Solving the Problems of State-Owned Enterprises

South Africa State-owned enterprises and Government Departments are suffering a meltdown.  This is nothing new.  It has been building since 1994, when the cause of the problem was introduced by the new Government.  It became clear very quickly after the ANC government took power in 1994 that the Party was intent on replacing the relatively competent top management of these entities with their own people, a policy which has become known as cadre deployment.  Bear in mind that it has been a consistent claim of the ANC that the Apartheid Government failed to provide adequate employment to Blacks.  The ANC was therefore forced to choose the new management of the economy from the ranks of poorly-educated people. 

One can perhaps sympathise with the sentiment.  As Gwede Mantashe pointed out, even in the United States, the new Party coming to power places its own people in the top positions.  He failed to point out that, in the United States, there is a very large pool of competent and experienced Republicans or Democrats to choose from, which gives at least a possibility of the new appointees being at least partly competent.  That pool was not available to the ANC.  It is still not available.  The training in the real world, and the gaining of relevant experience necessary to hold a top position, anywhere in the world, requires decades.  If we accept the ANC argument that the education of Blacks under Apartheid was abjectly poor, we must also accept the argument that any Black who has risen through the ranks since the vastly-improved education system has been available to them can have no more than six to eight years experience.  That is hardly sufficient to produce a well-rounded and competent management!

The effect of this, and of the fact that the top people in many of the Government-controlled entities were selected more for their Party loyalty than for their business experience and managerial excellence, is that practically every State entity is suffering from decades of incompetence, lack of managerial experience and corruption ranging from nepotism through to outright fraud.  Let us examine briefly several of them.

Eskom has demonstrated clearly that it has no idea of planned maintenance, information flow, planning or virtually any other aspect of management necessary to operate a major industrial undertaking.  The Minister made a noteworthy statement recently, that Eskom is not in a state of crisis.  That would arise, in her opinion, only if the electricity blackouts were unplanned!  A series of planned blackouts, even if they were planned less than an hour before they occurred, could therefore not be called a crisis!  One is reminded of the fatuous statement made by President Thabo Mbeki that AIDS is a syndrome, and a syndrome cannot cause a disease!  Eskom is presently remaining in operation largely because it has employed the services, at very high cost, of a number of foreign experts, who are managing to hold together what few strands of the Eskom fabric that remain from the Apartheid years.  The performance of Eskom since it has been managed by ANC appointees, rather than competent, experienced and qualified managers has been abysmal, with estimates that it alone has cost South Africa more than 10% of its potential GDP, and will continue to do so into the indefinite future.  Both the Minister and the CEO of Eskom would be fired in any civilized country.

South African Airways has also shown the ineffectiveness of its top management, requiring an annual bailout from State coffers in the hundreds of millions of Rands.  The rot started early in the ANC period, when the man who ran Delta Airways into the ground was appointed to run the company, with a pay package that was based on profit, a system that induced him to sell the entire fleet of (fully-paid) Boeings and replace them with a new fleet of (leased) Airbuses, a move that earned him a terminal bonus of R600 000 000.  One wonders what split the ANC and its people could have taken in that bonus, and what commission would have been paid to them for the acquisition of the new fleet, a move which cost the company hundreds of millions in retraining, retooling, new spares acquisition and many other areas, and which planted the seeds for the gradual disintegration of the company.  The multiple new management teams have achieved only the acceleration of that disintegration, with no end in sight.

The South African Broadcasting Corporation is another State-owned entity that has lived down to the reputation that Government-controlled bodies have earned.  Need one say more than that the two top positions in the Corporation have been occupied by persons who have lied about their qualification?  The fact that they can have been appointed without any check on the qualifications they claimed to possess is a clear indictment of the management systems of the corporation.

The Atomic Energy Corporation, a body that could stand in the company of the top five nuclear research organisations in the world, was closed down by the Government with great fanfare and at huge cost shortly after the ANC took control, and its installations were dismantled, with copper wiring being removed from the buildings to sell in order to pay the salaries.  In 2014, the Government announced, with great fanfare, that it intended to establish a nuclear research facility, at great cost.  One would be tempted to ask whether any thought and planning had gone into either of those moves.

The Council for Industrial Research was, under the Apartheid Government, a centre of excellence in research and development.  Under the present Government, one of its scientists was censured for wishing to present a paper at a science conference, discussing the abjectly poor state of municipal water supply in South Africa.  The paper included an example of one municipal water treatment works, in which a machine broke down.  The Manager f the works, an ANC appointee, did not understand the function of the machine, so, rather than repair it, he took it offline, allowing the bulk pollutants, such as diapers and tampons, to flow through, resulting in worms being common in the supply to domestic users.  The scientist was rebuked for his planned paper, which would bring the Government and the CSIR into disrepute!  He subsequently resigned, leaving his position open to be filled by another ANC appointee.

