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You might be surprised at how carefully some people who’ve never set foot on these shores, people who are mostly blindingly clever at maths and informed to a scarily deep level about our politics and history and whose job includes trading our currency and bonds, have asked me that headline question in the last week.

I have a stock answer that is true to myself but provides cold comfort to those whose fingers must hit one or other button to ‘short‘ SA relative to Russia, or vice versa, or Turkey or Brazil or the Philippines or offer up a financial instrument more exotic than I, for one, can understand, an indecipherable instrument that hedges all the angles but still takes a bet that has within its algorithms a call as to whether South Africa sucks completely or sucks less than the market has priced.

That answer begins: “well it’s complicated …”

Zuma as a president and the various cabals and gangsters that have kept him in place have had free policy and patronage range since 2008.

Nhlanhla Nene’s axing was the worst and most damaging – and exposing – decision Zuma and his cronies have taken since Zuma was elected ANC president in late 2007 (and I would include Mbeki’s recall in that comparison.)

Nene’s summary and unexplained axing and Van Rooyen’s appointment showed astonishing depths of either ignorance, cronyism or hubris – but I am tending towards ignorance, seasoned by the other two.

Only an extremely ignorant man, advised by people whose basic stupidity or grandiosity (undoubtedly a perfect combination of the two ) could have shat on the doorstep of global capital markets, of the people, countries and institutions that lend us money, those who own our banks and those who rate the quality of our government debt – and thought they could walk away from their malodorous mess.

We hear all this blather in ANC discussion documents about the crisis of capitalism, the unstable ‘casino economy’ and the glorious rise of China and Russia (India is occasionally mentioned) and this self-serving internal jabbering has left Zuma surrounded by coterie of people who think sentiment and a rain of Chinese dollars has relieved us of the brutal disciplines of global capital markets? Are these not lessons we learned in 1994 – 1996?

What? China will lend/give us money to bail us out as our currency crashes and the bond yields spike? Dream on morons. The markets aren’t everything you know, I hear him bleat, and this is what I have learned, Zuma proudly asserts, from my week at Focac and the visit of Premier Zi Jinping, my new best friend. The rise of China means ‘western’ markets have lost their power to take away our sovereignty.” Yay! Lets fire that neo-liberal sell-out Nene and get along with the business of taking back what is ours.

… and the awful retribution of the implacable, cold and thoughtless ‘markets’ crushed us under its heel, without even noticing.

Okay so a group of ANC leaders managed to slap him (Zuma) and his handlers down and have appointed Gordhan (again) who is going to deliver up some brutal lessons to this crew (I cannot wait!) … you will see in previous posts why I think that Gordhan’s appointment is not only a good idea, but leaves us in a position even better (politically) than when Zuma fired Nene (although it is a close call) – that is the answer I finally give to those who ask the question in the first paragraph … but only after long and probably boring but stern admonishments that complex systems do not yield up easy, dualistic answers.

But I want you to think about our core political leadership … or rather think about what they think about. Who are they? I assume it’s Zuma and his myriad sons and daughters and cousins and wives, it’s obviously the Guptas, the increasingly awful Lindiwe Zulu and others scattered about the differentially abled ANC Youth League, the Woman’s League and the Premier League with Ace Magashule neck and neck with Zulu in the running dog, protect-the-President-at-all-costs, Joseph Goebbels’ cup.

Jacob Zuma gave a perfect explanation (in terms of his logic) and defence of why he axed Nene in the speech he gave after the announcement. Rian Malan, journalist and author, nailed the problem by closely examining the unscripted words Zuma delivered after announcing that Nene was out and Van Rooyen was in.

You must read Malan’s article (here) but the long and the short of it is Zuma said “I am rebelling against (the idea that) what determines the value of a commodity is the law of supply and demand … The value of a commodity is the labour time taken in production …”

Do you know what that means? Do you realise how dire the consequences that flow from this being the view of our President?

Having been in reading groups in the early 80’s where we poured over and over “Capital: Critique of Political Economy” and several of Karl Marx’s other texts, I know exactly what Zuma thinks he means when he incoherently refers to Marx’s  Labour Theory of Value.

In the intellectual vacuum that Zuma and whatever advisers he used when he fired Nene and appointed Van Rooyen there could only have been a complete absence of the knowledge that most of those who lend us money, buy our financial equities or trade our currency base their decisions on the reliability, predictability and respect of the Minister of Finance. It doesn’t  matter if the traders and fund-managers are wrong or right in using this Cabinet Minister as the touchstone of policy credibility, it only matters that they do and the actions and inactions of the head of the National Treasury are scrutinised and combed with ruthless thoroughness by those who sell or buy our currency or debt (and in this case our bank’s equity as well).

We have a President surrounded by a coterie of what I am tempted to describe as imbeciles – and I don’t mean the Cabinet. Do they really think that  (the interrupted) rise of China will free us from the dictates of markets? Our debt, equity and currency are traded on markets where prices are set by how many buyers or sellers there are, not some sentimental, half baked understanding of Marxist theories from the mid-to-late 1800s. When those markets ‘think’ the politicians are clearing obstacles (Nene) so they (those politicians) and their clients can loot the public purse they (the traders) will unsentimentally sell the financial instruments that are the backbone of our economy and we will crumble. And this time we came that close.

We have a steely new Finance Minister who I believe has more reason than ever to stand up to the ignorant and incoherent policy coming from the centre – although growth and our place in the world will make his job intolerably hard.

We have seen that the centre can be countermanded when its decisions are so bad that they could have a real chance of pushing the country into penury.

However the centre is still the centre, and it is still strong and dominant in the ruling party anyway. We are not home and free while Jacob Zuma occupies the driving seat. It doesn’t really matter if he is a crook or a fool -he has shown unequivocally poor judgement, and this looms over us as an ever present risk.

 

 

For those who were tortured by my somnolently incoherent post last night, here is the follow up. Hopefully a little clearer.

  • The flip-flops around the Minister of Finance leave Jacob Zuma looking weak and vulnerable. There are grounds to begin questioning whether he will see out his full term.
  • The appointment of Pravin Gordhan is a victory on a number of different fronts and should be celebrated.
  • We can expect the process of fiscal consolidation to continue on track.
  • It really is the season to be jolly.

Gordhan’s shock reappointment as Finance Minister – positive

Jacob Zuma fired the increasingly widely respected Minister of Finance, Nhlanhla Nene, on Wednesday December the 9th. He gave no reasons but there had already been wide speculation that:

  • Nene decisively blocked a nonsense SAA deal to lease some Airbus planes upon which Zuma associate SAA board chair Dudu Myeni had set her sights;
  • That Nene was pushing important investigations into corruption or mismanagement at SABC that were getting uncomfortably close to Zuma’s close personal friend Hlaudi Motsoeneng and
  • Most importantly Nene was blocking the (approximately) ZAR1-trillion nuclear deal that was the pet project of Jacob Zuma and his close business associates the Guptas – who had appeared to prepare for the deal by investing heavily through Oakbay investments in several uranium mines

Almost immediately the ZAR tanked, the bond yields spiked and everyone with a voice screamed blue murder at the irrationality of the axing.

Zuma then, perhaps more mysteriously, appointed the relatively unknown and unqualified David Van Rooyen to the post, despite there being many highly qualified candidates available (South Africa has made a point of putting its highest quality ministers into the National Treasury position.) The widespread assumption was that Nene was being replaced by someone who would be more compliant to the President’s wishes, and more importantly, to the wishes of those who are in business with the President.

