutionally Speaking for all matters relating to politics and the constitution. There is going to be a lot of complex legal argument around this matter but most constitutional experts suggest that the judiciary will be harmed almost no matter the outcome.
The point we unfortunately have to keep uppermost in our minds is that politicians, and especially their machinations in internal struggles within the ruling party, have damaged our systems of law and the institutions that are important to our democracy – from the judiciary, to the prosecutorial authority and including all state sectors directly concerned with national security (including the SAPS, crime intelligence and National Intelligence Service.) And further, such damage continues unabated as powerful groups in the ruling alliance war against each other.
But unlike kid’s telescopes – which, like kid’s microscopes, were blurry and disappointing and stupid – the kaleidoscope was a device of astonishing power and beauty.
The simple expedient of twisting one end caused visions of astonishing, luminous, grandeur to pour out the other.
I can still feel that tingling as if I was balanced on a precipice, reaching out to shape a whole universe; causing tectonic shifts in the intrinsic structure of reality … okay, maybe not that last bit … but you get the point.
Such power … and I had absolutely no idea how it worked.
My “device of power and beauty” was a semi-rigid cardboard tube with loose coloured translucent beads or pebbles in the end and two mirrors running lengthways up the inside, duplicating images of the transparent junk that tumbled as the tube was rotated.
My first kaleidoscope wilted in my sweaty, meglomeniacal hands a few hours after I had torn it from its pretty wrapping – and I cut myself on a broken piece of mirror as I desperately pounded it to make it continue producing those wondrous images.
Which brings me to my worries about ANC policy making.
I am slightly more worried today than I was when I wrote the piece below (July 2) just after the conference.
That is partly because I have thought further about some of the issues and partly because the consensus points within the ANC seems to be slippery – and therefore uncertainty is rising.
In short my worry is that the ANC is approaching more vigorous economic intervention with the enthusiasm and growing expectations of my six-year-old self after he first looked through his pretty new cardboard tube.
I think the likelihood of this all ending in tears in increasing exponentially – and the reasons are not very different from those that caused the ruin of my first kaleidoscope and my cut finger.
I will pursue this theme (the threats involved with increasingly desperate state interventions – especially those that worsen the problems they promise to fix) in future posts, but first my initial take on the conference; written just after having read the particularly awful English language Sunday newspapers of July 1:
Much ado – and confusion – about the ANC policy conference
The teams of journalists from the political desks at the Mail & Guardian, the City Press, the Sunday Times and the Sunday Independent could have been covering different conferences given the divergence of their understanding of what went down at Gallagher Estates in the Midrand from Tuesday to Friday last week.
This is my first attempt at a distillation of the main points – partly of the coverage, partly of what was supposedly being covered:
- Debates about policy and the struggle over who will be elected to the top positions in the ANC at the National Conference in December became blurred, to the detriment of both.
- The “Second Transition” concept became associated with Jacob Zuma (even though it was penned by his factional enemy, Tony Yengeni) and its rejection by most commissions at the conference was interpreted as a set-back to Zuma’s re-election campaign.
- The power struggle obscured the fact that there was general consensus that transformation is “stuck” and radical and urgent action to hurry the process along needs to be taken if the ANC is to keep the trust and support of its majority poor and black constituency.
- The report-back to plenary of the key breakaway commission on mining became the most blurred moment, when Enoch Godongwana presented a summary of the views on the state’s proposed involvement in the mining sector – with pro-Zuma provinces KwaZulu-Natal, Mpumalanga and Free State tending to go with the SIMS compromise and the other six provinces tending to support the ANC Youth League in a strengthened nationalisation position.
- When consensus is finally reached, it is likely to include an even stronger role for the state-owned mining company – perhaps giving it the right to take significant stakes in all future mining licenses issued. Absolute taxation levels might be an area of compromise between the state and the mining sector in negotiations about this matter in the final lead-up to Mangaung where policy will be formally decided.
- There was broad consensus that the state could and should force the sale of farmland for redistribution purposes and that an ombudsman be appointed to determine ‘a fair price’ – to prevent the process being frozen by white farmers holding out for better terms. It is not clear whether this would require a constitutional amendment.
- There was general consensus that the Media Appeals Tribunal is no longer necessary, that the number of provinces needs to be reduced, that the proposed Traditional Courts Bill is reactionary and against the constitutionally guaranteed rights of women and children in rural areas, and that the youth wage subsidy (as a tax break to employers) had to be sweetened, or replaced, with a grant directly to young job seekers.
