South
Africa has become a complex mess of problems, and most of them point to a
decline in its economy. That factor
alone will exacerbate the underlying problems.
A suggestion has been made by Stephen Lings that the country needs a
growing and vibrant business sector to achieve the sort of employment levels
that will solve some of the underlying problems. That is self-evident to any economist, but
how can that be achieved?
There is no
quick fix possible, but there are several fixes that are vitally important in
achieving that objective. Here are some
of them, not in any order of importance.
Fix the
drift towards Communism. The
opportunistic socialist policies that are the hallmark of the ANC Government
have done much to destroy faith in what was a healthy capitalistic
economy. The Apartheid economy managed
to survive through years of sanctions and governmental ineptitude because the
businessmen had the confidence to invest in the future. That confidence has waned dramatically. The reason?
No intelligent businessman can miss the signs of rampant Communism at
its worst. A street in Pretoria is to be
renamed after Mao Tse Dung, the man who did more to destroy the Chinese nation
than any organisation since the British occupied China. That follows the example of Durban, in naming
a street after Joe Slovo, the former leader of the South African Communist
Party and a man who explained to Stephen Mulholland, a renowned and highly intelligent
journalist, how the SACP planned to survive in South Africa when Communism had
failed everywhere else in the world. “Communism
needs a capital base on which to work,” he explained with his normal
smile. “South Africa has that capital.” And what will you do when that capital base
has been exhausted?” asked Mulholland. “We’ll
then change to another system!” was the smiling reply. The examples of Cuba and North Korea, East
Germany, Czechoslovakia, Poland and all the other former USSR Republics should
be clear to the most obtuse leader of a nation, yet we, together with the other
sparkling example of a failed African economy, Zimbabwe, persist in following
the policies learned at the desks of Moscow, Havana and East Berlin. With a Communist as Minister for Higher
Education, how can we expect our upcoming business leaders to do otherwise?
The standard
of education is critically in providing the basis for the business leaders of
tomorrow. That standard in South Africa
is amongst the lowest in the world, and the cover-up of the ineptitude of the
Government in improving it, by lowering the requirements for a matric
certificate only serves to make it lower.
Granting a matric to a student who achieves a pass of 30% in five
subjects merely ensures that our economy has a plethora of certificated
morons. Would you drive your car over a
bridge that was designed by an engineer who achieved a pass of 30% in
mathematics? No businessman or –woman would
want to take the chance of investing their life savings in a company which will
have to employ those people! South
Africa has a good number of highly intelligent people. It is the responsibility of the education
system to foster that intelligence, to force those young people to apply their
minds in the achievement of a certificate that really has value.
The
policies and intentions of the Government are very clear to those with the
experience to understand them. The
discussion about forcing commercial farmers to hand over 50% of the ownership
of their farms to their workforce is a guarantees way to ensure that those
farmers do not make the investments that will ensure that the farms will remain
sustainable. The policies of the
Government in land restitution – the purchase or expropriation of farms and
their handing over to unqualified Blacks – has worked wonders in the farming
sector. The number of farmers has
dropped to a quarter of the total when South Africa was able to export
quantities of food on a reliable basis.
That fall will continue for as long as farmers do not have the certainty that
what they invest today will have benefit for their children in the next few
decades. That certainty is what grew the
agricultural sector beyond any other African country, and it is the removal of
that certainty that will bring it to the level of the agricultural sectors in
that country our political leaders seem to admire so much for their political
example, Zimbabwe.
However,
that is not the worst. Any perceptive
observer will see that the policy of redistribution – theft of the assets of
the Whites – will be extended to other areas of business. There has already been much rhetoric about
the obligation of the miners to bring the workforce into the ownership of the
mines. How long will it be before the
Government decides that the mines must hand over 50% of the ownership of the
assets which they developed at high risk of their own capital to the workforce? And then the banks, the insurance companies
and, eventually, all the other businesses.
If one puts the question to a foreign investor, the source of a huge
portion of the capital that has brought the South African economy to the stage
of development that the ANC now proudly claims to be responsible for, the answer
is remarkably clear. The question “Would
you invest in a company in which you will be compelled by Government edict to
hand over a half of the ownership and control to the workforce?” The answer “You must be out of your mind to
suggest that! Where else in the world
can I put my money where the Government has an understanding of economics? That is where I will invest!”
Add to that
the almost incredible stupidity of statements made by Trade Union leaders. A trade union is an organisation in which
extravagant promises are made to the members to convince them that they should
contribute to the equally extravagant lifestyle of the leaders, and then
convinced that a strike will achieve those unrealistic promises. Both the employers and the employees
lose. The only winners are the trade
union bosses. Although some part of the
wage demands in the recent platinum mines strike were achieved, that was a
pyric victory. Only the workers, not
amongst the smartest economists on the planet, could believe that the higher
wages would not lead to massive job cuts.