Then …

Then, even more shockingly, late last night (13/12/2015) Jacob Zuma did an about turn, dropped Van Rooyen and reappointed Minister of Co-Operative Governance, Pravin Gordhan, as Finance Minister (a post he – Gordhan – held prior to Nene’s appointment 18 Months ago.)

Jacob Zuma has had his wings closely clipped – which is a good thing

The decision to axe Nene bordered on the criminal but most analysts thought that Zuma could get away with anything he wanted within the ANC – even as the ANC lost support amongst the electorate. Well it appears they were wrong. A powerful enough group of leaders have got together, sat Zuma down and forced him to make a humiliating climb down. The financial market response might have helped and the bleating of the opposition and the press would have given some support, but the ANC prides itself of being impervious to the shallow swings of public opinion (which is no bad thing). This was an internal leadership revolt against Zuma, the Holy Grail that many had been hoping for as the country went from the healthy constitutional democracy of 2007 to this damaged (in many of its most important institutions) country, almost overwhelmed by rent-seeking and corruption.

We out here in the public realm don’t know anything for sure, except Zuma was given a ‘warm klap’ (warm slap – colloquial Afrikaans) and we can hope that this might begin the unravelling of his negative influence on the country and its politics. The admonishment and humiliating climb-down must have been caused by ANC heavyweights who have finally found their voice and power enough to put Zuma in his place.

Pravin Gordhan will be a better Minister of Finance – even than he was before

Gordhan has all the credentials and had a close to faultless term as head of the National Treasury. (If memory serves, like all heads of the NT his slips concerned the public wage sector bill and desperate attempts to avoid public sector strikes.) His only weak point is he tends to run an unhappy office … it was widely speculated that the staff at the National Treasury were unhappy with his dictatorial style of leadership. This we can live with.

Of interest is that since Gordhan had left the Treasury a witch hunt has been conducted in Gordhan’s previous posting, the South African Revenue Service, SARS. The witch hunt has been against an alleged “rogue spy unit”. The fact is the special investigation units, established by Trevor Manuel and Pravin Gordhan were an essential part of investigating complicated tax avoidance and fraud cases, especially those involving heads of large criminal networks and powerful politicians. It is a small step to see who might have been the obvious targets of the special investigative units. And an even smaller step to see why and who has stimulated the witch hunts and slander against the loyal SARS investigators involved in these units – calling them rogues and criminals, and ensuring their dismissal or buyout.

Thus this is going to be a Finance Minister that nobody is going to push around – especially not Jacob Zuma and his cronies – against whom Gordhan has good reason to feel ill-disposed. It’s a win-win.

My only faint worry is I am not sure of Gordhan’s attitude to the nuclear programme. I am sure he will not do anything to threaten the process of fiscal consolidation, but as an old style ANC securocrat he might have an over-attachment to nuclear power (an affliction of those who grew up in the ANC in the 70’s mostly because of the USSR’s warm embrace of that technology).

Greeting … and compliments of the season to you all.

I was too busy to post here during the last few months of 2014.

I had been writing and then road showing (here and abroad) an argument that suggested pressures acting on the ANC might, ultimately, save the organisation from its slow-motion collapse into what can best be described as a kind of criminal conspiracy.

On the whole, as they say, it was a deliberately positive counter to the life draining wails of despair that were starting to keep me from my sleep.

In the ANC there are thousands of pockets of resistance, but the overall character of the organisation and the way it has embedded itself with the state is deeply reminiscent of a huge wasp I watched yesterday stun an even bigger spider, implant it’s eggs in the juicy arachnid abdomen, stuff the bundle in a piece of dry cane, where the baby wasps will soon hatch and begin eating the spider in a precises way that keeps the host alive long enough for the new crop of wasps to fly off to carry on the business for which they were born. I believe some of such wasps are able to mess with the spider’s DNA in such a way that the spider will spend its last dying moments protecting the baby wasps.

This is an almost perfect metaphor for the behaviour of the hijacked centre of the ANC.

But I don’t think that is the whole – or even main – story, and below is the introduction to a longish report I wrote in October last year with my colleagues, Joan Tshivhinda (quantitative analyst) and Jeff Schultz (economist), that argues we have a better than even chance of being in a much improved situation by …. about 2020. That the pressures acting on the ANC could powerfully reshape the organisation for the better.

This is purely the introduction to the document. Joan did lots of quantitative work on the 2014 elections and Jeff did the same for the definition and class structure of SA society – so I think I am going to need more direct permission from BNP Paribas Cadiz Securities to publish the whole thing, but I hope to do so soon.

But for now:

Introduction – Against a Dark Background

(That title was made up purely for the blog post … the original title was “SA Political, Quantitative & Economic Research – emerging middle class lights up the gloom.)

There are significantly more important forces shaping our politics than the bad behaviour of our politicians.

  • Deep within the electorate a rapidly growing black African middle class is beginning to shape political and economic outcomes more profoundly than the size of the group implies.
  • We believe this group will determine many major outcomes for our politics and economics in the next few years.
  • Emerging from our analysis is a first (and best) case scenario in which the ANC goes through a process of renewal and recalibration over the next few years, powerfully reclaiming the defecting black African middle class and rolling out economic policies that will be optimum for financial markets and business.
  • However, we also describe several significantly threatening alternative scenarios, including further splits in the ruling party, the African National Congress (ANC) slipping below 50% of the national vote and losing the major metropolitan areas, the centre of opposition shifting toward some combination of the Economic Freedom Fighters (EFF) and the emergent socialist party… and even more gloomy potential paths we could, with a low probability, travel down.

Many institutions of political representation in South Africa (most obviously political parties and trade unions) are undergoing turmoil – within themselves, in competition with each other and in rapidly changing levels of popularity.

here are various methods we can use to seek to explain the turmoil. Much of the mass media focus has been on the character and integrity of the President (of the ANC and the country) Jacob Zuma, and his allies – and we attribute much of the turmoil to the Zuma camp’s alleged attempts to capture a lion’s share of available rents and patronage – and to keep their principal out of the courts. While we do not deny the role of individuals (as heroes or villains) in shaping history, we think it obligatory to examine changes in the deep structural features of society, especially in processes of class formation, and the changing needs of production, to seek explanations for the changing face of our politics.

Our basic premise is that ‘class formation’ among black Africans was held back by apartheid, and the legislation and state that defined that system. But in the 1960s and 1970s the global economy began to shift in its character, and in its requirements of the function of labour, goods and capital markets. In South Africa the economy shifts toward services and manufacturing and requires a more settled, urban, educated workforce, the members of which are able to purchase the goods and services being produced by the new economy.

For the first time in almost 100 years, black South Africans could realistically aspire to be urbanised, settled, housed, better educated and able to afford the goods and services of the new economy. And this set the emerging class powerfully against the political system of apartheid that understood its survival and the survival of white dominance depended on the defeat or diversion of these aspirations.

It is more useful and has more explanatory power, to understand that underlying the campaigns of resistance and repression and the attempts by the apartheid government to rejig its systems that controlled the movement, work prospects and political aspirations of black people were the reasons for the inexorable rise of the black African middle class.The 1976 uprising, the formation of the UDF in 1983, the formation of Cosatu in 1986 and its clear alignment with the still banned ‘Congress Movement’, the strikes, the school boycotts, the growing campaign for international isolation, the rapid reappearance of ANC symbols, leaders and flags in South Africa in the mid-1980s, the escalation of the ‘armed struggle’ and then the unbanning of the liberation movements, the release of leaders, the tricky negotiations at Codessa (Convention for a Democratic South Africa) 1 and 2 and finally the first democratic election in 1994 – could be seen to have been caused, orchestrated and guided by wise leaders and clever tacticians from both sides. And we don’t believe that statement is wrong, but we do think it misses the main point.

