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Having been woken by my children to tell me we had a new, new finance minister I blundered out of bed and scribbled this for my paying clients – forgive the blurriness it is essentially the sleeping pill that’s doing most of the
There were 7 more errors in this paragraph. I just fixed the ones that jumped out and bit me on the nose – and left the crazier ones visible so you too can learn not to write when on sleeping medication.
There rest cans stay in the farmyard.
Don’t call me stupid, stupid
- Pravin Gordhan appointed Minister of Finance – 5 days after the obscure Dave Rooyen’s appointment (It’s 10 p.m. on Sunday evening so this is a bit late and bit rushed).
- The only possible good side is that Zuma responded well to universal criticism from prices and the press and the commentariate.
- The truth is policy is in free-fall and Zuma clearly does not know what he is doing.
- This is a scary time and it would be appropriate to be as cautious as possible
Jacob Zuma has just announced that after ‘careful consideration’ he had decided that he was rescinding the appointment of David Van Rooyen as Minister of Finance and appointing instead, previous Minister of Finance Pravin Gordhan. It could be that with the ZAR falling out of bed, that condemnation of Nhlanhla Nene’s unexplained removal was almost universal and our bond and currency markets were in chaos … whatever it was, it was a deeply embarrassing and chaotic act redolent of uncertainty and panic.
Even though this is a “good” decision, from Zuma’s perspective it is “clutching” at straws, it looks weak, it look like the centre cannot hold. Expect serious political instability in the palace of power. Zuma must be back against the wall, making a decision that makes him look so weak, so foolish.
I will try and deal with this in more detail in the morning.
Listening to the EFF be the rock against which Zuma’s blithe refusal to account finally dashed itself yesterday I felt briefly elated.
Gangsters! Bashi-bazouks! Yes, PAY BACK THE MONEY! PAY BACK THE MONEY! Billions of Blue Blistering Barnacles!
But after a moment’s reflection I pulled myself, by the ear, back into the vehicle.
“You irresponsible old twit!” I said, my mind drifting back to this blog post from August 24 2010:
Waiting for a saviour to rise from these streets*
Just when all hope flees, as the last good politician still within government leaves his/her post to join the feeding frenzy and as the last decent officials trying to do a public service throw up their hands in disgust; and as the striking workers blockade the last functional HIV/AIDS clinic and trash the streets again; and as the broken bits of the Ruling Alliance go for the kill in their eye gouging, groin stamping gutter fight – just as all hope flees, whose silhouette is it that appears, backlit and heroic, flying in low over the horizon?
Is it a plane?
Is it a bird?
No, it’s … hmm, I’m not really sure.
When things are going as badly wrong as they are going for us, the person to look out for is the one who seems to have been sent by history itself as the solution to all of our problems.
I am not suggesting, as my old Granny used to say: don’t worry, cometh the moment, cometh the man or all’s well that ends well. I am suggesting the very opposite.
This is more of a warning to be careful about decisions we make when we are desperate than it is anything else.
Societies, political parties and whole nations are uniquely vulnerable at times like these. Our desperate need is for someone who can raise an anti-corruption army, is prepared to control the unions, able to fix service delivery and able to make the difficult decisions that will allow job rich economic growth.
The darker and more dire things become – and goodness knows they are as dark and dire as anyone can remember – the stronger our wish fulfilment drive becomes.
Where is the good-looking one, with the strong jaw and the easy, comforting manner, and the very firm but gentle eye and the plan and the promise and the words – and the record, or at least one you can, in your desperation, convince yourself of?
This is the moment in which nice Germans welcomed Adolf Hitler and Spaniards General Franco. King Constantine II of Greece inducted the awful “Regime of the Colonels” in 1967 saying he was “certain they had acted in order to save the country” and there was a (brief) Argentinian sigh of relief when Brigadier-General Jorge Videla overthrew the execrable, incompetent and authoritarian regime of “Evita” – as popular culture has dubbed Isabel Martínez de Perón.
I am not suggesting that a fascist opportunist and criminal is about to present him or herself as the saviour from our woes – or that things are so bad that we risk losing our judgement and welcoming him/her into the stockade. Well, not yet.
But explicitly and implicitly various political factions and individuals have presented themselves as alternatives, and the solution to our current problems.
There’s Zwelinzima Vavi – and whatever kind of workerist paradise he represents – who heroically criticised the media appeals tribunal and has laid about himself with a stout cudgel at all the worst of the cabinet ministers and officials trying to stuff the last tasty bits of the family roast into their distended bellies. And he’s available next year.
Deputy Minister of Police Fikile Mbalula suggested (of criminals) we should “shoot the bastards!” and in so doing presents a kind of law-and-order (and anti-communist) alternative, clearly being supported by the ANC Youth League and tenderpreneurs everywhere.
Lindiwe Sisulu dresses nicely and would be excellent if we ever panicked enough to need a kind of Cleopatra/Boadicea empress to save us.
Tokyo Sexwale is getting the kind of press that suggests he is an effective anti-corruption campaigner and an excellent Minister of Human Settlements i.e. he’s clean and gives good service delivery – and he’s bright, presentable, charming, good-looking and available – very available.
(This added as an afterthought: don’t discount Kgalema Motlanthe as a sort of leftish compromise that we have grown used to and, obviously, Mathews Phosa with his charming Afrikaans poetry and his friendly demeanour and his market friendly comments and his bitter struggle with ANC leader and communist Gwede Mantashe. Also consider a scenario, one I discuss elsewhere, where none of the contending factions achieves dominance and everyone agrees to stick with the burdensome incumbent … all is still possible.)
The National General Council of the African National Congress (to be held in Durban from 20 – 24 September) will reveal the main factions and their key representatives for leadership. The last NGC resulted in a rebellion against Mbeki and foretold his rout at Polokwane. This one is likely to be as instructive.
The point I wish to make here is a simple one. Those who appear to offer solutions must be judged in terms of who they are, what they have done and what they really represent. Just because we are in trouble does not mean we can afford to lose our critical faculties. My long gone Granny would have had two more things to say on the subject: don’t throw the baby out with the bath water, and don’t jump from the frying pan into the fire.
* The title of this post comes from the glorious “Thunder Road” by the inimitable Bruce Springsteen (it doesn’t really fit the story … but I really love the song:
You can hide `neath your covers
And study your pain
Make crosses from your lovers
Throw roses in the rain
Waste your summer praying in vain
For a saviour to rise from these streets
Well now Im no hero
All the redemption I can offer, girl
Is beneath this dirty hood
With a chance to make it good somehow
Hey what else can we do now?
I intend, in the near future, to dust off my Marxist theory.*
I am going to need a framework through which to express my growing conviction that much of our politics can be understood as a function of the collapse of the alliance of classes that underlay the national democratic revolution – and the African National Congress.
The big driver is the strongly emergent black middle class – or perhaps competing versions of that class. In the background is a sort of bad kung fu movie fight scene involving the industrial working class, various parasitic elites within the state and party, a comprador bourgeoisie and a whole mess of tribalists, proto-fascists, landless peasants and lumpen proletarians of various stripe.
(The camera occasionally flicks across the deeper shadow behind, where we almost catch a glimpse of Moeletsi Mbeki’s lurking oligarchs, watching us.)
It’s my job to have some kind of understanding of what is going on … and I will need all the help I can get theory-wise.
In the last week the ANC has given strong hints that the Labour Relations Act amendments are being held up because government wants balloting prior to strikes and a ‘forced mediation’ strike-breaking mechanism. (See here.)
Also we have the astonishing re-emergence of the (excellent) idea that we should break up Eskom and sell off some of the bits and get the private sector to build other bits. (See here … and btw I can’t help but notice how much interesting news is written by Carol Paton of Business Day.)
What’s going on?
Well, one things is government is facing further downgrades because it can’t pay its bills.
The biggest bill of all is public sector wages, which will be renegotiated before the current wage agreement expires in March 2015.
That bill will represent above 35% of non-interest government spending and the wage level the employer and the employee eventually agree upon and the degree of disruption that accompanies the bargaining is extraordinarily important for South Africa and therefore for the stability of the governing party.
Also government is burning due to its apparent inability to get the endlessly promised infrastructure built. At least part of the reason is the constant labour stoppages, for example at Kusile and Medupi.