Shafts will close, mining companies will withdraw from this country
which has now been shown to be an unreliable investment destination. The withdrawal of Gencor / Billiton from
South Africa has benefitted only the few Black ‘investors’ who were able to
move in on the assets that were sold at a cheap price. Anglo American is withdrawing from its
homeland, a completion of the move that started when it established a holding
company abroad, Lonmin is planning on downsizing its South African presence. And that is just in the mining sector. SA Breweries saw the future coming years
ago. So did Old Mutual. So has Sasol.
It is not necessary to list the dozens of companies that have understood
the future of politics in South Africa, but even a complete listing would
probably fail to include the other business potential that has fled these
shores. Paypal could have been South
African, and so could Tesla, if only the Government had ensured that the
leaders of those dynamic companies could believe that the results of their
efforts and risk-taking would remain theirs in the future. It is no coincidence that Australia, a
country that lagged behind South Africa in terms of economic development two
decades ago, should have far outstripped South Africa in economic growth in
that time. The secret? It is twofold. The Australian Government gave the assurance that
there would be no Government-sponsored theft of the fruits of the work of the
entrepreneurs who would work to build the economy, and that assurance attracted
the brightest and best of those who left their homeland because they feared the
communisation of that country. The biggest
still unanswered question in this regard is when will the Government read the
signboards that have been there for twenty years?
If the
Government sincerely wants to promote business and so the creation of jobs, the
most important move it can make will be to clear away the logjams of bureaucracy
that it has built up. It is wonderful to
have the most progressive (?) Companies Act in the world, but explain to the
shack-dweller in Alexandra, who has looked for any work for the past five
years, how that benefits him. Numerous
people complain that the registration of a company can take nearly a year! One German businessman, has written eight
letters to the Companies Office requesting a listing of the Directorships
registered in his name. His enquiry
stems from a suspected fraud perpetrated in his name. Unfortunately, no reply, or even
acknowledgement, has been received over the past eighteen months. In the UK, a company can be registered within
eight hours, and the details of directorships are available on-line! The dozens of meaningless reports required by
various Departments of Government add significantly to the hurdles any businessman
has to jump over each month before he can even start to think about running his
business in one of the highest-risk economies in the world, and then he has to
face the possibility that the South African Revenue Services will take it into
its head to destroy his business in order to advance the interests of favourites! These are not imaginary problems. They are faced by the real businessmen and –women
who work to create the jobs that Government talks of.
The problem
of corruption continues to bedevil the business community. That takes place not only in Government, but
the supreme indifference of senior members in Government to finding a way to
deal with corruption continues to promote.
When has a public trial of a Minister resulted in a lengthy jail
sentence, a sentence that will be served in prison, not on the golf
course? The BBEE legislation has
promoted a new brand of corporate corruption.
In order to run their businesses in anything approaching a profitable
way, many businessmen have been induced to set up elaborate structures to
present the BBEE front, with multi-level contractual relationships to ensure
that the shares handed to Black partners will not be disposed of for a quick
profit, in many cases foiling the Black shareholder element, and ensuring that
the effective control remains in the hands of the businessman who has spent
twenty years gaining the experience and qualifications necessary to make the business
successful, while the new partner, who often has little to offer in the form of
experience or capital or, most importantly, a good educational foundation for
learning, has as his prime priority a new 7 Series BMW or a Range Rover! In the past, a well-educated person started
at the bottom and worked his way up the organisation over fifteen or twenty
years before he gained the position, and salary, that is now demanded by
twenty-five year olds. That process,
although frustrating, was the foundation on which the economic success of the
nation was built, and the lack of that foundation of learning, education and
experience is the likely cause for the failure of the economy that we are
witnessing today.
Finally,
for today, if we want to have an economy that will grow, we must have a
Government that we can trust. We must
have leaders who accept the pronouncements of the Courts and the Public
Protector, and give effect to them. We
cannot afford to have a Minister who appoints a Chief Executive of the SABC in
direct contradiction of the requirements of the findings of the Public
Protector, with the lame excuse that an independent firm of attorneys found
that he was not guilty of any wrongdoing!
When did an unnamed firm of attorneys gain precedence over a
Constitutionally-grounded Chapter Nine institution? That action prompts any thinking person to
ask the obvious question. What does the
executive in question know about the Minister to warrant that action? We don’t need a President who presents red
herrings instead of complying with a clear finding of the Public
Protector. He gained unjustly from the
improvements made to his mansion and must inform the public of how much he is
to repay, and when he will make that repayment.
The question is simple, the prevarication clear. We don’t need a President who has remained
under suspicion of having engineered the withdrawal of criminal charges against
him by the exercise of political persuasion, and has failed to comply with a
clear order of the High Court to deliver the (incriminating?) tapes. Instead, we need people like the present
Public Protector, with the power to enforce a finding in the same way as an
Order of the High Court can be enforced, with the power to imprison those who
don’t comply on the basis of Contempt of Court (yes, even the President!),
subject only to an appeal to the Court of Appeal. We need a rule that, when a Government
Department or body goes to Court wastefully, the responsible Minister or
Director General must pay the wasted costs personally. Most of all, we need a Government that speaks
the whole truth to its citizens, in a way that allows them to make a rational
decision on the correctness or otherwise of the policies and actions of that
Government.