The apartheid state tried everything to head off the rise of the Africa middle class:

  1. the ‘hearts and minds’ campaigns in black communities – which only at its most trite consisted of giving out copious amounts of sweets and propaganda from the top of armoured vehicles;
  2. the attempt to establish a Tricameral Parliament to give political representation to Coloureds and Indians and the vigorous attempts to build the Bantustan[1] administrations and promote the system of local black councils[2] – attempting to ensure that ‘the oppressed’ would not find unity in opposing the regime – and ensuring that black African aspirations were diverted to stony ground and
  3. the campaigns of repression, including raids into neighbouring states, troops deployed into townships and state-funded assassinations squads and other ‘dirty tricks’ campaigns.

The not so subtle point we are trying to make was this was all actually driven by the African middle classes struggling to come into being (led and ridden by various political formations) and held back by the apartheid state and legislative regime. Thus, the emerging black middle class was both the engine and the prize of the contest between the liberation movement and the apartheid regime.

We draw theoretically on both the Weberian and Marxist definitions of class. With the defeat of the apartheid state, long suppressed class formation and differentiation has exploded in black communities. We attempt to describe and characterise the black African middle class (possibly classes) using a mixture of methods:

  1. Our classification has a minimum per capita income threshold which will be significantly above the middle of the income distribution for black South Africans;
  • We will show the group is the fastest growing segment of the Living Standards Measures (LSMs) table since 1994 and we will argue that it is politically influential and powerful beyond its numbers, consumption power and voting preferences;
  • Finally our definition will include the fact that members of the group will be more likely to have tertiary education (or professional or technical qualifications) and be more likely to live in Gauteng.

If we conceive of our political parties, electorate and the interplay of powerful other interests as part of a complex ecology with eco-niches and selective Darwinian pressures, then much of the turmoil in the ecosystem (the formation of the EFF, the torturous debates about affirmative action in the Democratic Alliance (DA), the splitting off from Cosatu of the National Union of Metalworkers of South Africa (Numsa) and the formation of some form of socialist alliance, the details in the drop in support for the ANC in this last election, the extreme anger about Jacob Zuma’s alleged diversion of public assets, his attempts to avoid the law and avoid various forms of constitutional curtailment) can best be explained by the growing assertiveness of the class we describe.

We overlay these categorisations with a close examination of the fact that the African National Congress lost approximately 11% of the national votes it won previously from across the geography of the urban black African areas of South African industrial heartland of Gauteng in the May 2014 general elections. We point out that in areas that were more representative of the middle class we defined above, these losses were greater.

We conclude that the pressures being brought to bear

  • could split the ANC further;
  • could drive the party further toward its flirtation with a sort of rural populism driven by patronage and traditional patriarchal authority;
  • could drive the party further into the hands of the South African Communist Party which has been the main beneficiary of the rise of Jacob Zuma; and
  • could provide space for the EFF, the DA and Numsa’s in potentia socialist party to grow to the point that the ANC drops below 50% vote.

We hope/predict that the middle classes and the Gauteng ANC, as the part of the party most exposed to the middle classes to which we refer, is already in the process of preparing to draw the party back from the brink it is approaching. The Zuma faction is entrenched, but it is our belief that the brand value being lost under his leadership will inevitably lead to a correction.

In general, our conclusion will be that the negative political consensus about South Africa is overdone, because attention is not being given to the deep, underlying structural drivers of change in the country, namely the coming into its own of the black African middle classes.

How history works – the origins of the black African middle class and what really caused apartheid to fall

Change in the structure, priorities and labour processes of the global economy began to accelerate in the 1960s and 1970s with a relative shrinking of primary resource extraction and heavy industry. South Africa, like much of the rest of the world, experienced relative growth in the manufacturing and services sector.

Nicslondonslides2

Thus the economy began to require a settled, better educated and skilled labour force, and one that could procure the goods and services produced by the new economy.

Black South Africans could, for the first time, realistically aspire, as a group, to be more settled, housed, better educated and be the consumers of certain goods and services to which their parents had had no possible access. Thus their interests melded with the similar interests of the already existing black African middle class that had managed to take root in the stony apartheid ground.

This nascent middle class had long been deliberately stunted by the apartheid state – and certainly segregated – to keep it from competing with its white counterparts, but in the views of Nzimande[3] (yes the very same one[4]) quoted in Southall[5], the group could be broken down into the following categories:

  1. The bureaucratic petty bourgeoisie – basically officials tied closely to the central apartheid state, but also town and city administrators and in the Bantustans (reliable allies of the apartheid state in Nzimande’s view);
  2. The civil petty bourgeoisie – civil servants and state employees like teachers, nurses and clerks – and from whose ranks Nzimande argues was drawn much of the leadership of the national liberation movement (clearly entirely unlike the bureaucratic types mentioned above);
  • The trading petty African bourgeoisie – which Nzimande eccentrically orders into several groups based on their ability to align with the liberation movement, but concluding that those belonging to the National African Federated Chamber of Commerce (NAFCOC), while clearly pro-capitalist, were useful allies to the liberation movement.
  1. The corporate petty bourgeoisie – basically black employees in major companies which, since the early 1970s, had “sought to legitimise capitalism through the discourse of the ‘free enterprise system”. In Nzimande’s views (as summarised by Southall) this group was “simultaneously hugely frustrated by limited opportunity and white managerial racism, uneasily situated as it was between capital’s attempts to create a black middle class and white management’s defence of its own class interests”.

The point of all of this is that almost all academic research agrees that there had been an “enormous increase in the African middle class between 1960 and 1970” Harold Wolpe in Southall 1977) “indicating the growing upward mobility of blacks into clerical, technical and non-manual jobs and of Africans into skilled employment”. (Southall) [6]

There are two observations that are worth making:

  1. The group definitions in the literature do not distinguish between skilled and upwardly mobile workers and the classes of traders and small business owners and civil servants.
  2. Because the definition is loose the group appeared almost impossible to count, with Samuel Nolutshungu (1983) estimating 121,948 members of the black middle class by 1970 and Wolpe (1974) putting the number at 1,315,800 for roughly the same time.

However, for our purposes here these are not problems because our argument is that, under the heel of apartheid, was growing a class of people whose expectations were realistically rising and this led to rapidly heightening political resistance.

At the height of apartheid, the oppression faced by all black South Africans, and especially Africans, was the political basis for downplaying growing class differences and it appears to us that the sense that change was possible, that the aspirations were realisable, was a multiclass phenomenon among all black South Africans.

It would be equally difficult to describe the sophistication, brutality; or give a proper timeline of the apartheid state’s attempt to survive the onslaught – and the consequences of its failure to do so.It would be impossible here to adequately describe the growth and momentum of resistance in the 1970s and 1980s. From the massive strikes in Durban in 1973 through the 1976 uprising, the campaign to defeat the Tricameral Parliament from 1983, the strikes, the bombs, the stay-aways, the States of Emergency from July 1985 and the growing criminalisation of any form of opposition – the profound growth of international solidarity for South Africans who were living under apartheid – and rising costs of resisting and defending the system.

However, for our purposes, it is interesting to examine one aspect of the state’s reaction when it realised how rapidly and powerfully black expectations were rising in the 1970s with the changing requirements of the domestic and global economy.

The Wiehahn Commission submitted an interim report to Parliament in May 1979 which recommended:Under pressure from South African and global businesses, especially after the Durban strikes in 1973 and the uprising in 1976, the National Party government made a serious attempt to reform the industrial relations system and the linked system that governed the rights of black Africans to move from place to place (influx control).