Having lost much revenue (and political support) during the recent strikes led by Amcu and Numsa, the ANC government is forced to find a way to rewrite the terms of engagement between employer and employee.
Also Eskom is bleeding … or potentially bleeding … government dry.
The case for privatisation is threefold: you get money from the asset sale to pay your debts, you don’t have to keep bailing out the loss-making enterprise and you get the ‘efficiencies’ (the removal of structural impediments to growth) that supposedly come from the private sector running the enterprise.
(As an aside: privatisation seldom works quite like that. This government, and the people of South Africa, have barely recovered from the the drubbing we received from the ‘private sector’ following the partial privatisation of Telkom in the 90’s. But desperate times, desperate measures … and all of that.)
The groups that traditionally oppose these policies are in disarray. Cosatu has essentially collapsed in a heap – and the most energetic sections of organised labour are actively hostile to government/ANC anyway and no longer require wooing … or rather, following Marikana and various statements of outright hostility by the ANC and government leaders, are no longer susceptible to those old sweet lies.
The forces that shaped our labour market are profoundly changed.
A growing mystery to me is where the SACP is in all of this?
So its all: hello 1996-class project, we who threw you out with the bathwater at Polokwane in December 2007 would like to apologise and welcome you back. Don’t worry, the communist are in China learning how to deal with corruption and with the labour force … you can chat to them if they ever come home.
So meanwhile here is a sort of ancestor to my questioning the ‘class character’ of the moment; a column I wrote for the Compliance Institute of South Africa in November last year:
Is this Jacob Zuma’s Maggie Thatcher moment?
I admit that on the face of it the comparison seems something of a stretch.
For example I can’t think of an ‘Nkandla’ equivalent in Baroness Thatcher’s world – although her son seemed to benefit from parental political power in much the same way as Jacob Zuma’s myriad offspring seem to be enjoying.
The point, though, is Thatcher came to power with the reforming mission to roll-back back the influence of organised labour and to make labour markets more flexible– all as part of her attempt to stop an on-going recession, bring summer to the ‘Winter of discontent’ (paralysing wage strikes by public sector unions in Britain in 1978-1979) and increase employment and economic growth.
(‘Thatcherism’ as a political-economic ideology is also considered to include attempts to keep inflation low, shrink the state – by privatising state owned enterprises – and keep a tight rein on money supply … (and is not famously concerned about employment – Ed) … but let’s leave those details aside and stick with the matter of organised labour.)
Much to my surprise there is growing evidence Jacob Zuma is forcing a showdown within the Congress of South African Trade Unions (Cosatu) – and between the members of the ruling alliance (the ANC, the SACP and Cosatu).
Since 1994 it has been a good bet that tensions in the ruling alliance would flare up and then subside – but that the constituent ideological factions and organisations would always back off from a real split.
The ruling alliance has always seemed to me like a vaguely unhappy marriage that none of the parties have the resources or discipline to leave.
I have been covering South African politics and financial markets since 1997 and in 1999 I commissioned this cartoon :
The original caption read: ‘She means nothing to me’, he pleaded unconvincingly. ‘You’re the one I will always love’.
The report that accompanied the cartoon – which I originally published for the then stockbroker Simpson Mckie James Capel – made it clear that the man in the middle represented the ANC and his entreaties were addressed to Cosatu and the SACP … while his real passion (and the furtive fumbling behind his back) was for business, global and domestic. (Cathy Quickfall drew the cartoon and did a better job than I could have hoped for: the Cosatu/SACP figure’s naive and hurt innocence, still wanting to trust Mr ANC; business in a sharp suit, her disdainful look into the distance with just the busy hand behind her back revealing her urgent and furtive intent.)
It has looked for many years as if the dysfunctional relationship would continue for ever – that the parties involved (both the institutions of the ANC, the SACP and Cosatu but also the myriad ideological factions that exist across those organisations) have more to gain from being inside and more to lose from being outside.
But, surprisingly, it appears that the ruling faction within the ANC (the incumbent leadership, represented by Jacob Zuma) appears to have finally drawn some kind of line in the sand with the ‘left’ unions within Cosatu, most obviously the National Union of Metalworkers of South Africa.
The first signs that this was happening appeared when evidence surfaced that Jacob Zuma’s allies within Cosatu were moving against Zwelinzima Vavi, the now suspended secretary general and strident ‘left’ critic of corruption in the ANC and critic of the slightly more business-friendly economic policy (particularly the National Development Plan) of the Zuma government … (remembering that this was written late last year and Vavi has now been reinistated … sort of – Ed).
At first it appeared that Vavi would be got rid of by being accused of corruption or some form of financial mismanagement related to the sale of Cosatu House for a price less than it was worth. While that investigation was still on-going, Vavi handed his enemies a perfect excuse to suspend him by having sex with a junior employee in the Cosatu head-office earlier this year (last year – Ed).
Since the suspension of Vavi his allies in Cosatu, especially the biggest affiliate (the 350 000 member Numsa) has been on a collision course with both Cosatu itself and with the ANC.
The conflict is likely to come to a head at the Numsa special congress to be held on December 13 – 16.
Why do I see this as, partly, Zuma’s Maggie Thatcher moment?
Well, Vavi’s suspension is only the proximate cause of the impending collision. The ‘real’ or ‘underlying’ causes are what are important.
Vavi, Numsa secretary general Irwin Jim, his deputy Karl Cloete – and probably a majority of Numsa leaders and shop stewards … and several other groups and leaders within Cosatu) appear increasingly of the opinion:
- that Cosatu has been bullied by the Zuma leadership into accepting policy positions with which it (generally) disagrees
- that the ANC under Zuma has attempted to turn Cosatu into a ‘labour desk’ of the ANC and the alliance summits have become nothing but a ‘toy telephone’ rather than a real joint decision making forum for the ANC/Cosatu/SACP alliance
- the policy positions with which this group disagrees are, particularly, the National Development Plan, but also e-tolling, the Youth Wage Subsidy and the ANC government’s failure to ban labour brokers. (The reasons why this ‘left’ group opposes these policy measure are crucial: they oppose the NDP because it is seen as ‘neo-liberal’ and anti-socialist; e-tolling because it is seen as covert privatisation of public infrastructure; the youth wage subsidy because it segments the labour market, threatening Cosatu’s monopoly and potentially exposing ‘protected’ Cosatu members to competition from ‘unprotected’ youth workers; and the failure to ban labour brokers because those institutions are also anathema to Cosatu’s monopoly.)
- that the ANC under Zuma has been captured by a crony-capitalist regionally based (possibly ethnic) elite bent on looting the state
- that the gamble to back Zuma against Mbeki has badly misfired
There is widespread press and analyst speculation that the tensions within Cosatu could lead to the federation splitting – and in some way or another the more specifically ‘socialist’ pro-Vavi, Numsa-based group leading Cosatu – or a piece of Cosatu – out of the ruling alliance.
In what way is this ‘Zuma doing a Maggie’?
Well, because the disgruntlements of the Vavi/Numsa group (described above) are real and represent significant shifts against organised labour by the Zuma government.
If we add to the youth wage subsidy, the NDP, the failure to ban labour brokers, e-tolling in Gauteng to the very tight budgeting for public sector wage increases mentioned in my October column I think we have a strong circumstantial case that Zuma’s ANC has moved decisively to roll-back the power of organised labour.
Why Jacob Zuma and his allies might have done this is revealed clearly in the anaemic Q3 GDP growth figures of 0.7 per cent compared to the previous quarter, or 1.8 per cent on a year-on-year basis . Almost across the board analysts and economists have ascribed most of the weakness to labour unrest, particularly in the motor vehicle sector – where the recent strikes were organised by Numsa! (Again, remember that this was written in November last year … just imagine how many exclamation marks he would have used if he had written that sentence today? -Ed)
Numsa has also helped plague Eskom’s flagship Medupi project – and has undoubtedly contributed to government’s infrastructure plans looking shaky.
The ANC’s motivation is not purely an attempt to fix economic growth – and bring to an end our own ‘Winter of Discontent’. Vavi and his allies in Numsa have harried and harassed the ANC leadership over corruption – and particularly the upgrade to Nkandla – and this has clearly helped force the hand of the Zuma ANC to drawn a line in the sand with the left-wing of Cosatu – especially as the ANC enters an election and struggles to cope with this level of internal dissent and criticism.