- The push for “organisational renewal” will require a number of changes: a probation period of 6 months for new members, a 10 year membership requirement before such members can be elected to the NEC, a reduction of the size of the NEC from 80 to 60 members and a downgrading of the status of the Leagues (women, veterans and youth) so they more directly serve the interests of the mother body.
So if this was a soccer tournament, what is the score?
The City Press led with “Tide Turns Against Zuma”, but frankly I think this is more about that newspaper’s preferences than anything else. The ideological disputes in the ANC are complicated but broadly follow an Africanist/nationalist group versus a SACP/Cosatu/anti-nationalist group. Neither Jacob Zuma nor Kgalema Motlanthe are clearly in either camp (but Zuma tends towards the former and Motlanthe towards the latter). Only one potential challenger, Tokyo Sexwale, is firmly in one group (the nationalists, which is the ideological home of the ANC Youth League) and he has more chance of passing through the eye of a needle than winning this competition.
Only Motlanthe could seriously challenge Zuma in a succession race and despite all the rumours and leaks it is by no means clear whether he has any intention of running – or, if he did, whether he would have a significantly different policy agenda than that being pursued by Zuma and his backers.
Occasionally our correct and coded political dialogue is enlivened by a less experienced politician whose staff were out to lunch when their boss put pen to paper – or word in mouth, as the case may be.
One such instructive episode has been a piece by Minister of Safety and Security (Police) Nathi Mthethwa in which he attacks Helen Zille for, essentially, challenging the notion that Jacob Zuma is in any way the inheritor of the mantel of Nelson Mandela.
This article (astonishingly I think you will agree) is prominently and proudly carried in the official ANC journal, ANC Today. You can catch the full text here.
Minister Mthethwa breathlessly and breathtakingly lacerates that “disgusting madam”, … “Helen Zille and her ilk sinking in the foul waters of self-aggrandisement”.
She is the “pitiless lone voice from the gutter” with her “disgusting, shallow and shameful short memory” she is “obsessed and blinded by her hatred of the ANC” .
She has “unveiled yet again her infamous stripes” by “urinating on the progress being made” and “(s)he continues to suffocate in her own choking fires of hatred and unrestrained banal rank opportunism” with her “barren infantile political posturing”.
You might well ask what the scary and threatening leader of the Democratic Alliance said that caused the Minister of Police to wax so lyrical.
Helen Zille in her weekly missive (SA Today) took up the occasion of Nelson Mandela’s birthday to make a few sharp points about the blurring between party and state in celebrations around the old man’s 92nd birthday.
She ends her stern, school headmistress admonition with:
The great irony is that the more the ANC diverges from Nelson Mandela’s vision, the more the ANC seeks to own it … The ANC does not own Mandela. The ANC gave up its claim to Mandela’s legacy when it diverged from the values he cherished. Instead, Mandela’s legacy belongs to all those people in South Africa, from all backgrounds, who still value selflessness, integrity, non-racialism and freedom for all under the law.
This really must have hurt to have sent Minister Mthethwa into such babbling apoplexy.
The minister and his colleagues who allowed the article to be published with such proud prominence have failed to learn the most important thing about politics. Politics is always about winning the middle ground and isolating your most dangerous enemy from his/her potential friends.
The immense value of the symbol of Nelson Mandela to the ANC is precisely that he is a lifetime leader of the ANC and is venerated across the political spectrum. The political task of the ANC must be to give leadership to “the nation” and to the middle-ground, to be accepted as the legitimate leader of the South African state. Part of achieving this goal surely must be – for the ANC – to welcome its political opponents to venerate Mandela?
It seems obvious to me that through this defensive bullying and bombast Mthethwa achieves the very opposite – and frankly must be making DA strategists wring their hands with glee.
But I am coming to think I expect too much from a political party that advertises the death of its strategic sense by placing this kind of ignorant diatribe by one of its leading members in its leading publication.
The Black Management Forum (BMF) is competing with the ANC Youth League to represent those who wish to gouge economic advantage from transformation and bulldoze every law, institution, practice and idea that stands between them and the smorgasbord.
Listen to the BMF president Jimmy Manyi at a recent conference hosted by his organisation as he urges us into the Animal Farm:
- Firstly he attacks the protection of property in the constitution, saying the clauses insisting on fair or market value for appropriated land are the “sting in the tail”;
- He goes further and argues “It appears the Constitution does not support the transformation agenda in this country”;
- He bemoans court cases where previously disadvantaged individuals lost their court bids when trying to obtain tenders;
- He attacks media freedom, asking “Why is it that the media can have a field day railroading the office of the president without impunity?” … although he probably means “with impunity”.