  1. Legal recognition of Black trade unions and migrant workers
  2. Abolition of statutory job reservation
  3. Retention of the closed shop bargaining system
  4. The creation of a National Manpower Commission, and
  5. The introduction of an Industrial Court to resolve industrial litigation[7]

The Riekert Commission reported at about the same time and recommended:

  1. Black workers already in urban areas with the ‘requisite permission’ to be there should receive ‘preferential treatment’ in finding employment – and thus create a stable labour force and encourage a “Black urban middle class”[8]
  2. Other Black workers could be removed after 72 hours of looking for work in an urban area and influx control would be tightened.

It is not our purpose and beyond our ability to explain the complex mechanism by which the apartheid legislative regime and its state pursued its ends but what is noteworthy for our purposes here is that National Party strategist and securocrats understood what was happening and they attempted to accommodate and divert the force that was coming at them, namely a rapidly growing group of politically marginalised, controlled and subjugated people who had seen the possibility of a better life and were prepared to struggle for it.

What happened in the 1970s and 1980s and in South Africa would have been strongly predicted in a piece of academic work presented by US sociologist James C. Davies in 1962: Toward a Theory of Revolution” in the American Sociological Review, (27)1 5-9.

We have deliberately left out the role played by individuals, organisations and leaders in building political and military resistance, in mobilising the majority into defiance and then in skilfully negotiating a peace, a new constitution and democratic country.Simply put Davies argues that in societies where expectations of improvement in the conditions of life begin to rise, they inevitably outstrip the real improvement. Finally daring to hope for the removal of influx control and the right to live and work where they chose, black South Africans instead got the mean-spirited liberalisations of the Wiehann and Ricket commissions – and the revolts driven by an unacceptable gap between expectations and reality followed as night follows day.

Nicslondonslides

It is our contention that what broke apartheid, with its laws, its state, its political parties, its cultural institutions, its security apparatus and its ideology was precisely its attempt to dam the flow of people’s rising aspirations – and we are still in the catastrophic flood of that dam having burst.We have done this because we want to emphasise that the deep and powerful historical forces of class formation and economic change tend to drive politics, not the other way around. The best politicians are those who realise these limits, who really understand that their profession is the art of the possible. One may slightly divert and shape the torrent but one’s power is strictly limited.

The Black African middle classes today – an introduction

In this sense the pressures that built up against the apartheid edifice are the same, and the same energy is driving South Africa into the future. It is the long suppressed black African middle class, having steamrolled apartheid out-of-the-way and now moving through our politics and economy with the same irresistible power… and its expectations continue to rise.But again, while we think these programmes have obviously had a major impact – and are likely to be tightened up – the real ‘explosion’ and driving force have been the aspirations of ordinary people who have long been denied the opportunity to seek to the good life, to educate their children to higher levels than was open to them and to accumulate assets. The ANC government has opened the doors, but it is impossible for those doors to be opened wide enough and it is essentially a market force that causes people to push, shove, clump and burst through the crumbling entrance as fast and as far as possible.The formal removal of apartheid legislation in the 1990s, the deliberate and vigorous and largely successful attempts to change the demographics of the state and civil service, including that of the major parastatals, a host of legislation designed to pressure private companies to put equity in black hands and to appoint black senior managers, the use of licensing in the minerals sector and, importantly, the use of state expenditure to promote black entrepreneurial activity have been important pillars of government policy and have undoubtedly been major forces in promoting a black African middle class.

Apartheid, among its myriad impacts on the shape of South African society, suppressed ‘normal’ class formation and segmentation among the black population. It was, in fact, and for a long time, a systematic attempt to do just that – so as to protect whites from the competition.

We have described in the previous section how various black African middle-classes as well as upwardly mobile sections of the working class emerged despite the best efforts of the apartheid system.

[1] A Bantustan was the cornerstone of the system: black people were allocated (often arbitrarily) to one of 10 territories where they would live and be politically represented. The idea was to concentrate members of particular language or ‘ethnic’ groups in these places and black people would eventually only be in ‘South Africa’ as migrant workers from these homelands. Four of the homelands, Transkei, Bophuthatswana, Venda and Ciskei were declared independent, but this was never recognised outside South Africa.We concluded, however, that the apartheid system was destined to fail as soon as the economy required something different from black South Africans and black South Africans could therefore realistically aspire to something different.

[2] A major social project defined in the Black Administration Act 38 of 1927 – endlessly amended to promote the co-optation of influential individuals in the black community – that in turn led to the burnings and killing of such councillors, most notably through the infamous ‘necklacing’ (placing a burning tyre around the victim’s neck).

[3] Nzimande, B. (1990). ‘Class, National Oppression and the African Petty Bourgeoisie: The Case of African Traders’, in Robin Cohen, Yvonne Muthien and Abebe Zegeye (Eds), Repression and Resistance: Insider Accounts of Apartheid. London; Melbourne; Munich; New York. Hans Zell Publishers: 165-210.

[4] Blade Nzimande is General Secretary of the South African Communist Party and has been since 1998.

[5] The ANC and Black Capitalism in South  Africa, Prof. Roger Southall, Democracy and Governance, Human Sciences Research Council Seminar 2003/23

[6] The ANC and Black Capitalism in South  Africa, Prof. Roger Southall, Democracy and Governance, Human Sciences Research Council Seminar 2003/23

[7] From the excellent South African History Online, a non-profit resource: http://www.sahistory.org.za/dated-event/wiehahn-commission-report-tabled-parliament (accessed 10/24/2014 19h54)

[8] http://www.sahistory.org.za/dated-event/recommendations-riekert-commission-investigate-employment-conditions-black-workers-are-t (accessed 10/24/2014 19h54)

I swore I would never write a listicle as clickbait for my blog; although I once tried mansplaining what that meant.

But anyway … here are the 4 most egregious examples of  … of  just general political awfulness from the last week’s political news:

1. Chancellor House gets another slice of the Eskom pie – and says: F*%& you, we can do what we like

The Weekend Witness (also City Press 27/04/2014) reports that Chancellor House, an investment arm of the ANC, has begun the purchase of Swiss-owned Pfisterer, a manufacturer of electrification components. Pfisterer is a major Eskom supplier and has a R550 million contract with the state owned power utility.  The report alleges that Chancellor House will invest R34 million in a transaction that gives it immediate control of 49% ofPfisterer , and that Chancellor House will buy out the remainder over the next 18 months. Chancellor House’s Mamatho Netsianda told City Press: “If Chancellor House invests, it is not a crime. Why are you bothering me? We didn’t break any law. You don’t have a job to do. I have a job.”  Hmm, nice work if you can get it.

2. State nuclear corporation channels public money to the ANC – and is about to adjudicate the biggest public tender in South African history

The Nuclear Energy Corporation of South Africa (Necsa), a wholly state owned entity recently paid R76 000.00 for seats at an ANC fundraising dinner. This quote from an unidentified board member of Necsa from the Sunday Times’s (26/04/2014) story: “We get money from government. How can we use it to fund the ANC?”

The deadly serious point of the article is that Necsa will soon be adjudicating bids for the R1-trillion nuclear build programme, the biggest public sector contract in the country’s history.

The country is still reeling from the corroding effects of the R30-billion Strategic Defence Acquisition finalised in 1999. Then deputy president Jacob Zuma was charged on various counts of racketeering, money laundering, corruption and fraud in the wake of the successful prosecution of his then financial advisor Shabir Shaik for charges that included the soliciting of a R500 000 (per annum) bribe for Jacob Zuma from a leading defence contractor.