The resignation earlier this week of Numsa president Cedric Gina (who, unlike the majority of his Numsa colleagues, is close to the current ANC leadership: his wife is an ANC MP and he probably has similar ambitions himself) is probably an indication that the Zuma/ANC allies intend contesting Numsa’s direction in the lead-up to the Numsa special congress in December. The ANC leadership has probably decided to fight it out in Numsa – and Cosatu more generally – making sure that if/when a split occurs the faction that sticks with the ANC/Zuma/SACP is as large as possible and the faction that defects is as small as possible.
The big risk for investors and financial markets associated with a possible split in Cosatu is that Vavi/Jim group is likely to contest with unions within Cosatu that currently support the ANC and Zuma’s leadership – most obviously and most unsettlingly – with the National Union of Mineworkers which has complained repeatedly that Numsa is poaching its membership. This potential for a widespread contestation of each workplace and each economic sector between a new ‘Cosatu’ and an old ‘Cosatu’ is probably the most important threat represented by the unfolding crisis.
Politically the Vavi/Jim group will likely be campaigning against the NDP, the youth wage subsidy, e-tolling and Nkandla-style corruption just as the ANC’s election campaign peaks early next year. I do not think a split in Cosatu will translate automatically into specific electoral declines for the ANC – it is possible and even likely that Numsa members who support a split could still vote for the ANC.
However, one of the big unanswered questions is whether the defecting faction has any possibility of linking up politically with the EFF. Up until now the defecting faction linked to Vavi and Jim have unequivocally rejected the EFF on the grounds that its (the EFF’s) leadership are ‘tenderpreneurs’ (much like the Nkandla faction of the ANC) who just happen to be out in the cold.
However, the EFF’s support for nationalisation of mines and expropriation of white owned farms with or without compensation does dovetail with aspects of the Vavi/Jim faction’s essentially socialist ideology.
My own view is that in the event of a split it is possible that the Vavi/Jim faction forms a ‘labour party’ which could only feasibly contest elections in 2019.
The motivation for Thatcher moving against the unions was as much about weakening the Labour Party as it was about repairing the economy – so we shouldn’t dismiss the Zuma/Thatcher comparison purely because his motivations are mixed.
If Zuma and the ANC succeed in reducing the militancy and power of organised labour it is possible that they will have contributed in a small way to laying the grounds for an improvement in public education, for a period of recovery and even extended economic growth.
It’s a risky – and complicated – business, but it was for Baroness Thatcher as well.
* It was, in our eyes, a fine hat and we cocked it jauntily. And thus attired, and to our very great satisfaction, we successfully answered all the important epistemological questions of the day. We let the cowards flinch and traitors sneer as they boastfully proclaimed the end of history. We were history … or at least, through the complex functioning of the intelligentsia in Marxist Leninist theory … we were history’s engine made flesh. And the race wasn’t over … we were merely getting our breath back.
I am on my way to London to speak to the funds that buy and sell South Africa’s corporate and government bonds i.e. the market that sets the price at which the world is prepared to lend us money.
Daily I become more convinced that the South African political economy is, like quick clay “so unstable that when a mass … is subjected to sufficient stress, the material behavior may transition from that of a particulate material to that of a fluid.”
The other metaphor I was fiddling with was: all the cards have been thrown in the air and where they will land, nobody knows. (I’m sure there is an elegant song or poem that says something like that, any help there would be appreciated … that request is the WordPress equivalent of a #twoogle – Ed)
But before I get onto the more lofty questions about the future of life, the universe and everything, I thought I would send you my latest news update – so you can see the gradually building case for my sense that everything has changed. (Thanks as always to BNP Paribas Cadiz Securities for generously allowing me to republish this – albeit a few days later – here.)
- A new socialist party appears on the horizon of South African politics … it’s not all good news, but nor is it all bad
- Murmurs about vote rigging – a leading indicator of political instability
- Mining policy meets with surprising levels of push-back from the private sector – in the Business Day at least
- The future push for the NDP, Hitachi and the ANC, final takes on the budget and why South African telecommunications infrastructure is a very fat golden goose
Numsa confirms it will launch socialist party
The biggest union in the country is effectively in the process of being expelled from the ANC- aligned Cosatu and has announced its intention to establish a party, provisionally to be called the United Front and Movement for Socialism.
“We need a movement for socialism,” general-secretary Irvin Jim told reporters in Johannesburg on Saturday.
He (Jim) continued on to argue that ‘leadership of the national liberation movement as a whole had failed to lead a consistent radical democratic process …’ (Jim paraphrased in numbing detail in SABC Online, Sunday, 2 March 2014, 17h49.)
Numsa has been given seven days (from last Thursday) by the Cosatu NEC to provide reasons why it should not be suspended from the federation. The main issues motivating the suspension are that Numsa has been openly critical of the ANC and the Cosatu leadership and that Numsa has begun competing with, especially, the National Union of Mineworkers, in defiance of Cosatu’ s one-industry-one-union slogan.
This is unfolding much as predicted. The ANC under Jacob Zuma has decided (or been compelled) to impose discipline on the ruling alliance and force a degree of compliance with the various policies of the ANC and its government. The discipline sought by the ruling group within the ANC is motivated by apparently divergent concerns. On the one hand, Jacob Zuma and his allies are attempting to get the left-wing to stop attacking them (Jacob Zuma and his allies) as corrupt and incompetent. On the other, Jacob Zuma and his allies are attempting to force a degree of support for the National Development Plan (NDP), a policy that the left-wing generally sees as ‘neo-liberal’, anti-poor, anti-working class and conservative in fiscal and monetary terms.
There is a fine tension here between positives and negatives (for the audience NB writes for … mainly fund-managers – Ed). The NDP has been widely welcomed in financial markets. But the corruption associated with the holding of high office in South Africa is becoming something of a crisis for investors of all stripes. It is as inaccurate to think of Jacob Zuma’s Nkandla faction as purely the champion of market friendly policy as it is to think that Irvin Jim, Zwelinzima Vavi and Numsa are purely the anti-corruption champions of South African politics.
For now, we need to watch for the formation of the socialist party, probably at or before the year-end. Such a party will have a multiplicity of impacts including (but not limited to) undercutting areas of ANC support and forcing the ANC towards finding policies that stimulate economic growth.
(By-the-way I feel it is likely that this new party will have more substance and longevity than the EFF and through a variety of possible mechanisms – including some kind of alliance or even amalgamation – could subsume much of the EFF support and intellectual leadership. But that sort of speculative concoction will follow this post some time over the next few days.)
UDM says beware of vote rigging
The Sunday Independent (2 March) reports that Bantu Holomisa of the United Democratic Movement claimed that ‘rogue elements’ in the Independent Electoral Commission will help rig the 7 May election to ‘facilitate the underperforming ANC’:
“The ANC is very concerned (about shedding votes), hence they are pinning their hopes that those rogue elements will run the elections, so rigging will be on the high. There is no doubt about that” – Bantu Holomisa in the Sunday Independent, 2 March 2014.
The effectiveness, reliability and constitutionality of the Independent Electoral Commission have been important guarantors of aspects of South African democracy. While Holomisa’s allegations are not substantiated (in the aforementioned interview), the fact that such allegations are made can be an important leading indicator of long-term political stability. People and political parties must trust the electoral system if they are to accept the outcome of elections.
(Holomisa’s ‘rogue elements’ probably refers to Pansy Tlakula, chairperson of the IEC, who was found last year by Public Protector Thuli Madonsela to be guilty of improper conduct and maladministration with regard to the R320 million lease contract for a new head office for the IEC. Tlakula is currently challenging Madonsela’s finding in courts. The IEC and the Public Protector are both institutions established in terms of Chapter 9 of the South African Constitution with specifies that they are designed to “strengthen constitutional democracy in the Republic” – Chapter 9 of the Constitution of the Republic of South Africa, 1996.)
Mining policy pushback – in the Business Day anyway
Today’s Business Day leads with a story claiming that there are ‘growing rumblings’ from the mining industry about the ‘once empowered, always empowered’ equity provisions in the Mining Charter. The issue in this case is that the government will this year audit the mining companies’ requirement to be at least 26% black owned. Neal Froneman, CEO of Sibanye Gold, is threatening to go to court to have Sibanye’s empowerment transactions counted in the audit, even if the black beneficiaries have since sold out of their equity.
