A visitor in the garden of our neighbors John and Nora in Durban, on the cliffs above the valley of a thousand hills in South Africa.
These steep cliffs which are still wild, extend for many kilometers and manage to sustain several large species, including leopard, genet, caracal, duiker, steenbok, black and green mamba, vine snake, puff adders, berg adders and many other snakes, including african rock python, like this one in the photo, which can grow to six meters.
How did you go bankrupt?
Two ways. Gradually but then suddenly’.
These two lines, which appear in the Ernest Hemingway-novel ‘The Sun Also Rises’, encapsulate, for me at least, what is slowly but surely unfolding in South Africa.
We are in the ‘slowly at first’-phase of going bankrupt as a country, but at a later stage, not too far away, will we reach the ‘suddenly’ part of running out of cash. Some would say we’ve already reached that point.
The #FeesMustFall student unrest we witnessed last week at most of our campuses, Parliament and even at the Union Buildings, are seemingly unrelated symptoms of a much greater build-up of steam boiling under the surface. These sporadic and isolated incidents include the labour uprising and massacre at Marikana in 2012, the ongoing e-tolls boycott and several hundred incidents of social unrest around water, electricity and the provision of basic services.
But related they are and there is more to come.
For me they represent small but ever-growing fissures in the ground under our feet that are opening up as the financial pressures – brought about by years of economic mismanagement, corruption, lack of governance and government arrogance, to name just a few – build up steam.
What the end of the commodity cycle means
These pressures were still manageable when the commodity prices were in full bloom and the economy was growing at around 5%, prior to the Great Financial Crisis. Government revenue was pouring in, creating the illusion of a cash-flow that forever rises into the future. Ah, such bliss….
Those days now seem so far away. The commodity cycle peaked in about October 2011; less than a year later the first to feel the squeeze were the mine workers at the platinum mines who went on strike demanding an adjustment to their basic wages. They were met with a hail of bullets leaving 37 dead.
The e-toll saga in Gauteng is nothing else but a manifestation of middle-class anger directed at the financial squeeze they find themselves in. By itself e-tolls are not a substantial cost, but when taken into consideration with above-average increases in land taxes, medical aid fees, school fees, electricity and everything else, it becomes the proverbial last straw on the camel’s back. With e-tolls you have a choice to pay or not pay; that therefore became the weakest fissure and out burst the steam.
If government does not realise this and continues on its misguided current path, the pressures are bound to build up to a bursting point of volcanic proportions.
It also is a manifestation of the utter powerlessness experienced by middle-class voters who are being squeezed by rising taxes, levies, fees, medical aid contributions, cost of living and a host of other factors. There is a rage building up under normally placid and law-abiding taxpayers.
Mugged by a blue light gang
Let me give you a small example of what I’m talking about. I’m certain many will relate to this.
The other day, in rush-hour traffic near Sandton on the M1 North going to Pretoria, I sat in bumper-to-bumper traffic, when behind me one of our modern-day curses under the ANC government loomed large in my rear-view mirror: a blue light convoy, accompanied by about five JMPD vehicles.
Everyone was threatened, cajoled, sworn at and pushed aside as the convey came screaming past, sirens blaring. Woe betide anyone who did not react fast enough in the eyes of the gun-toting JMPD-traffic cops, so that the big and very important man/woman of ANC could come through. I watched with horror as the procession continued in the direction of Pretoria.
It left me breathless with an impotent rage and yet we as taxpaying citizens can do absolutely nothing about it. I looked at the faces of the motorists around me, black and white, and the same rage was clearly visible.
It may be an insignificant incident in the greater scheme of things, but this is the way an increasing number of middle-class taxpayers in the private sector are starting to feel about the government. For it is they who are feeling the economic pinch the hardest.
Government workers now the rich and privileged
Middle-class taxpayers in government have been earning salary increases at a rate of inflation plus 3% for many year now and have been promised increases of the same for the next three years. A cushy job in government is now the surest way to middle-class wealth for most South Africans. Much of that is the consequence of cadre deployment, among other things. Merit seemingly counts for very little in the greater scheme of things. Such is the power of the civil service that National Treasury had to allocate money from its contingency reserves – emergency money in other words – to satisfy the demands of government workers.