3. No parliamentary scrutiny of Nkandla

The African National Congress yesterday quashed the parliamentary committee established to scrutinise President Jacob Zuma’s responses to the Public Protector’s findings on the R246-million upgrade to the Nkandla homestead. Opposition parties were furious, claiming ANC members of the committee were “submitting to the will of the (ANC) headquarters, Luthuli House, rather than following the oath they made to uphold the constitution, part of which was to keep the executive accountable.” Committee chairman Cedric Frolick said the next Parliament could resurrect the issue, a point non-ANC members of the committee felt was unlikely and certainly not guaranteed – Business Day 29/04/2014

This particular story gets worse: a key ANC  member of the now disbanded committee said during a march in support of Jacob Zuma over the weekend that Public Protector, Thuli Madonsela, “is not our god”, regardless of being named as one of the world’s top 100 most influential people by Time magazine. “They can praise her good work, which is advancing the political agenda of the DA … We still reserve our right to expose that she is acting more as a politician and that she has brought that office into disrepute.” (City Press 27/04/2014)  … which rather explains why the ANC has sunk the committee which was the last opportunity for government and the ruling party to acknowledge mistakes and culpability around the Nkandla upgrade. It is widely reported that the ANC is encountering, along its election trail, significant and harsh criticism from its own electorate about the Nkandla issue in all provinces except Kwazulu-Natal.

4. Sadtu accused of running jobs for cash racket

City Press published an exposé of allegations that the South African Democratic Teachers Union, a key Cosatu affiliate, had run a “promotions and appointments for cash” racket that “led to scores of illegal appointments” across the country – and at least one murder of a principal (City Press 27/04/2014). The article describes several situations in which principals were threatened with death to leave their jobs to make way for someone who has paid the R30 000.00 to occupy the job. The article implicates some Cosatu, Education Department and ANC officials and leaders in the scam. “On Tuesday, Mfundi Sibiya (54) the Kwazulu-Natal education’s department Ugu (lower South Coast) district director, two principals and an ANC ward councillor were granted bail … (after) allegedly ordering the murder of Nyon’emhlope Primary School principal Nkosinathi Zondi (46) … shot five times, allegedly by hitmen Andile Zulu and Lungisani Makhoba …)”.

The failing South African education system is an important constraint to South African economic growth, and a key component of this failure is Sadtu’s success in thwarting attempts by governments to properly assess and grade teachers and to link advancement to performance. The exposé in City Press suggests (but, it needs to be noted, does not prove) how deep and pathological is the impact of Cosatu’s Sadtu union on the failure of the system.

 Stories that didn’t make the cut … because this whole exercise was starting to make me nauseous

  • Journalist Nickolaus Bauer photographing the handing out of ANC T-shirts from a traffic police vehicle, and then having his pictures forcibly deleted by a member of the SAPS VIP protections services.
  • Journalist Max du Preez’s accusation that Jacob Zuma “is using every trick he used while being head of intelligence for the ANC in exile in Angola and Zambia”. That he has “plunged the ANC back into its darkest era when commanders in exile issued the orders and cadres even remotely suspected of being hesitant or questioning were victimised, even jailed, tortured and executed.” Further that “the criminal justice system was perverted and abused and the powerful State Security Agency employed to make sure Zuma and his inner circle stay in power.”  Catch the article here.
  • The allegation that emergency parcels (food, toiletries and blankets from the SA Social Security Agency) are being dished out at a certain political party’s rallies – no guesses, this is getting ridiculous. The allegations have been made to the Public Protector. Hmm what is it that MP Buti Manemela said? Oh yes: the Public Protector is “advancing the political agenda of the DA”.

This is a quick and casual aside as I await the more weighty matters of Pravin Gordhan’s medium-term budget policy statement at 14h00 today.

For various reasons* I attempt to keep abreast of the rapidly evolving technological and cultural aspects of what we call ‘social media’

New cultural trends drive developments in language and there are a couple of new words and usage that I found interesting enough to share here.

Recently a person I follow on Twitter (Sarah Britten who goes by the handle @ananitus – I love her stuff and follow her across several media platforms) used a hashtag to characterise the flood of criticism she got when she mentioned that she had gone to a chiropractor for relief from some or other ailment.

Most of the criticism/advice came from men and she called it (the criticism and advice) “#mansplaining’ as in: enough with the #mansplaining, I don’t need you to tell me whether alternative medicine is unscientific or illogical (that’s not a quote, I don’t have a record of the original interchange, but that is roughly how I remember it).

I immediately felt slightly embarrassed. Oops, busted. I have been patiently mansplaining to the women in in my life that their views are illogical and unscientific ever  since I was a too serious boy. Hurumph Hurumph – stroke my beard, push my eyebrows together, suck on my pipe. You see Josie/Mom/darling the scientific method exposes astrology as  … blah blah.  Yeah, right.

A hashtag (#) is a kind of metadata tag that allows all future conversations that deal with the same topic to be grouped and therefore accessible.

Listicle is another new word (well, new to me anyway) that perfectly sums up a phenomenon to which we are all being increasingly exposed. A listicle is an article that presents itself as a list.

It can be any rubbish … just make it up. The 10 ugliest South African politicians. The five top reasons to vote/not to vote for the ANC in 2014. Seven reasons that Blade Nzimande has become a recluse (or the 50 reasons he should become a recluse). Five secrets that are keeping Zuma in power. The 10 hottest DA members of parliament. Five reasons why South Africa sucks as an investment destination. The three top reasons why Zuma’s critics should keep their tax affairs in order. Five reasons we should not listen to the rubbish spouted by political analysts. The ten least known Zuma sexual conquests. Four ANC members most likely to become president in the next 20 years.

The point that I find so interesting is that  listicles  are almost irresistible to your finger hovering on the mouse. Just look at The Huffington Post and you will understand just how compelling (and trashy)  listicles are.

In fact listicles are so compelling that they can usefully to termed ‘click bait‘. Anyone who has ever flicked a gaudy lure in front of a fish in the hope of irresistibly drawing the fleeting piscene attention long enough to embed the hook in the creatures mouth (goodness, when I put it like that fishing sounds a faintly monstrous activity) will immediately understand what ‘click bait’ means.

I have held out against using listicles as click bait on my blog. I hope I am never reduced to heading a post with Top five political risks to investment in South Africa or 3 reasons supporting a sovereign downgrade or even Top 10 best dressed ANC NEC members. But you never know; desperate times lead to desperate measures.

 

 

*For me it’s a professional imperative: I have to get my views out there to persuade those  who might want to pay for those views (supposedly delivered in more depth) that the said views might be worth paying for … so I  trundle out my free-to-air discussion and curating on a range of platforms in the hope that this will generate paid work … which it generally does, btw. The two other reasons are

  • posting forces me to come up with a view on the unfolding situation … I am never certain what I think about something until the moment I am forced to say to someone else what it is I think – so thanks, you are that someone else;
  • keeping the blog is a way of safely storing a history of my views – this is all sitting out here in the interweb, a record of my views, safely stored away from my own lack of competence or the ill-fortune of my laptop.
  • the cloud.

The appropriate comparison for J Arthur Brown’s visit to Khayelitsha yesterday is Jacob Zuma’s visit to Eldorado Park a few weeks ago – the president’s vist conducted ostensibly to free that neighborhood from the tyranny of crystal meth and tik.

Watching the visuals on eNCA (catch those here) of the white fraudster’s visit to the Cape township yesterday was surreal. Brown, louche, handsome and relaxed in tatty jeans and gelled hair being warmly welcomed by the community meeting; the elderly African audience in their Sunday best, anxious to please, respectful and sitting up straight in their seats. Brown lounging like a  rock star being interviewed by Rolling Stone.