Mining companies are issued licences pursuant to them meeting certain criteria with regard to Black Economic Empowerment, employment, social, community and labour obligations.
The series of stories in the Business Day about this matter smacks a little of a campaign by the newspaper – nothing wrong with that but then consume them tentatively. The story is worth reading just to catch the tone and tenor of Neal Froneman – who sounds fed-up to the point of rebellion. Catch it here.
The article quotes Mike Schroder, a portfolio manager of Old Mutual’s gold fund, at a mining conference last year: “One cost that I can’t chart is BEE (black economic empowerment). It doesn’t affect the bottom line or the EPS (earnings per share) or PE (price:earnings) ratios, but every time a BEE deal is done, our pension funds, our provident funds, our unit trusts have to chip in.”
I expect these legislative interventions by the government to strengthen not weaken over time. It is my initial impression that part of the ANC’s answer to the populist incursions onto its territory by the EFF will be to significantly strengthen ‘transformation obligations’ on the private sector – and in return the government will back the private sector against the labour unions. I think these trends will become visible before the end of the year and will be accompanied by greater emphasis on the NDP and by the axing of the ANC’s left-wing elements. Thus, the ANC will attempt to reconfigure South African politics, basing itself more tightly on the emerging property-owning and middle classes than previously, and in a loose alliance with the private sector. This feeds into my ‘hoping for the best’ view of last week – although we should be cautious, because these complicated trade-offs will as likely end in tears as smiles.
Bits and Pieces
- Last week, Helen Zille, leader of the opposition Democratic Alliance, became involved in an unseemly Twitter spat with City Press journalist Carien du Plessis. Actually, it was only Zille doing the spatting and (probably to Zille’s mortification) du Plessis wrote a calm and thoughtful defence of herself in the City Press on Sunday (2 March 2014). In the Twitter exchange, Zille essentially accuses du Plessis of apologising for being white (as far as I can make out). Zille is feisty and combative and there have been several ‘scandals’ around her phraseology and views. She definitely skirts the boundary of what is acceptable in the highly circumscribed and sensitive language of political debate in ‘post-apartheid South Africa’. Will this lose the DA any votes on 7 May? Will it gain the party any? I have no idea.
- Business Day editor Peter Bruce’s Monday morning column, ‘
The Cutting EdgeThe Thick Edge of the Wedge: The Political Basis for budgets (if he perchance comes to these lonely shores and find’s that error, I ask his forgiveness in advance) should be required reading for anyone interested in the speculative intersections between South African politics and economics. This morning, he claims that a normally reliable informant, someone “spectacularly close to the Presidency”, told him that Trevor Manuel will stay on in government as a super-minister in the Presidency in Zuma’s next administration, that other ‘left leaning ministers in the economics cluster’ (he probably means Ebrahim Patel in EDD and Rob Davies in DTI) will be shifted aside, that the ANC will hold its vote above 60% on 7 May, that the new administration will make “a big and forceful push after the elections to begin implementing the National Development Plan”, that the EFF and Numsa’s new party will not fly, and that Zuma will secure his safety from prosecution for fraud post his presidency by ensuring that his ex-wife and African Union President Nkosazana Dlamini-Zuma is his successor. (The argument in Peter Bruce’s article being: “She would not put the father of her children in jeopardy – which I don’t necessarily buy, but is interesting anyway). This view concurs quite closely with my view articulated last week that it appears, shorn of its ‘left’ and ‘right’ factions, the ANC will be obliged (and set free) to pursue vigorous economic growth if it is to win the 2019 election.
- Hitachi has bought back the ANC stake (held by investment company Chancellor House) in Hitachi Power Africa as the shareholding constituted ‘a conflict of interest’. You don’t say. Hitachi Power Africa won R38.5 billion of contracts from Eskom for the Medupi and Kusile power plants. Nuff said.
- The weekend press had a few ‘final takes’ on the budget. The two I found most interesting were Peter Bruce, in his aforementioned column, writing that it was “a budget of almost unsurpassable banality”, and Numsa’s Irwin Jim saying at his Johannesburg press conference on Saturday that the budget “more than anything else confirms the right-wing shift in the ANC/SACP government”. I won’t say anything.
- Telkom CEO Sipho Maseko wrote a paid-for ‘open letter’ in the Sunday Times yesterday accusing MTN SA and Vodacom of acting against the public interest (of expanding access to and lowering costs of a ‘modern communications infrastructure’) by opposing lower termination rates. Maseko claims that Telkom had subsidised Vodacom and MTM to the tune of R50bn over two decades. Professor Alison Gillwald of Research ICT Africa was quoted in today’s Business Day (by the excellent Carol Paton) as saying “Telkom is right. MTN and Vodacom had an extraordinary termination rate asymmetry with Telkom over 20 years.” She went on to say that, during the period of asymmetry, the private companies rolled out “enormous infrastructure that has improved access.” Finally, she says: “While one wouldn’t want to kill the golden goose, she was a very fat goose” … which I thought was a good enough turn of phrase to deserve republication anywhere.
* That is deliberately missing an apostrophe – the ‘*’ makes you think it might be there and you are forced back and forward between the noun and verb meaning. (Get a life! – Ed.)
Herewith is an extract from my weekly news summary/analysis of what I thought was important in the main weeklies.
Freedom Day, April 27 – nineteen years on from the first democratic election … a good story by-and-large
City Press has a useful op-ed page by the always excellent Ferial Haffajee (who is also the editor) based on the South African Institute of Race Relations (SAIRR) handbook 2012. Interestingly, while SAIRR has become an ever stronger critic of the ANC, CEO Frans Cronje acknowledges that “the last 20 years have seen a revolutionary improvement for all South Africans” – a fact that is apparent from the graphic representations (each one manually scanned from the City Press … so apologies for the quality) below.
Worries about an Arab spring, and social unrest are often based on the assumption of intractable negative social trends. Haffajee, a strong social and political critic of government herself, says: “Over the years of covering South Africa’s freedom, I’ve come to learn this about us: We don’t count our lucky stars often enough, nor do we give ourselves credit for the things we do well. Why this is, I am not sure. But the answer probably lies inherent in the way power was peacefully transferred, but not decisively won.” These graphs run counter to popular wisdom in a number of ways, perhaps the most important one to point out for domestic consumption is that the idea that whites are the new oppressed, and the losers in the last 19 years (as argued in powerful sections of the media and Solidarity trade union, for example) is obviously, even elaborately, wrong.
Businesses unanimous in condemning draft Licensing of Business Bill
A proposed bill will force small businesses and traders to register with, and be licenced by, local councils and municipalities (“every greengrocer, car dealer, pharmacy, and livestock seller … it includes every service provider, from lawyers to hospitals and hotels, car parks, airports, freight carriers and advertising agencies” – Free Market Foundation quoted in Business Report, the Sunday Independent’s business section). The report links the bill to the latest Global Entrepreneurship Monitor that shows SA entrepreneurship levels to be the lowest in sub-Saharan Africa.
The entrepreneurship survey is deeply disturbing – although not wholly surprising and we agree with Business Unity South Africa when it says (as quoted in the same story) that the bill “will … retard the growth and development of SMEs and further harm a sector which is presently struggling with a high business failure rate.” However, we understand the real target of the Department of Trade and Industry which is floating the legislation is to restrict illegal hawking, particularly of the flood of cheap, illegally imported manufactured goods. Legislation often has unintended consequences, which is the reasons there is extensive public consultation before laws are placed on the statue books. The DTI’s instincts are to fiddle in the economy, but its intention here is undoubtedly correct, it just needs to find the best mechanism.
Wage bargaining and the strikes season is upon us
The City Press business section says “major wage talks scheduled for the mining, motor manufacturing and chemical industries haven’t even begun properly.”
“A full blown teachers’ strike is now on the cards after teachers’ union Sadtu last week presented President Jacob Zuma with a 21-page mix of labour and political demands” – City Press (those demands include the removal of Basic Education Minister Angie Motshekga and her director-general Bobby Soobrayan.
The Motor Industry Bargaining Council (MIBC), where Numsa dominates sets wages for 160 000 workers in the sector and this year will open with a demand for a 20% across-the-board increase, an industry wide minimum of R6000.00 a month and a ban on labour brokers – later this week.