Middle-class taxpayers are not, generally, beating inflation with their salary increases. This can already be seen in new motor car sales, home sizes, travel and even medical aid membership – they are all shrinking. Middle class SA is under a tremendous amount of pressure. Over the weekend the Lever Institute at the University of Cape Town confirmed this trend.
As it is, according to economist Mike Schüssler, the average salary in government is now R241 000 per annum versus R196 000 per annum in the private sector. The bloated government salary bill lies at the heart of much of our financial problems at the moment. And what are we getting in exchange? Surly, sloppy service with attitude and if you can’t do your job, you employ a consultant.
There was a time that a government employee would accept a lesser salary (relative to the private sector), in exchange for job security, medical aid, housing allowance and a generous pension fund. It was in the private sector where you would make the big bucks but where you could also lose your job and/or business if things went pear-shaped.
In the current financial year SA will spend R550 billion on the salaries of all civil servants from local to national government, more than half of the four major taxes central government receives, namely VAT, personal income tax, company tax and fuel taxes.
People often ask me what a fiscal cliff is. Just open your eyes and observe. We are busy storming at one right now. A fiscal cliff is when your expenses keep on rising but your income suddenly drops away, leaving you with a massive debt to service.
The mystery of the 36 000 ghost workers
Our media is barely scratching the surface when it comes to the thievery and gross incompetence at local government level. All the North West municipalities, for instance, are under administration. It has become so common that reports of theft and maladministration do not even receive a mention anymore.
Last month trade union Solidarity released a report on the ‘ghost workers’ of the North West province, highlighting that at least 36 000 ghost employees have been drawing a combined amount of R19 billion in salaries in this province alone. R19 billion! This report received barely a mention in the media and one battles to find any discussion on it.
I feel like shouting: There’s the money for #FeesMustFall!
The education fee shortfall shouldn’t cost anyone a thing. Just stop the thieving and corruption and you have all the money for anyone who qualifies to go to university.
But in the end government will find someone else to blame: the private sector, the ‘privileged’ whites, the colonialists or the foreigners.
Government spending will be higher next year; so too the budget deficit, the wage bill as well as interest payments on government debt.
And all the time those pesky foreigners, the foreign debt ratings agencies, are waiting and watching.
Ratings agencies… such a western thing.
Magnus Heystek | 28 October 2015 00:01
I can predict when South Africa’s “Tunisia Day” will arrive.
Tunisia Day is when the masses rise against the powers that be, as happened recently in Tunisia. The year will be 2020, give or take a couple of years. The year 2020 is when China estimates that its current minerals-intensive industrialisation phase will be concluded.For South Africa, this will mean the African National Congress (ANC) government will have to cut back on social grants, which it uses to placate the black poor and to get their votes. China’s current industrialisation phase has forced up the prices of South Africa’s minerals, which has enabled the government to finance social welfare programmes.
The ANC inherited a flawed, complex society it barely understood; its tinkerings with it are turning it into an explosive cocktail. The ANC leaders are like a group of children playing with a hand grenade. One day one of them will figure out how to pull out the pin and everyone will be killed.
A famous African liberation movement, the National Liberation Front of Algeria, after tinkering for 30 years, pulled the grenade pin by cancelling an election in 1991 that was won by the opposition Islamic Salvation Front. In the civil war that ensued, 200000 people were killed.
The former British prime minister, Margaret Thatcher, once commented that whoever thought that the ANC could rule SA was living in Cloud Cuckoo Land. Why was Thatcher right? In the 16 years of ANC rule, all the symptoms of a government out of its depth have grown worse.
What should the ANC have done, or be doing?
The answer is quite straightforward. When they took control of the government in 1994, ANC leaders should have: identified what South Africa’s strengths were; identified what South Africa’s weaknesses were; and decided how to use the strengths to minimise and/or rectify the weaknesses.
A wise government would have persuaded the skilled white and Indian population to devote some of their time — even an hour a week — to train the black and coloured population to raise their skill levels.
What the ANC did instead when it came to power was to identify what its leaders and supporters wanted. It then used SA’s strengths to satisfy the short-term consumption demands of its supporters. In essence, this is what is called black economic empowerment (BEE).