Afterwards outside: the crowd greeting him with Amandla!  – everyone taking a turn to hug their last hope for the return of the money, the man who the state accused of stealing it in the first place.

Zuma’s trip to Eldorado Park is the same species of manipulation. It was supposedly prompted by an eloquent request by resident Dereleen James describing her desperate efforts to get her 17-year-old son off crystal meth. See that moving letter here.

Both these incidents have the classic elements of ‘big man’ politics and the worst features of populism.

What you do is take an issue that absolutely no-one could disagree with and then you march in as the good and heroic saviour. Even those who suspect your motivations are forced into silence. The poverty-stricken victims need all the help they can get, even if it is coming from people who are motivated by the need to repair their public image.

I don’t buy that, in exactly the same way as I don’t buy it when repressive governments argue that the internet needs censoring because of child pornography.

Anyone who argues against the populist measures is immediately cast as the villain: so what, are you in favour of drugs, child pornography and poverty? You are prepared to let these victims suffer just to satisfy some political principle of your own?

Julius Malema, Jacob Zuma and Winnie Mandela had one thing in common. They understood perfectly that you shouldn’t waste your time with actually solving the housing crisis, poverty, drug addiction (choose your perfect and sanctified issue.) All you need to do is go into the impoverished area and give someone a house. Do it with fanfare and praise singers. The community will come out, awed at your power and generosity, clear that you are the source of the goodies that make life possible, full of hope that their turn might come some time soon.

So maybe J Arthur Brown is going to stump up a few million rand, perhaps set up a fund for the people who have been robbed. Surely that is a good thing?

No, it’s not if it means that pressure is relieved on the more pervasive looting of pension and investment funds by people like J Arthur Brown.

How can we be anything but horrified when the fox volunteers to police the hen-house? Not for some vague political principal, but because our desire to save one chicken has endangered them all.

A few years ago it would have been the SACP and the ANC making these arguments and far more eloquently than I have here (catch an excellent interview with Jeremy Cronin several years ago doing precisely that  – push through till he gets to the ‘big man’ and populism bit, it will be worth your while).  Of the many things I regret about the present, the loss of that perspective from our politics is the one I feel most keenly.

Zuma’s visit to Eldorado Park is indistinguishable, in its deeper architectural structure, from J Arthur Brown’s visit to Khayelitsha. In both cases there will be immediate changes to local people’s lives, but changes that purely result in a displacement of the problems and temporary relief.  Like the distribution of food parcels by politicians just before elections the temporary relief provided the hungry does not balance the harm done the society by the successful hoodwinking of the electorate by the ‘big man’.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

… meanwhile

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

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

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

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

Following a previous post: The Limits of Politics I want to argue that what the ANC is becoming is less a function of the failings of its leadership and more a consequence of the titanic forces of social change.

The past and present history of the African National Congress could be characterised (in shorthand) like this:

National Liberation Movement

The ANC arose out of the fact of the prolatarianisation of an African peasantry and the deepening national oppression of all black South Africans – only codified in Grand Apartheid in 1948 but stretching back much further.

What the ANC was was a natural expression of the changing pattern of the oppression of Africans (and other black South Africans)  between 1912 and 1994. One way of understanding the shape, raison d’être, policies and leadership of the ANC during this period is to trace the history of the strategy and tactics of the pre-Apartheid and Apartheid states.

Each phase of ANC resistance to colonisation and apartheid – from the initial polite depositions of the early years, to the militancy in the 50’s, the banning in 1960, the crushing of the organisation’s internal structures, the launch of the ‘armed struggle’, the imprisonment and exile of its leadership, the playing catch-up after the 1976 explosion, the United Democratic Front as an internal wing to prevent Coloured and Indians being won over to a National Party strategy leading up to mass protests, negotiation – was mirrored in the changing structure of the society.

This is not to say the ANC was a perfect expression of all aspects of African resistance or that, in turn, such resistance was a perfect response to national oppression. The shape that all things assume is always a complicated expression of subjective and objective factors and this is true too for the African National Congress.

The forces that ended Apartheid

Of course the struggle for freedom of South African people and their organisations (and their allies around the world) is one way of understanding what brought about the end of Apartheid.

But another is to ask: what was Apartheid trying to control, for what end – and why did it fail?

Apartheid was ultimately a system of law, repression and inducements designed to deflect African’s economic and political aspirations away from white owned and controlled South Africa – for the purpose of securing white economic power and security.

It ultimately failed because Africans “voted with their feet”. The National Party was trying to legislate (and police) against the collective desires and actions of millions of people. But Africans would not have their aspirations diverted to the geographical or the political Bantustans. In the face of fines and brute force Africans kept coming back to the cities, the bright lights, the markets, the chance of work and the chance to do business.

To avoid complicating this further, let me say my own shorthand understanding of what was happening (and the timing of what was happening) is the South African and global economy were growing in ways that required an educated and settled workforce and this in turn raised for African South Africans the realistic possibility of being ‘settled’, ‘educated’ and, ultimately, of achieving a better life.

Apartheid and National Party rule constituted a barrier to the swelling aspiration of African South Africans – particularly for property, assets, homes and the right to work and live where they pleased.

The ending of Apartheid and National Party rule was the bursting of the dam.

1994 and beyond – the time of the flood

The African National Congress had always been forced to root itself in a marginalised African population and this meant it faced most forms of power in the society as the challenger and the outsider.

The ANC was able to ride the wave of rising African aspirations in the 70’s and 80’s – but there was no expectation that it meet those aspirations.

Everything changed of 1994.

The government’s of Nelson Mandela and Thabo Mbeki had a mandate and responsibility to use the winning of the ‘political kingdom’ to seek the economic one. What followed was a two-pronged approached to empowering the ‘previously disadvantaged”:

  • take the state bureaucracy out of white hands and put it into black ones;
  • encourage transformation of ownership and control of the private sector through employment equity laws and regulations and through the development of a black economic empowerment  regime.

The process very quickly assumed its own momentum and the first stratum of individuals who were sucked into the maelstrom was the political class … the senior members of the ANC and government.

Once you have begun to use the state as a lever to gain economic power it is difficult to stop.

But by the time Thabo Mbeki’s government attempted to formalise, control and broaden the process with the Broad-Based Black Economic Empowerment Act of 2003 it was out of control – and engulfing large sections of the ruling party and the senior levels of the state bureaucracy.

… and the point?

The point is not to exonerate the ANC or government or individual leaders who have become tenderpreneurs or crony capitalists. It is not even to excuse government (particularly Thabo Mbeki’s) for making specific errors in structuring the process  … there were others paths that could have been taken that might have made a difference.

But the reason I suggest this vantage point or approach is because I think the hope that this process could ever have been calm or orderly is based on misunderstanding the deep, structural and historical nature of what is happening.

A flood of wealth and power is moving from the old order to the new and has blurred the boundaries between the public and private sector and is threatening to overwhelm government and the ruling party. Once the waters have achieved a new equilibrium it may be possible to re-establish a separation and rebuild the laws.

But it is going to be close.