The Chemical Industry also starts next week (sectors involved are “fast moving consumer goods, glass, industrial chemicals and pharmaceuticals” – City Press.)
The most widely anticipated talks are those coming up in the Chamber of Mines for the gold mining industry (and concurrently in the coal sector) – the first since illegal strikes rearranged the labour landscape and ushered in a plethora of worker committees refusing to work through unions. “The handsome increases some of the mining strikes won last year, by bypassing the formal system, will exercise the minds of everyone at the table …” City Press.
The article also says “the Chamber of Mines is meeting with Amcu again this week to try and arrange its place in the forum … where Amcu will have to share Num’s mandate for the populous lower bands.”
“The plan for a new platinum forum echoing the gold and coal forums at the chamber has not made any progress. This while mining companies will see their standing wage agreements expire this year” – City Press.
South Africa has a predictable strike season, the timing of which coincides with the expiration of bargaining chamber agreements in different sectors of the economy. Every year it appears that a wave of strikes is enveloping the country, but at some time during the gloom, journalists twig to the fact that this happens every year – much of the flurry in normal and predictable. Strike action during these times can appear to cascade through the economy and we need to be clear what is ‘normal’ and what is ‘abnormal’. The platinum and agriculture strikes last year were abnormal and have, to an important degree, contributed to destabilising the system – by creating unrealistic base expectations and by encouraging workers to bargain outside of the unions and structures of the central bargaining system. This does lay the grounds for serious uncertainty this year. Adding to the tension is the apparent attempt of Zuma and his strategist and allies in Cosatu to get rid of popular Secretary General Zwelinzima Vavi. As we discuss below, this could contribute to serious disturbance in industrial relations this year – disturbances that are distinctly not part of the normal cycle.
The growing tension in the ruling alliance is putting Cosatu under intense strain
The Sunday Times says it has seen and analysed Cosatu’s schedule of rallies and official speakers for May 1 and argues: “May Day celebrations will once again expose the deep division in Cosatu” – a significant part of the tension concerns Num leaders refusing to address rallies in the Eastern Cape, an important labour sending area for platinum mines and likely strongholds of Amcu where Jacob Zuma’s Num allies are might to be embarrassed, heckled or driven from the stage.
City Press attempted to tote up the “for and against Vavi” unions indicating membership numbers – using figures drawn from the Cosatu 2012 national conference official ‘organisation report’- and it’s own insights into which groups of union leaders are Zuma allies/Vavi critics. It is not an extremely useful exercise because each union has for-and-against sections, with only Numsa and Num being large and significant unions with more clearly defined “for and against” positions. However the forces against Vavi appear to have the numbers if they need them, although it is not clear that this translates directly into votes in the forum that will make the decision.
This morning an opinion column written by this analyst exploring attempts by the Zuma allies to get rid of Zwelinzima Vavi will be published in the online newspaper The Daily Maverick. Here is an extract that contains the most salient “so what?” for financial markets:
“Shafting Vavi could conceivably split Cosatu – and even lead to the formation of a new left or worker-based political party. Take Numsa, all the other trade unions and bits of trade unions that support Vavi and add the individuals and organisations Vavi has been accused of flirting with (in the National Anti-Corruption Forum and earlier in the Civil Society Conference – October 27 2010) and dig out all those leftists long ago alienated from the ANC (think the brilliant and creative Zackie Achmat and those connected to him); go wild and add Amcu and some not yet indiscernible political formation emerging around Amcu or even around Agang … and you have the grounds for a real and serious challenge to the ANC. At the very least shafting of Vavi might not equal clearing Cosatu of his influence. It might equal clearing the ruling alliance of Cosatu … leaving Zuma Incorporated clinging to a fading Num and a few cronies.… it is a risky game. One of the by-products could be another catastrophic year on the industrial relations front. If Cosatu splits, it won’t be a neat division between different unions … the fault lines will run through individual unions and the disturbances generated by the Amcu/Num contest could become a model for the whole economy.”
The SACP joins criticism of the National Planning Commission – final nails in Trevor Manuel’s coffin
To add to the general factional confusion in the Ruling Alliance, close Zuma allies, the SACP has published a discussion paper that has a “sharp, pointed and nuanced interrogation” of the NPC (which produced the much vaunted, in financial markets and by business, National Development Plan). “We cannot have a free-floating NPC, with an apparent presidential endorsement and using the budget of the presidency” says the SACP discussion document.
Actually, to my surprise, I agree with the main SACP criticism: the plan “does not have a strong organic link into government and its diverse planning apparatuses and processes.” Without such links, the NDP was always going to be a fig-leaf covering up the paucity of any actually strategy for economic development in the Zuma administration. The SACP can’t hide the fact that what it mostly dislikes about the NPC or the NDP is business’ participation in the formulation of the ideas and that Cosatu is starting to come out ever more critical of the document. I expect the NDP to go the way of a myriad similar (although never quite as thoroughly and carefully wrought) such plans from South Africa’s recent past.
Bits and pieces
- City Press spent a day in the DRC’s Eastern Region with the M23 guerrilla movement, meeting them in Bunagana on the Rwanda border. The UN is deploying a brigade as a result of UN resolution 2008, which accuses the M23 and other rebels of mass rape, murder sprees and of recruiting child soldiers. The M23 insisted to City Press that Khulubuse Zuma (a nephew of the president) won valuable oil concession on the shores of Lake Edward and in exchange Jacob Zuma has committed “elite troops and top-drawer fire power to the UN force to smash M23.” The M23 guerrilla movement is trying to play into South African politics by accusing Zuma – sounds like one group of wolves trying to accuse another to cover up their own predatory behaviour. I have seen no evidence to back the idea that the troops are being sent to protect the Zuma family’s interests.
- The Dina Pule saga continues to become ever more deeply incomprehensible. City Press claims Dina Pule has alleged that famous soccer club owner Jomo Sono is behind a smear campaign against her to attempt to blackmail her into awarding his (Sono’s) company a the multi-billion rand set-top-box decoder contract. Pule is due to appear before Parliaments ethics and member’s interests committee on Thursday or Friday and the sooner political clarity comes to the telecommunications sector, the better.
- Regional leaders are expected to hold a summit soon to discuss Zimbabwe’s readiness to hold elections, amid warnings that time is running out to ensure the poll is free, fair and credible – Sunday Independent. Lindiwe Zulu, President Jacob Zuma’s foreign policy adviser and a key member of his facilitation team in Zimbabwe confirmed that Zanu-PF had recently thrown up obstacles to ‘proper monitoring’ of the Zimbabwe negotiations. “But she said her team had persuaded Zanu-PF that as SADC was supervising negotiations, it had the right and obligation to attend whatever Jomic (Joint Monitoring and Implementation Committee) meeting it chose to. Zanu-PF conceded the point” – Sunday Independent.
- Senior managers at PetroSA have been accused in the Mail & Guardian of conspiring to loot billions from the national oil company. It is a big story, dense with details and looks extremely damaging to those who stand accused. I will be monitoring the implications.
My Sundays are spent combing through the Mail & Guardian, City Press, the Sunday Independent, the Sunday Times – and a host of online news sources.
I do this to compose a news review and analysis to be on the desks of my clients by 06h30 on Monday mornings.
It is an arduous task, made all the more so because to get to the good stories one has to plough through the turgid rubbish, misinterpreted rumours and exaggerated rehashes of corporate, government and party press releases.
There are many exceptions. Johnny Steinberg in the Sunday Times is peerless. Percy Mabandu’s Dashiki Dialogues in City Press is a welcome respite.
At least half of the content of the weeklies is good, solid stuff, written by thorough and skilled journalists (too numerous to name here) and many of them have been kind and helpful (those are slightly different things) to me over the years and I would hate to impugn their professionalism.
But it’s the other half of the content that makes my Sundays a gloomy, brooding time of the week – and there are moments when I feel a visceral antipathy to the physical presence of the newsprint scattered around my apartment.