BEE promotes a number of extremely negative socioeconomic trends in our country. It promotes a class of politicians dependent on big business and therefore promotes big business’s interests in the upper echelons of government. Second, BEE promotes an anti-entrepreneurial culture among the black middle class by legitimising an environment of entitlement. Third, affirmative action, a subset of BEE, promotes incompetence and corruption in the public sector by using ruling party allegiance and connections as the criteria for entry and promotion in the public service, instead of having tough public service entry examinations.
Let’s see where BEE, as we know it today, actually comes from. I first came across the concept of BEE from a company, which no longer exists, called Sankor. Sankor was the industrial division of Sanlam and it invented the concept of BEE.
The first purpose of BEE was to create a buffer group among the black political class that would become an ally of big business in South Africa. This buffer group would use its newfound power as controllers of the government to protect the assets of big business.
The buffer group would also protect the modus operandi of big business and thereby maintain the status quo in which South African business operates. That was the design of the big conglomerates.
Sanlam was soon followed by Anglo American. Sanlam established BEE vehicle Nail; Anglo established Real Africa, Johnnic and so forth. The conglomerates took their marginal assets, and gave them to politically influential black people, with the purpose, in my view, not to transform the economy but to create a black political class that is in alliance with the conglomerates and therefore wants to maintain the status quo of our economy and the way in which it operates.
But what is wrong with protecting South Africa’s conglomerates?
Well, there are many things wrong with how conglomerates operate and how they have structured our economy.
Conglomerates are a vehicle, not for creating development in South Africa but for exploiting natural resources without creating in-depth, inclusive social and economic development, which is what SA needs. That is what is wrong with protecting conglomerates.
The second problem with the formula of BEE is that it does not create entrepreneurs. You are taking political leaders and politically connected people and giving them assets which, in the first instance, they don’t know how to manage. So you are not adding value. You are faced with the threat of undermining value by taking assets from people who were managing them and giving them to people who cannot manage them. BEE thus creates a class of idle rich ANC politicos.
My quarrel with BEE is that what the conglomerates are doing is developing a new culture in South Africa — not a culture of entrepreneurship, but an entitlement culture, whereby black people who want to go into business think that they should acquire assets free, and that somebody is there to make them rich, rather than that they should build enterprises from the ground.
But we cannot build black companies if what black entrepreneurs look forward to is the distribution of already existing assets from the conglomerates in return for becoming lobbyists for the conglomerates.
The third worrying trend is that the ANC-controlled state has now internalised the BEE model. We are now seeing the state trying to implement the same model that the conglomerates developed.
What is the state distributing? It is distributing jobs to party faithful and social welfare to the poor. This is a recipe for incompetence and corruption, both of which are endemic in South Africa. This is what explains the service delivery upheavals that are becoming a normal part of our environment.
We all accept that a socialist model, along the lines of the Soviet Union, is not workable for South Africa today. The creation of a state-owned economy is not a formula that is an option for South Africa or for many parts of the world. Therefore, if we want to develop SA instead of shuffling pre-existing wealth, we have to create new entrepreneurs, and we need to support existing entrepreneurs to diversify into new economic sectors.
CLICK – Architects of Poverty: Why African Capitalism Needs Changing
Mbeki is the author of Architects of Poverty: Why African Capitalism Needs Changing. This article forms part of a series on transformation supplied by the Centre for Development and Enterprise.
Another positive outlook on Africa, which despite the various serious problems we have with corruption, crime etc. clearly shows we are moving in the right direction.
It’s just that we are still in “wild west’” mode as such, or as I see it, we live in an exciting, real live Wilbur Smith novel. We live with history in the making. Well, I guess everybody anywhere does, but ours is certainly one of the more exciting journeys, violent crime apart.
Enjoy the energy/adrenelin trip. VIVA!! or whatever turns you on.
SPEECH DELIVERED BY DR CHRISTO WIESE TO THE MEMBERS OF THE ADELE SEARLL MOUNT NELSON 100 CLUB. FRIDAY, 7 MAY 2010
A few years ago I read a very interesting book, by a Lebanese writer, one Taleb, titled The Black Swan
“There are known knowns. These are the things we know that we know. There are known unknowns. That is to say, there are things that we know we don’t know. But these are also unknown unknowns. There are things we don’t know we don’t know.”
Being ignorant when it comes to the unknown unknowns is understandable, but what constantly amazes, in respect of our continent and our country, is how little many people know of what are or should be, the known knowns.