Some of the things we think we know about revolts and revolutions – but that do not always apply:

  • Where there are adequate elective processes dissatisfied people believe they can influence outcomes through voting and therefore are unlikely to make the sacrifices required of a revolution.
  • Revolts are generally lead and organised by the middle classes – a degree of education is required – thus where the middle class is linked to the ruling elite through patronage or ethnicity, its members are less likely to lead a revolution.
  • Societies where a middle class is non-existent (where the division in the society is a simple one between the rulers and the people) can be surprisingly stable and enduring.
  • Poverty and unemployment tend, on their own, not to be strong predictors of unrest and revolt – it is often a necessary condition that these two social ills exists alongside visible inequality.
  • Ethnic exclusion from government or the economy is a powerful driver of unrest and revolt – colonialists loved to place favoured ethnic minorities to rule over less favoured ethnic majorities – a recipe for revolt and, depending on the relative size of the groups, civil war.
  • Revolts tend not to happen in situations or countries where the condition is continuously and steadfastly awful. Revolts happen when expectations begin to rise amongst “the people” – in response to improving social, economic, political or cultural conditions.  US sociologist James C Davies turned the simple observation that expectations rise faster than improvements in the underlying conditions and further that the system can cope with the disconnect only until conditions continue to improve (the Davies J-curve). I discuss the usefulness of this formulation in relation to South Africa’s ongoing service delivery protests here, a blog post that could have been written … almost word for word … today, but was, in fact, written in March last year.

With those meagre points acting as a theoretical background here then are my thoughts on the forces working for and against revolt in the South African context. It is not as simple a matter as putting some things in one column and others in another. Many of the protective factors are also depth charges seeding our future with hazards, but I will do my best to make it as simple as possible.

Why we are less revolting than we might be

  1. The first and most obvious reason is unlike many of the Middle East North Africa countries (from now on written as MENA, following a financial market convention) South Africa is a fully functional democracy where citizens have several opportunities to vote for and against parties that run their lives at a local, provincial and national level.
  2. The Ruling ANC is still seen by much of the electorate as the party led and staffed and supported by those who fought apartheid and those whose lives have improved because of that system’s demise. Whatever it might be in the future, right now the ANC still has enormous reserves of goodwill based on the fact that it is the premier liberation movement (still) led by the heroes of the struggle.
  3. The ANC government pays just under 40 percent of consolidated non-interest expenditure (that’s  R314 billion up from R156 billion five years ago) on the public sector wage bill and a further 20 percent to the poorest South Africans in the form of social grants. These are crucial constituencies to get to buy into stability – and a large part of the nation’s wealth is doing just that:  providing jobs for the emerging middle classes and  poverty alleviation for those who would otherwise be without hope.
  4. Add into the stability mix the fact that the ANC has managed to dispense a huge degree of patronage to the most aspirant and powerful of its leaders, members and constituents through the legal and regulatory regime of Black Economic Empowerment and the application of employment equity laws especially in the parastatals.
  5. Finally, whatever the criticisms, this government has built more houses for the poor, paved township roads, established sewerage and water connections, and provided the poorest South Africans with private and public goods on a scale unimagined under the previous dispensation of the Apartheid rulers.

Why we might be more revolting than we think

  1. Firstly, the obvious threat to stability is fiscal. Can we afford to meet the ever growing needs of the poorest as well as the growing middle class? At some impossible to predict moment in the future a force (a Maggie Thatcher type force) will arise within government and attempt to get our financial house in order. The first cuts will be in the fattest areas: social grants and public sector wage bill. I have no doubt an even slightly popular government could weather the resulting storm, but it will be a weather phenomenon that will be spoken of for many years.
  2. Secondly, failure to meet the fiscal challenge has its own terrifying dangers. In fact, this is precisely what happened in Zimbabwe. The leaders of Zanu-PF ransacked the war veterans pension fund which caused ex-combatants to begin militantly to threaten Mugabe and Zanu-PF.  The pension fund was recapitalised to the tune of $2bn in the late 90’s and the rest, as some are wont to say, is history. Spending $2bn they didn’t have led directly to hyperinflation, food riots and the formation of the MDC. With no largesse left to dispense the white owned farms were next on Zanu-PF’s attempts to stave off revolt and the last titbits of that economy are currently being pissed up against the wall with the same objective but in the name of “indiginisation”. Of course, Zimbabwe hasn’t revolted, but the price the politicians have made that country pay for stability has left Zimbabweans worse off than even the most cataclysmic revolution might have done.
  3. If  a greedy, rent seeking, corrupt, politically powerful and unaccountable elite is what fuelled revolt in MENA, then we are in all kinds of trouble. “Elite Theory” is a branch of sociology that argues that the economic and political elite make up an informal network that is the actual source and exercise of power – not “the people” through elections and parliament.  At an obvious level the theory applies to us: a publicly unaccountable elite within the ANC deploys loyalists to key institutions throughout the state and economy so as better to control the shape and direction of society. But with such a dominant and popular ruling party, such practices are unlikely to lead directly to revolt. However, beyond the formal exercise of the policy of “cadre deployment” we have an elite almost identical to those in Tunisia, Egypt, Libya and a host other MENA countries. These are the grand political families that thrive on tenders won from the state and bribes won from global corporates attempting to secure lucrative deals here. These are the groups and individuals that have turned some of our provinces, town and cities into gangster fiefdoms ruled by fear, patronage and manipulation.

On Balance?

We are still well within the safety zone and the system seems to have the flexibility and resources to withstand firm assaults in the future.

The obvious danger is the parasitic elite that honeycombs the upper echelons of our politics and economy. Many who participated in the Polokwane Putsch understood themselves to be cleansing the ANC and government of such an elite.

Unfortunately they failed to notice that their principal allies were the second -rankers and blatant criminals that Mbeki had managed to keep away from the trough.

If this elite manages (as it constantly strives to do) to divert the resources our society has available for economic growth, employment, poverty alleviation, infrastructure development, public health and education (you name the social good, it is threatened by the elite’s rent seeking activities) then we will have to reassess.

While people like  Willie Hofmeyr are still loyal ANC members and in place as senior state officials there is hope. Yes it is horrifying that he estimates that his Special Investigative Unit will scrutinise R20bn of tender fraud in this financial year (read about that here) but the real trouble arrives when people like him throw up their hands in disgust and head for the private sector.

Here is the summary of South Africa’s performance in the Global Competitiveness Report 2010 – 2011. The highlights are mine and the seriousness of the problems is obvious..

While we quite rightly bemoan health, education and labour market failures it is interesting to note we were top ranked – in the whole world! – in two categories: in auditing and reporting standards as well as in the regulations that govern our securities (financial instruments) exchanges.

But on with the bad news: part of the process of the construction of the report involves asking the opinion of “business leaders” (see note below about methodology) about their concerns. The top four concerns they had about South Africa are not a huge surprise:

From a list of 15 factors, respondents were asked to select the five most problematic for doing business in their country and to rank them between 1 (most problematic) and 5. The bars in the figure show the responses weighted according to their rankings.

Methodology note from the press release: “The rankings are calculated from both publicly available data and the Executive Opinion Survey, comprehensive annual survey conducted by the World Economic Forum together with its network of Partner Institutes (leading research institutes and business organizations) in the countries covered by the study. This year, over 13,500 business leaders were polled in 139 economies.”

Click here for a link to the full report.

From murder to car jacking and from GBH to rape the April 2009 – March 2010 Crime Statistics published yesterday indicate significant and welcome improvements.

Unfortunately the absolute levels are still extraordinarily high and in one area, crimes against women and children, there have been large and distressing increases.

See the really unusually well written and interesting ‘Crime Situation in South Africa’ document from SAPS  here and links to all the ‘per category’ figures here.

(This added a few hours after publication: here for per province/per station as well as the national crime totals and here for really interesting interactive maps per category per ‘a command area’ (not sure how that geographic area it defined, but the graphic display is is particularly interesting.)

I can’t help but think of the Selebi corruption trial and conviction as a proxy for the big one that never happened.

There’s a story about Glenn Agliotti wandering around Shell House in the early 90’s, undoubtedly looking to meet and great the returning leaders of the ANC.