- The times live report on his input concludes that: “Two further issues he feels need reviewing were Section 27 of the Constitution which pronounces on procurement and culture”
Manyi and those he represents are delightfully undisguised. There is something strangely compelling about a politics where the class that wishes to loot the state and pillage what it can from the transformation agenda sticks out a belligerent jaw and sulkily asserts: “F$@% YOU, it’s my right!”
(catch The Times article here)
I have whipped through the State of the Nation address while Jacob Zuma is just getting started. My initial impression is good, maybe even very good …. but maybe there has just been so much bad news and poor performance that any detailed and thoughtful stuff from government is likely to impress me …
Here are some bits and pieces:
As always the address was long on the broad brush, leaving the details to ministerial budget votes over the next few weeks.
However, there were interesting bits:
First a claim that no-one appears to be believing …. I will have to check these figures and see how they arrived at them:
We are pleased to announce that by the end of December, we had created more than 480 000 public works job opportunities, which is 97% of the target we had set.
More money for public infrastructure – power and transport
Over the next three years government will spend R846 billion on public infrastructure.
One of the most favourable public expenditure/infrastructure statements was:
Among other things, this will look at the participation of independent power producers, and protecting the poor from rising electricity prices.
We will establish an independent system operator, separate from Eskom Holdings.
Money to subsidise the employment of first time young workers
Proposals will be tabled to subsidise the cost of hiring younger workers, to encourage firms to take on inexperienced staff.
He announced a plan to hold departments accountable:
The Ministers who are responsible for a particular outcome, will sign a detailed Delivery Agreement with the President.
It will outline what is to be done, how, by whom, within what time period and using what measurements and resources.
Very concrete education targets:
We aim to increase the pass rate for these tests from the current average of between 35 and 40% to at least 60% by 2014.
Results will be sent to parents to track progress.
In addition, each of our 27 000 schools will be assessed by officials from the Department of Basic Education.
This will be recorded in an auditable written report.
We aim to increase the number of matric students who are eligible for university admission to
175 000 a year by 2014.
Brutal admission on certain health failures:
We must confront the fact that life expectancy at birth, has dropped from 60 years in 1994 to just below 50 years today.
We are therefore making interventions to lower maternal mortality rates, to reduce new HIV infections and to effectively treat HIV and tuberculosis.
We are implementing plans to increase the number of police men and women by 10% over the next three years.
Concrete stuff about housing and mobilising private sector funds:
We are working to upgrade well-located informal settlements and provide proper service and land tenure to at least 500 000 households by 2014.
We plan to set aside over 6 000 hectares of well-located public land for low income and affordable housing.
A key new initiative will be to accommodate people whose salaries are too high to get government subsidies, but who earn too little to qualify for a normal bank mortgage.
We will set up a guarantee fund of R1 billion to incentivise the private banking and housing sector, to develop new products to meet this housing demand.
The appointment of Menzi Simelane to head the National Prosecuting Authority is profoundly reminiscent of the National Party’s style of rule in the declining years of Apartheid.
Do you remember the Broederbond, and other instruments of Afrikaner Nationalism? Do you remember the stolid manipulation of every conceivable government, parastatal or private institution? The constant need to appoint National Party apparatchiks to every level of management?
The fundamental nature of Menzi Simelane , down in his bones and in his genetic code, is to do what he is told by the president and the party. As director general of Justice he attempted to instruct the prosecuting authority to desist from prosecuting Jackie Selebi, he lied for Mbeki, he lied to the Ginwala Commission and he believes the executive has the right to instruct the prosecuting authority – and hang what the constitution says.
Now Jacob Zuma has appointed this man to head the National Prosecuting Authority. This soon after Zuma appointed Mo Shaik – whose only apparent credentials is slavish loyalty to Jacob Zuma – to head the South African Secret Service. The Secret Service and the prosecuting authority? What could he want with those institutions?
There is no doubt – in my mind, at any rate – that Simelane is appointed primarily because he will be prepared to lie and otherwise intervene in the legal process to protect this president and these rulers as he has done for the previous gang.
Only a government entirely overrun with apparatchiks and political gangsters could make an appointment as brazenly in-your-face as this. This is haughtiness and lack of sensitivity taken to new and dizzying heights. This is the demonstration that the Zuma government will go to any lengths to protect itself from legal prosecution – no matter what the consequences for sentiment, constitutionality and good governance.
The declining years of Apartheid saw the best of young Afrikaners abandoning the party and the bureaucracy of government. What they left behind was an increasingly predatory state in terminal decline, deeply corrupt and entirely dependent on patronage and extra-legal manipulation.
This is the brink upon which we again stand.