Non-Africans, and I suspect even some South Africans, often fail to grasp that Africa is not a country, but a continent. And a very large continent at that; the land mass of Africa is larger than the combined land mass of China, India, the US and Europe.
This vast continent with its more than 800 million people is made up of 53 diverse countries whose inhabitants speak more than 2000 languages. And to mention only a second aspect of Africa’s diversity, per capita GDP in 2009 for example was 51 times higher in Equatorial Guinea than in the Democratic Republic of Congo. Another common mis-apprehension is that South Africa is a non-African country meaning unsuccessful.
How does one define a successful country ?
Would you agree that a country with the following score-card can rightly be defined as successful. Let us call the country X.
1. X has the world’s 26th largest population and 29th largest economy.
By now, I am sure, most of you have guessed that the mystery country of course is South Africa. Or rather South Africa as we have just analysed it, by focusing on the positive aspects. Of course there is another side to the coin. Our unacceptably high levels of crime and low level of policing efficiency. Our inability to achieve the desired output for our vast expenditure on education bearing in mind that – 25% of our non-interest budget expenditure goes to education. Also the ever present fear of corruption and maladministration, etc., etc. I am sure everyone has his or her own little list.
I would submit, however, that the positive aspects, that I have briefly referred to (and there are many more) at least prove that contrary to the way pessimists perceive South Africa there are definitely two sides to the South African coin.
The challenge for every South African appears to be which side of the coin do you wish to focus on for example when you drive to Cape Town International Airport – which is the lasting impression on your mind – the unsightly (albeit diminishing) shack lands – or the glittering new Airport precinct. Cape Town International Airport is regularly judged to be one of the best (mid size) airports in the world.
But as pointed out earlier, South Africa is unquestionably part of Africa. So we should also look at Africa.
Firstly, how is Africa faring politically. Fortunately we now have a very handy yardstick with which to measure African Governance. That is the Mo Ibraham Index established by the like-named Sudanese billionaire and compiled by a team from The Harvard Kennedy School of Government. The criteria used to compile the index are: economic stability, corruption, security, rights, loans, elections, infrastructure, poverty and health.
The 2008 Mo Ibrahim Index stated that 31 of 48 sub-Saharan nations recorded higher scores than in the previous year’s survey.
What this index reflects is the reality – that in Africa today the political generation of the Bwana Mkubas (Big Men) is showing signs of passing – prompting some to speak of Africa’s Second Liberation.
Those with a clear understanding of modern Africa believe that it is the growing democratization of Africa that allows the warm water of the market to spread within its states – a trend that in turn reinforces the spread of greater democracy. Economic and Political freedom will continue to lead as it has already done, to economic opportunities, social upliftment and a new place for Africa on the World Stage.
What are the reasons for Africa’s democratization? I would like to mention only four:
One powerful reason for this welcome change is demographic. The post 1960’s African population boom means that the continent’s electorate is on average young. Never having lived under colonialism they are far more likely to hold their politicians responsible for the challenges facing their countries. Blaming colonialism is increasingly seen for what it is, namely an excuse for bad governance.
Another reason for the greater democratization is the bigger role played by women in African politics. In Ellen Johnson Sirleaf of Liberia the continent has at last elected its first female president, one with an open style and a technocratic bias.
Previously chauvinist parliaments across the continent are seeing the number of women MP’s increasing. In Rwanda, a recent African success story, the ratio is now 56%. In South Africa it is 33% with females constituting 40% of our Cabinet.
Further support for the Second Liberation has come from Africa’s increasingly vociferous fourth estate. In an ever growing list of countries the Media has become the guard dog that barks and that no longer readily responds to being told to shut up.
The justice system in a given African country may not yet always be able to bring its former leaders to book. However Frederic Chiluba in Zambia and Bakili Muluzi in Malawi are welcome exceptions. In addition, external institutions, supported by African Nations are being established to fulfill this role. Charles Taylor of Liberia is having his day in court in The Hague and the International Criminal Court has even issued an arrest warrant for the sitting President of Sudan, Omar Bashir.
Just as Africa’s condition and future development will have a massive impact on South Africa, so will developments worldwide impact on Africa. So what will the New World look like that South Africa will likely inhabit in 2020?
China with a population of 1.5bn by then will be close to overtaking the US as the world’s largest economy. India (2020 population of 1.3 bn) will be a top 5 economy and Indonesia will be emerging as an Asian Brazil, resource-rich and with a population of 275 million.