Somewhere in those chaotic corridors where incompetence was already a watchword he bumped into Jackie Selebi who was then the ANC Youth League president and member of the ANC National Executive Committee.

Too many versions of this story exist – some putting the meeting much later when Selebi was already a member of parliament, to which he was elected in 1994.

But the version I have is Selebi was part of the “advanced guard” of ANC cadres who had been sent to prepare the way for returning leaders, and that the first casual, supportive meeting took place as early as 1990.

Now the Jackie Selebi story has been exhuastingly, if not exhaustively, rehashed during the trial during which our previous Commissioner of Police and head of Interpol has now been found guilty of corruption – with Glenn Agliotti being the corrupter.

Similar story to Jacob Zuma’s

It reminds me of a similar set of stories about our erstwhile president Jacob Zuma. He was also part of an advanced guard and his version of Glenn Agliotti was none other than Schabir Shaik – who looked after him, gave him pocket-money and places to stay and, ultimately, traded on his name and access and went to prison for the crime of corruption.

The whole edifice of the organisation that became the sum total of our political and governing leadership was uniquely vulnerable during that brief moment of return.

They had nothing: no money, nowhere to stay, no transport and no infrastructure.

They were like innocents arriving off the boat in the new world; a whole legion of sharp and dangerous types were waiting to sidle up to them offering comfort and succour and help and support.

It doesn’t excuse Jackie Selebi just like it doesn’t excuse Jacob Zuma (who through political shenanigans remains untried and unpunished) but it is important to remind ourselves how vulnerable these men and women were and how easily they fell.

There is a moment when the frog in the pot on the stove is in cool comfortable water. As we watch, with horror and disgust, the frog stew boiling furiously and the green scum frothing into the flames we should keep that in mind.

Jacob Zuma said at a press conference in Sandton yesterday:

I’m not certain whether there have been threats of xenophobia. I know that there have been rumours that have been reported. (Reported in The Star)

As I drove towards Cape Town on the N1 on Sunday people were already streaming north, belongings in those huge carrier bags – they lined the side of the highway on the Paarl end of the tunnel. At that time spaza shops belonging to Somalians were already being burned in townships around Paarl and Franschhoek.

Outside of the Western Cape it might be true, as the president says, that the xenophobic threats are “a rumour”. But ethnic cleansing does not require current violence; it requires a history of violence and a promise of the same. The history is clear (here for previous post on this issue, here for a devastating M&G photo gallery of the May 2008 riots) and the promise of further violence has been reported constantly since late 2009.

It seems to deepen the injustice  that the current round of ethnic cleansing is taking place just as South Africa and its citizens are being hailed for their hospitality and general warmth during the Fifa World Cup.

Take a look-see at the names that are linked in Evelyn Groenink’s excellent story about IT billionaire Robert Gumede’s wedding to Dr Portia Mkhize in Nelspruit last weekend.

Ignore if you can the author’s articulate disgust at the complacent and self-satisfied comrade billionaires and their squeezes grunting at the golden trough while Leandra burns.

Think instead of the names she links, almost as an aside:  Mathews Phosa, Tokyo Sexwale, Julius Malema, Fikile Mbalula and then outwards into realms more obviously dark and filled with foreboding.

It’s an interesting social calendar piece that pushes the boundaries of the genre. Catch it here.

The local state – its politicians, agenda and bureaucracy, is under popular attack

It is starting to be whispered that there is a “hidden hand” in the service delivery protests*.

The problem (of the protests) is serious and threatening and government is starting to worry about high-profile violence during the World Cup.

These protest share a strong crossover constituency and architecture with the xenophobic violence that occurred May 2008. At that time, Thabo Mbeki’s spooks argued that a hidden hand was at work – in one bizarre version Zimbabwe’s Central Intelligence Organisation was fingered as triggering the violence to punish the Mbeki government for some impenetrably Byzantine set of motivations.

This time around the speculation is that the spreading protests have something to do with Alliance tensions i.e. the conflict (endlessly discussed in these columns) is fueling service delivery protests – I suppose that would mean either the ANCYL or Cosatu/SACP using popular discontent against the sitting council dominated by either the leftists of the nationalists respectively.

To argue that Alliance tensions is the (or even a) main driver is a bit of a stretch. The protesters themselves foreground slow delivery of housing and the whole gamut of services (toilets, sewerage, water, refuse , telecommunications, roads) but also have a sharp focus on corruption, maladministration, nepotism – and therefore, indirectly, on cadre deployment.

From M&G – Modderfontein Road in Ivory Park after service delivery protests

The protests appear to be coordinated. They have similar beginnings: “elders” – or the moral equivalent –  meet in a town hall to discuss grievances; they decide to march to the municipal offices in the town centre; they carry placards about Eskom, housing, corrupt council officials; on the way they are joined by youth and the unemployed, and the march swells; somewhere near the edge of the town centre police stop the now more threatening and chaotic march; stones are thrown and rubber bullets fired; the protest breaks into smaller groups and spreads; councilors and council property are targeted and running skirmishes with the police occur over a few days; the ANC sends a SWAT team to the area and this team either moves against the council or stands firm against “anarchic” and “violent” protesters. At any point during this process the attention of the mob can turn to the foreigners – Zimbabweans, Malawians, Somalians , Mozambicans, Angolans, Nigerians and those from the DRC.

It has become something of a legend and commonly accepted “fact” by foreigners living in South African townships that post the World Cup and in the lead-up to the local government elections in 2011 the xenophobic violence will erupt on a scale beyond anything that has happened in the past.

The Davies-J Curve – the real hidden hand behind the violence

One of the reasons the government and the intelligence agencies are suspicious about the violence is that it occurs always in municipalities where there has been a degree of successful service delivery. The violence does not seem to happen in areas that are absolutely poor and unserved and have remained so for some time.

Interestingly this is precisely the situation predicted by US sociologist working in the late 1950’s, James C Davies. His theory is that rising expectations is related to the possibility of armed conflict but only when rising expectations – brought about by, for example, some degree of service delivery – meets a downturn. His theory became known as the Davies J-curve.

What happens is that when material and other conditions are improving, expectations rise faster than the individuals own situation. The system seems to be able to cope with this, except when there is a downturn of some kind – this is the sharply curved “Reality” line in the diagramme above.

This predictive framework (usefully discussed by the Centre for Security Studies here) almost perfectly mirrors what has happened in townships and poor municipalities since 1994. The violence seems to spike in early winter and it seems to be concentrated in areas that have had by-elections. In general it seems to be at its worst after national local government elections.

We must assume that in the lead up to such elections the ruling party and its councils push service delivery and the promise of service delivery. After the elections delivery collapses.

Thus the expectations are on an ascending path as the reality of delivery veers sharply downwards.

Violence results and often the weakest and poorest are both the victims and perpetrators of that violence.

* Orange Farm, Sedibeng, Siyathemba township in Balfour, Leandra, Lesilie, Oogies, Accornhoek near Bushbuckridge, Chochocho near White River in Mpumalanga, Protea-Glen, Dobsonville-Gardens in Soweto, Ennerdale in Fine Town, Reiger Park in the East Rand, Parys, Diepsloot, Attridgeville and Mamelodi – all names of service delivery protest hotspots culled from recent press reports. While I cannot place all these towns on a map (and am not even sure that some are not colloquial names for the same place) it seems clear that there is an unfolding crisis of governance in many of South Africa’s 283 municipalities , especially in the poorest, semi-rural communities.

I am an independent political analyst focusing on Southern Africa and I specialise in examining political and policy risks for financial markets.

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