Okay, I am glad I got that off my chest … anyway, here is an extract from yesterday’s news summary – obviously all of it taken from that part of the weeklies written and edited by the thorough, professional, kind and helpful journalists I was refering to earlier …
Notes on the weekend press 19.11.2012
There were some interesting and revealing leaks in the Sunday newspapers:
Confidential NPA communications raise questions about grounds on which Zuma corruption charges were dropped in 2009
The Sunday Times led with an exclusive based on 300 pages of leaked internal emails, memos and minutes of meetings of the National Prosecuting Authority (NPA) concerning the dropping of corruption charges against Jacob Zuma on 6 April 2009. The NPA failed to stop publication in a high court interdict on Saturday.
The story in the Sunday Times indicates that the senior state prosecutors felt they had a winnable case against Zuma and that attempts by Zuma’s legal team to use the ‘spy tapes’ to argue that the prosecution was politically motivated was “blackmail” – and that the prosecution should have gone ahead despite the threats from Zuma’s legal team.
So what? Good question. Zuma’s ‘Stalingrad Defence’ against the corruption charges (fighting door-to-door, street-by-street; retreating, but at enormous cost to the enemy) probably has years to run – pushing any possibility of a trial into the dark and distant future. Anyway, an ANC that uses its overwhelming parliamentary majority to block a motion of no-confidence in the president (as it did this week – see below) is unlikely to shrink from passing legislation that exempts its leader from the indignities and distraction of a corruption trial.
Internal reports of patronage, factionalism and vote-rigging
Two reports to the weekend meeting of the ANC NEC were leaked to the Sunday Independent and City Press, one from Nkosazana Dlamini-Zuma and one from Gwede Mantashe. They both paint a bleak picture of bitter struggles for power in the ANC.
Dlamini-Zuma’s report deals with 425 internal ANC complaints about the 2011 municipal elections – and concludes that a significant number of ANC councillors were fraudulently nominated. “In many cases”, she argues, “ANC branches and members are no longer viewed as living, dynamic units consisting of human beings … (They have become) membership forms that constitute a bulk commodity”.
Gwede Mantashe, in a draft of his secretary-general’s report, describes intense factionalism “bleeding the organisation”. He suggests the ANC Youth League has positioned itself as a “counterforce” and that “the determination of some members … to destabilise the organisation and disrupt meetings as a tactic to get what they want … is a clear sign of a revolutionary movement that has been infiltrated.”
So what? It is a plus for the ANC that its leadership is anxious and forthright about the battle for patronage and position that takes place within its ranks. It might even be a plus (for the ANC) that all that energy is going into ANC leadership contests – because it is an acknowledgement that the ANC remains, for most intents and purposes, the only show in town. However, at some point, voters are likely to become disillusioned if the party is better at ensuring economic advancement for its leaders than it is at getting the government to deliver services more effectively.
Finally, the fact that high-level confidential internal party reports like these keep finding their way into the press is an excellent demonstration of the ills those very reports rail against.
Motlanthe wanted no confidence vote to go ahead
The deputy president chairs the ANC’s political committee in parliamentary which gave the nod for the no-confidence in Zuma motion to be debated in the parliament. This was overruled by the party’s caucus the next day.
So what? This is being interpreted as another blow to Motlanthe’s electability at Mangaung. As always, Motlanthe actually took no view during the committee meeting – it was National Council of Provinces chairman Mninwa Mahlangu and parliamentary speaker Max Sisulu who were in favour of allowing the motion to be debated and ANC chief whip Mathole Motshekga who was opposed. Motshekga convened a special sitting of the ANC’s parliamentary caucus when he lost the argument and the caucus hastily overturned the decision. We think the impact of this matter on Motlanthe’s election chances is less interesting than the fact the ANC refused to allow such a debate to take place – a breach of the etiquette, if not the rules, of parliamentary democracy. The DA filed papers on Friday at the Western Cape High Court to seek an urgent interdict to compel the Speaker of the National Assembly “to uphold the constitutional right of the opposition to have this motion debated” (DA parliamentary leader Lindiwe Mazibuko in a statement on Saturday).
Farmworker conditions and unrest
All the newspapers reviewed here (Mail & Guardian, City Press, Sunday Independent and Sunday Times) had stories relating to the farm strikes and the unrest in the Hex River Valley, Ceres, Touws River and De Doorns areas. The M&G insisted the strikes were “organic” (occurring without any form of organisation), although it also ran the assertion by commercial farmers union AgriSA that “political forces have directed the strike”. Meanwhile, government (in the person of agriculture minister Joemat-Petterson) and Cosatu (in the person of provincial secretary Tony Ehrenreich) have unsuccessfully attempted to portray themselves as at the vanguard of the angry workers.
So what? Wage levels in the sector have come as something of a shock to much of the media (the sectoral determination sets the minimum wage for most of these striking workers at ZAR69 per day.) Clearly, Cosatu and the government are worried about a Marikana-type outcome, where workers turn on the union and government with as much – or even more – ferocity than they display to the employer. This is, ultimately, a wage strike that is part of the wave that started at Impala in January and is likely to burn all the way through the economy, especially in areas poorly represented by trade unions and in areas where wages are out of kilter with the rest of the economy. If there is a possibility of workers achieving better settlements outside of the collective bargaining system, that is the route they are likely to pursue. Already the government is reopening the minimum wage determination process for this sector – something that would not have happened without the strikes having lit a fire under the government and its trade union ally. The logic must be that the wave will continue to cascade until it has modified basic wages throughout the economy. This probably means that this driver of labour unrest will be present for at least the next 18 months.
In other news:
- Nkandlagate bubbles on – with several newspapers disputing Zuma’s claim that he is paying off a bond on his house. Last week Zuma went off-piste in the parliamentary debate about his Nkandla homestead and won many hearts with an emotional defence of his right to own a home – a home which in his case had twice been burned down in violence in the province. “My residence … has been paid for by the Zuma family,” he is quoted in the M&G. “All the buildings and every room we use … was built by ourselves as family and not by government. I have never asked government to build a home for me, and it has not done so.” The truth will be eventually out, but it appears that it will be an arduous and painful birth.
- City Press ran a fascinating extract on Doug Fosters book about “the younger Jacob Zuma”. Amongst the many interesting bits and pieces was the huge esteem in which Zuma is held by his family – and especially his brothers. The esteem comes, in part, from his early brilliance at stick-fighting, “a form of combat in which one turned the fury of an adversary back against him … Ukuxoshisa was a test of quickness, balance and misdirection. Winning blows were landed with whip-like motions, involving a sudden flip ….” Both Thabo Mbeki and Zuma’s current competitors should have benefited from this paragraph based on an interview with one of Zuma’s brother’s: “Sometimes, the young boy held his sticks casually, as if on a lark, as Mike remembered it. Occasionally, he even turned away from his opponent to crack a joke with other kids standing around. When his opponent dropped his guard or joined in the teasing, though, he would pivot swiftly and strike suddenly, sweeping his opponent off his feet.”
- Cosatu has come out, according to two of the papers, with a strong advice to Motlanthe to back off from challenging Zuma at Mangaung. They look set to join most ANC supporting structures in proposing Cyril Ramaphosa for deputy president in the event that Motlanthe doesn’t back off.
- The Democratic Alliance is due to hold its elective congress next weekend – and despite lots of minor contests, it looks like Helen Zille will be unopposed for party leader.
- Several news sources carried stories similar to the Business Times’: “Happy Xmas, Tokyo”. The assertion is “Human Settlements Minister Tokyo Sexwale and his partners in Mvelaphanda Holdings are set for a festive bonus of what could be R265-million on the sale of its stake in Absa.”
It is interesting to me – and might be to you – to look back at what I thought about Jacob Zuma’s rise to power in 2009.
Here is something I wrote during the April general election – with a few minor edits. It is becoming increasingly relevant, as “the left” is backed into a corner and the Malema style populists seem to hold sway.
Bread and Circuses
Opinion polls indicate that the ruling African National Congress will shrug off five years of bitter leadership struggles and a sea of bad news to emerge from the election with a close to two-thirds majority.
But what it has cost for the ANC to turn the headwinds into tailwinds will be a hard price to pay.
The view divides neatly and sharply between the shorter term and the medium-to-longer term.