Commodity-rich countries from the “New World” – Africa, the Middle East, Russia, Indonesia, and South America will be prospering, because of Asian demand for their products. Most of the “Old World” – the US, Europe and Japan plus their adjacent, dependant regions such as Mexico and Eastern Europe will be stuck in a low growth economic rut. Indeed the coming decade may well be the West’s Japanese-style “lost decade”. The reason being that the demographic consequences of the ageing of the Old World – coupled to the fact that the US, UK & Europe – 15% of the world’s population – currently consume 70% of the world’s mobile savings – this means that in the West there will be higher interest rates, a higher cost of capital and consequently lower economic growth.
Overall South Africa will live in a more globalised, intensively competitive world economy that will be increasingly focused on an urbanizing, industrialising Asia. The region which by 2020 will also dominate the growth in global consumption, driven especially by the exploding middle classes of China and India.
By 2020 it is projected that South Africa will have a population in excess of 53 million of which 30 million will be under the age of 25. Forced by intensive competition from Asia on South Africa’s remaining industrial base our economy will have to refocus on its core, defensible, competitive advantages : mining, agriculture and tourism. Sectors that are doubly blessed in that they are all labour-intensive and export orientated.
South Africa’s trade focus will by then have diversified significantly from the West. Asia will have become by far our most important trading partner – China most obviously but with English-speaking India a strong number two. Indeed the Indian Ocean Basin – from South Africa in the West to Australia in the East will have become a very prosperous trading basin.
South Africa’s economic status will be secured by its natural-resource based development with targeted value-added propositions added on to this foundation further enhanced by the development of tourism – a “magic” industry in that it is an export-earning service sector capable of absorbing large numbers of lower skilled workers – especially in rural areas.
But then optimise these opportunities we South Africans will have to learn to think out of the box socially, politically and economically – designing policies that are made for South Africa and that are good for South Africa.
Events over the last two years have illustrated that the capitalist way is not only to be found in the West. We must and I believe we will develop a 2020 vision for South Africa that is much more globally relevant than to-day in the Asia-centred, commodity-hungry world we will live in by 2020.
Sceptics of course will have grave reservations as to our ability to develop and implement such a vision. The answer to such sceptics (perhaps the same people who were hoarding bully-beef and candles in the run-up to the 1994 election) is to point to the many successes we have achieved as a country – in 1994 and in the sixteen years since.
As Roelf Meyer recently wrote in Die Burger. In taking stock we should compare ourselves with comparable countries in the rest of the world. We should not compare ourselves to the developed or Western World, because we were never part of that world. We should compare ourselves with developing countries and also countries that recently emerged from internal conflict. In the latter group we are a shining star and within the international community South Africa is still hailed as a beacon of successful conflict resolution.
Roelf refers to a 2009 issue of the Economist in which comparisons are drawn between 180 countries and specifically the 65 best economies in the world.
According to the survey: South Africa has the 25th largest purchasing power, is the 39th largest exporter, is the 25th largest manufacturer of goods and the 28th largest supplier of services. On the competitiveness Index we rank no 45. Not great, but it looks a lot better when one notes that Brazil, considered one of the leaders of the developing world and with a much larger population ranks 43.
But these are the achievements of yesterday and today. And we have to get from 2010 to the 2020 Vision. Other countries or societies will not do it for us. The Government on its own cannot do it.
Inter alia, because as Henry Kissinger once said:
“No policy – no matter how ingenious – has any chance of succeeding if it is born in the minds of a few and carried in the hearts of none” and Ronald Regan said: “The most terrifying words in the English language are: I’m from the Government and I am here to help”.
Every South African who has the best interests of this country at heart, will need to do his or her bit. As general pointers I would like to leave you with a few suggestions:
“Make a positive difference, no matter how small, inter alia, by developing a positive mind set : Perhaps along the lines of what George Bernard Shaw said “You see thing and you say “WHY?, but I dream things that never were and I say “WHY NOT?”
1. Harness the power of community
2. Engage in constructive participation
3. Do not be overwhelmed by all that is still unacceptable or sub-standard. Look around at the great things that are happening – Soccer World Cup.
We should not only see the positive – but embrace it and contribute to it. Surely then, but only then will exponential benefits flow to all of us who share this beautiful country.