For some time South African political risk has been elevated due to a number of factors associated with the rise of a political faction around current ANC president and erstwhile country president, Jacob Zuma. The concerns have…
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This is a summary of my analysis of the news from of the weekend press (August 19) – and radio and TV commentary – concerning the events in which 34 striking miners were killed by police last Thursday (August 16) at Lonmin’s Marikana mine in Northwest Province. (Written Sunday night, so some new facts might have come to light that I haven’t included – especially not Julius Malema’s “breathtaking political coup yesterday” – see Carol Paton’s lead story on front page of Business Day today … here is a link.)
The police shootings came after a week (starting August 12) in which workers launched a violent wildcat strike reportedly demanding a wage increase to R12500.00 p/m – from the current average of about R4500.00 p/m for Rock Drill Operators, who were the main constituents of the approximately 3000 workers who had gone on strike (the wage demand issue was dissected here – a story that points out that the real wage differential between what the workers were demanding and what they were getting was actually much narrower.)
During the course of the strike, prior to the police decision to remove the workers from a nearby hill they had occupied, approximately 10 people had been killed, including members of the police force, security guards, and ordinary workers – perhaps strikebreakers, although this is still unclear.
Julius Malema visited the area on Saturday and addressed the strikers – and is the only political leader who has been welcomed to do so. (Since I wrote this Zuma also managed to address the strikers).
President Jacob Zuma’s office has announced that a (judicial) inquiry into what happened will be established (see terms of reference and other details here.)
Minister of Mineral Resources Susan Shabangu together with Minister of Labour Mildred Olifant announced on Saturday they will be establishing a “task force” to address the problems at Marikana and deal with wider problems in the platinum sector.
It would be difficult to overstate the depth and variety of impacts of this event. Every news source reviewed here took the position that what had happened at Marikana was impossible to explain through any one category of cause and thus a multiplicity of causes was the approach taken across the board – although usually ending with the statement that the society and its top political leaders must, ultimately, carry the responsibility. Thus the commentary will be broken into the categories most commonly used in the Mail & Guardian, City Press, Sunday Times and Sunday Independent:
Marikana as union rivalry
All the weeklies placed the rivalry between the mainstay Cosatu union, the National Union of Mineworkers (Num) and the Association of Mining and Construction Union (Amcu) as the central explanation of what happened at Marikana. The consensus was that Num is slipping throughout the mining sector, having become too close to management (I doubt this is something with which either the union or management would agree) and increasingly representative of white-collar workers – and not RDOs and their assistants, and others who do much of the difficult physical work deep underground. “Amcu leaders and members launched ferocious attacks on Num members who were not prepared to go on strike”, said the Sunday Times lead editorial, summarising the most popular explanation for the central cause of what happened at Marikana. This ‘inter-union rivalry prism’ has much deeper implications when we consider the fact that Num is the key element of support for Jacob Zuma’s re-election at Mangaung in December this year, and Cosatu itself is three weeks away from its National Congress where its own leadership struggles – which are likely to be deeply influenced by what happened at Marikana – are being driven by those within the ANC – a matter explored under a headline below.
Marikana as Lonmin management failure
All the news sources reviewed here expresses the view that wages were unacceptably low in the platinum sector and that management was in some way culpable of feeding the conflict in the workforce by having attempted to make a separate deal with Rock Drill Operators at Marikana. These stories also tended to quote a 5 year study by the independent, “faith based”, Bench Mark Foundation – by chance (according to the foundation) released during the strike – that is sharply critical of the platinum mining companies for having failed to fulfill social obligations to workers and surrounding communities. (Sunday Times, Mail & Guardian, City Press)
Marikana as policing failure
There was unanimity throughout all the news sources reviewed here that the police had handled the situation badly – and that deaths were, in part, a result of improperly armed (with automatic rifles) and poorly led police forces on the scene. Most accounts went to some effort to explain that the police had been fired on by strikers, that (at least one) member had been hacked to death by strikers during the course of the action (City Press, Sunday Independent) and that at least one shot came from the strikers during the confrontation – although the only weapons collected by police after the action were pangas, sticks and iron bars … no guns (Philip de Wet corrects this in the comments sections below, saying police found 6 guns including the one taken from the murdered policeman … I am looking for a link to the Phiyega statement and will put it here when I find it.)
Most of the sources agree that “They were armed to the teeth and advancing on the police. This is not to justify the killing, but we must be aware that today we could just as easily have been talking about the massacre of policemen” – Mondli Makhanya, Sunday Times. However, the Independent Police Investigative Directorate (IPID) has announced that it will investigate the killings and ”will seek to establish if the police action was proportional to the threat posed by the miners” – Pierre De Vos in Constitutionally Speaking.
Marikana as societal break-down – as a result of economic inequality
As mentioned, it is difficult to overstate the degree of anxiety and hand-wringing about the state of the South African democracy that came through in all the news sources reviewed here – and in television commentary throughout the weekend. The general point of concern was that the levels of inequality (raised in this case by low wages and poor working conditions of miners) will, here-on-out, be a constant destabilising element to this society. Commentary also focused on asserting that the mechanisms by which society negotiates clashes of interest – including the labour market collective bargaining regime – are broken (evidenced by this incident and the more-widespread-than-ever, and often violent, service delivery protests). Thus political stability was raised as a matter of concern in all 4 of the weeklies.
Marikana as driving exit of foreign investment
The business sections of the three Sunday newspapers all pointed out that the price of platinum rose sharply on the back of what had happened, but that Lonmin share prices fell precipitously. “Fear clashes will spread” was the lead Business Times headline and several stories suggested that “foreign investors” would exit because of endemic labour conflict and unrest. “The police killings … ‘have taken things to a new level, spreading the fear to currency and bond market investors’”, Business Times quoted Nomura’s Peter Montalt
Marikana through the prism of Mangaung.
Two issues lay the ground for Marikana to be perceived through the prism of the pervasive leadership contest in the ANC. The first is that Num itself is the key pillar of ANC support in the trade union movement (it’s the biggest union in Cosatu) and the force that swung Cosatu support for the ANC at the formation of the trade union federation in 1985. More specifically, Num, under the leadership of Frans Baleni, is backing Jacob Zuma’s bid for re-election at Mangaung in December. The powerful – and very left-wing – National Union of Metal Workers of South Africa (Numsa) under Irvin Jim – and backed by Cosatu Secretary General Zwelinzima Vavi – is opposed to giving carte blanche backing to Zuma (mostly because of corruption concerns) and it is speculated that this faction might back Kgalema Motlanthe against Zuma at, and in the lead-up to, Mangaung. Several newspapers – but particularly the better informed Mail & Guardian, suggested this dynamic will lead to an attempt (by pro-Zuma forces) to unseat Zwelinzima Vavi at Cosatu’s national congress in three weeks’ time.
Secondly, Julius Malema immediately stepped into the breach at Marikana – as he did at the comparable (because it was also driven by the Amcu/Num contest) Impala strike earlier this year. Speaking to the workers on Saturday 18 – and note he was the ONLY political leader who has been allowed, by the strikers, to address them and he received a warm reception – Malema called for the resignation of Nathi Mthethwa (Minister of Police and key Zuma ally) and Jacob Zuma himself.
The faction of which Malema is a part and the factions that have a tactical alliance with him are likely to make as much as possible of the Marikana killings, and attempt to lay the blame directly at Zuma’s door (as almost all news sources reported Malema doing on Saturday.)
- There is a risk that it spreads – to other platinum operations, to the mining sector more generally and even to the society at large. The transmission mechanisms would be Num trying to win back ground it is losing from Amcu as well as via the already restive squatter camps and township neighborhoods. Municipal IQ, an organisation that monitors various aspects of municipalities, but particularly service delivery protests, points out that we had already passed, in July, the highest yearly totals of such protests since 1994. This outcome would not be my first case scenario. What drove the violence and the series of errors (of commission and omission) of the unions, management, the police and government that led to the killings are unique to that incident. If it does spread, the most likely first stop would be other platinum mines, and therefore the first impacts would be on supply of the metal.
- The feed through into conflict between unions – obviously between Num and Amcu, but also within Cosatu, between Num and Numsa – could presage a generalised increase in levels of industrial unrest.
- Government is likely to turn its full attention to the “social” performance of the mining companies – under the Mining Charter. Expect a thicket of new regulations – and a generalised attempt to focus the blame on the companies.
- Jacob Zuma’s comfortable lead in the Mangaung contest (and this is purely my opinion) is gradually narrowing as we get closer to the December ANC National Conference. The Marikana incident is likely to weaken his position further – and this in the context of a series of defeats in the second biggest ANC province, the Eastern Cape – which until a year ago was considered safe ground for Zuma.
Nedbank chairman Reuel Khoza provides the lead headline in today’s Business Day as “warning of a rogue state future for SA”.
So imagine if you could, for a moment, that you are playing a sports game.
As in a dream, you suddenly realise you don’t know the rules; you don’t know how to score, who’s on your side or what the parameters of the field are.
This could be a comical situation – and I am sure I remember boys from my school days whose mystification on the rugby, cricket or hockey fields would bring a gentle smile to our (his team mates’) faces.
But this is also the stuff of nightmares: an inscrutable world where what happens happens for reasons entirely mysterious, where people are motivated by incomprehensible impulses and the dread of the unknown builds and builds.
I am sure I am not alone in having worked in a dysfunctional institution?
I mean something worse than a j0b in which you are poorly paid and have a psychopath for a boss (entry level experience requirements for human adulthood as far as I can make out).
A dysfunctional institution is one in which the sum total of what the organisation achieves appears to be at-odds with its explicit mission.
I am suggesting something worse than an organisation that doesn’t achieve what it is designed to achieve. I am suggesting that in some instances a deeply dysfunctional organisation can, when everything is aggregated, achieve the very opposite to its stated purpose is.
Which brings me to the institutions of the South African state.
I am occasionally lucky enough to get hold of some excellent economic commentary written by Sanlam Group Economist Jac Laubscher and published on that company’s website. In his most recent contribution (which appears here) he takes some concepts from Why Nations Fail: the Origins of Power, Prosperity and Poverty by Daron Acemoglu and James A Robinson (book I haven’t yet read, but will do so on the back of Jac’s comments) and hints at how they might be applicable to South Africa.
According to Laubscher, Acemoglu and Robinson suggest that the dominance of “inclusive institutions” over “extractive institutions” is the difference between success or failure of nations.
Inclusive institutions harness and unleash human creativity and incentivise citizens and workers to give of their best.
As Jac Laubscher summarises:
Inclusive institutions are characterised by guaranteed property rights (vital for investment and productivity growth), an impartial legal system that upholds contracts, the effective provision of public services to create a level playing field, space to create new businesses, and the freedom to choose one’s career.
“Extractive institutions” in the words of Jac Laubscher:
… are aimed at extracting income and wealth from one section of society to the benefit of another section of society, usually the elite. In fact, extractive political institutions are the means by which the elite enrich themselves and consolidate their political dominance.
It is a fairly simple matter to demonstrate that to some degree key state and semi-state institutions and processes in South Africa have become mechanisms for extracting wealth by the politically connected elite.
But a key qualifier here is “to some degree”. I don’t think the state has yet, unambiguously, become an extractive tool of the political elite. But it is obvious that at least part of the political elite is struggling mightily to shape our institutions to and for that purpose.
Yesterday I listened to Trevor Manuel deliver the National Development Plan to a joint sitting of parliament. At the same time the the Constitutional Court was hearing an application by the Treasury and Sanral to set aside the April interim interdict granted by North Gauteng High Court halting e-tolling and mandating a full review of the system.
My views on both Trevor Manuel and e-tolling are ambiguous – they both have their good and bad points – but I appreciate the subtlety and complexity of what the National Planning Commission has tried to achieve … and I celebrate the fact that we have a Constitutional Court we can trust with decisions like the one it was busy with yesterday*.
But the institutions of our society are not yet the corridors of the predators’ labyrinth – but we’d be foolish to ignore the signs.
* The Concourt matter is important for a number of reasons, but the aspect that interests me professionally, is part of what is happening is driven by the fact that the Treasury feels the need to defend its credibility as a borrower. I suspect that the rating agencies are happy that the Treasury is fighting this matter but are anxious that they might lose. The lender wants to be certain that the entity to whom it lends is properly able to make the agreement to pay the money back. The Treasury is ultimately arguing that the North Gauteng High Court ruling means no lender to the South African government can be sure that the courts might not declare, in effect, that government was legally incompetent to make the decision in the first place – significantly increasing default risk.
Reblogging two stories about protest … this is the second …. but I am not exactly sure how and where these are displaying. Hope they are not causing chaos somewhere on the my website.
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.
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A few days ago I published a link here to an e-tolling interview I did on CNBC Africa that someone put on YouTube.
The post received several interesting comments about an aside I made on more than one occasion during the interview that I thought users paying directly for infrastructure is probably a more efficient method than taking the funding out of the tax pool – with a long list of exceptions that had to do with social solidarity and making sure those who couldn’t pay were subsidised in some way.
I received several interesting comments and dragged myself out of bed early this morning to respond to those … but found, to my horror, my browser (Chrome) refused to visit my wordpress page, saying it contained “suspicious content”, perhaps even “malware” from something called “oulitnet.co.za”. Chrome further informed me that it had alerted the said site to the problem.
I decided to delete my last entry (to the YouTube link) and the problem seems to be gone.
I think “oulitnet.co.za” is a religious site of some kind and I have no idea why its content should have been connected to the YouTube video.
So instead of trying to work that all out I have just dumped the link and will, at some stage, return to the question of the most efficient way of paying for infrastructure … which I know is not a breathlessly exciting subject, but is probably important enough to warrant another post at some stage.
So apologies to anyone who attempted to visit that post and got the same scary warnings to stay away that I got this morning … they are gone now and it is safe to return to to the water …
You might be wondering why the Sunday papers were filled with conflicting version of the results from the municipal election.
The answer is contained in a decent story on Times Live written by Brendan Boyle:
The DA took 23.80% of the vote for ward candidates, 24.08% of the proportional representation vote for parties, 15.3% of the vote for ward councillors and 21.97% of all votes cast.
The ANC took 60.98% of the ward vote, 62.93% of the proportional representation vote, 69.43% of the district council vote and 63.65% of all votes cast.
So you can spin your version in a number of ways – and everyone has been furiously doing just that. See here for the DA using the proportional vote comparison which gives it 24.08 percent versus the ANC 62.93 percent and therefore casts its performance in the best possible light (something it is perfectly in its rights to do.)
(This added half an hour after publishing – it has been pointed out to me by some of the people I follow on Twitter – @Bruceps and @RyanCoetzee – that the only choice that all voters were offered that indicated their party preference is the proportional representation vote which gives the ANC 62.93 percent and the DA 24.08 – strongly persuasive that this is the number that most accurately indicates party support.)
The Sunday papers seems to have arbitrarily shifted from one usage to another.
I have used the figures from the IEC website for the overall total of votes cast for parties. Here they are (if you click on any one of the nine it will enlarge and become readable):
As of right now (this was 12.40 on May 20 2011) the ANC is sitting at 63.63 percent of the vote (66.35 in 2006), the DA at 22.1 (14.77), the IFP with 3.94 (8.05) – and newcomers to municipal elections COPE with 2.31 and the National Freedom Party with 2.54. The other important factor to consider is the ID got 2.02 percent in 2006 – which we must assume has mostly gone to the DA in this election.
The trends are important but are likely to be overlooked by the degree in which they were exaggerated before they appeared.
If anything the ANC is likely to continue to drift upwards and the DA downwards – because the constituencies in which the ANC is stronger are bigger and messier and therefore results take longer to come in.
The leader article in this morning’s Business Day points out that only 9.2 percent of South African’s are ‘white’ and with the Democratic Alliance running at about 22 percent of the vote the official opposition has already broken out of it’s racial ghetto.
I think this is the correct way to spin it.
Some DA supporters might be feeling disappointed – it looks like they have only one metro (Cape Town); but my feeling is anything more than this was hopeless optimism.
The DA talking up its game was always going to end in tears.
The fact is the party has done extraordinarily well – particularly in the metropolitan areas.
The ANC has won with reduced majorities almost everywhere and the DA is up an astonishing 8 percent on its performance in 2006.
These are the significant trends in the election and the statisticians will be furiously projecting forward to 2014 – although you should note that the ruling party tends to do worse in the municipal vote (a global trend).
The ANC is giving hints that it takes the criticism and promises to fix the three areas that have contributed to the reduction of its margins: candidate selection, poor service delivery and widespread corruption in local councils.
Were this to happen the results, as they are running, are the best they could be.