The Johannesburg Municipal Health Service established a new section to deal with an important health issue, and appointed an ANC-qualified woman to head it.  She managed to exhaust the entire annual budget of the section by the appointment of several administrative staff, also of the right racial and political persuasion, and the purchase of a fleet of luxury cars for them.  There was, apparently, no effective budgetary or monetary control of her expenditure or appointments.  One need only look at the state of the municipal clinics to see how ineffectual the management of the Health Service is.  It is commonplace for users of these services to queue from five-thirty a.m., to be dealt with by four, when the clinic closes, or, even worse, to be told at that time that they will have to return tomorrow, because the doctor had to leave at twelve!  A quick count on several days at eight in the morning of the people waiting patiently in the queue disclosed that there were at least three hundred people already waiting at that time.  If we assume an average salary of only R5 000 per month, and an average work loss of six hours, that amounts to a staggering wastage of 380 000 man-hours per month per clinic, over 47 000 man-hours of work lost, a salary cost of about R11 000 000 per month per clinic!

The Departments of Education have consistently set new records in poor performance.  Schoolbooks are not delivered, on time or at all.  Teachers are off work for more than 10% of the teaching year, and their qualifications are so poor that many of them would not be able to pass the examinations that they are teaching towards.  The Union does not want regular examination or inspection of the state of the teaching, because that would imply a comparison of their members with an objective standard.  The examination results are adjusted to ensure that at least a certain number of the students pass the matric examinations, the pass mark is adjusted downwards to a level that makes employers question the value of the certification, while the students are pumped out into the non-existent) workplace, and the universities are told that they must accept candidates for degrees, regardless of their performance at school, because to do otherwise would be discriminatory.  The Law Society issues a report that states that newly-graduated Ll Bs are unable to use language effectively.  The coal-storage silos at power stations, designed by engineering graduates, collapse.  A lecturer in engineering at one of the major universities resigns, declaring that he is not willing to compromise the standards of education merely to accommodate a Government demand that the university produces the required number of Black engineers each year, regardless of their capabilities.  There can be no doubt that the management of education in South Africa is not at even the minimum level for a Third World country, never mind a country that aspires to lead the continent.

The South African Revenue Services established a unit to investigate tax matters, and that unit was reportedly then directed to undertake investigations in the political arena that had nothing to do with tax issues.  The people who objected to that were suspended without proper formalities being complied with, leading to a judgement in the High Court reversing those suspension.  A matter of this importance must have been known to the top management of SARS, leading to the view that the top managers were acting improperly, in contravention of the law.  If they did not know of this matter, the only conclusion can be that they were not competent to hold the positions.

The South African Police Services pays out in excess of a hundred million Rands each year under High Court judgements in claims for wrongful arrest.  The Police Stations in the Western Cape are so understaffed, to the knowledge of the Police high command, that gangsterism is running rife and hundreds of children are killed every year.  Police killings of innocent civilians are reported weekly.  A Commissioner of Police was reported to have called in the assistance of seven sangomas (witch doctors) to assist in the finding of a seven-year old rape victim who disappeared shortly before she was to give evidence in the trial of her alleged attacker.  Yet the Commissioner of Police, a woman with no Police experience at the time she was given the job, declares that she is satisfied with the ‘progress’ being made by the SAPS!

It is possible to cite dozens more examples, but it is not necessary to do so, to realise that practically every aspect of management touched by the Government in South Africa is at least below the minimum standard necessary.  The question now arises what should be done about it?  A number of obvious answers come to any thinking person:

·         Select only people who are ‘fit and proper persons’ to senior positions, as is required of banks, insurance companies and other financial institutions, with attention to their actual (not only claimed) qualifications and experience.

·         Get rid of cadre deployment.  Race or political persuasion are not valid parameters for the selection of management in any context.  If a particular policy is to be implemented, that policy must be spelled out, and the management required to comply with it.  Unfortunately, that wold require that many unspoken policies are made public, but that is the responsibility of Government in any event.  Policies of Government bodies cannot be formulated behind closed doors to be implemented by stooges.  There were many well-qualified, broadly experienced and competent managers in South Africa, and many of them could be induced to return if it were to be made clear to them that their advancement through the ranks would be on the basis of performance.

·         Get rid of Black Empowerment.  South Africa cannot afford the huge cost, in financial terms as well as in terms of the loss of competent persons abroad and in the loss of competitive capability, of a policy that has reintroduced Apartheid in covert form.

·         Introduce standard methods of assessment of performance of top management, and discipline those who do not meet those standards.  If the failure to meet the required standards of performance is not corrected within a reasonable time, discharge those persons and appoint new and competent persons to those posts.  The Chairmanship of SABC, the Chief Executive position in Eskom, and the Chief Financial Officer post in SA Postal Service are not learnership positions!  These jobs are for people who can actually perform the important duties they require!

·         Make the size of the salaries and the payment of bonuses to top management dependent on performance in the achievement of objectives that are meaningful in economic and financial terms.

·         Set a rule that withholds any bonus on termination of employment if the overall performance of the intended recipient is not in accordance with pre-set targets.  Any forced termination should automatically negate any bonus entitlement unless specifically approved after the termination, for good cause.

 

SASSA and the Failure of Grant Payments

The South African Social Security Agency has achieved something noteworthy.  It has made payments of social grants early for the Christmas season, but then withdrawn those payments that were not collected earlier than usual, leaving 35 000 recipients destitute for the month.  Noting that the number of persons who would not receive their grants for December was “only 35 000” out of a total of 11 000 000, the spokesman for SASSA stated that, in his opinion, that was not a bad result!  He also pointed out that SASSA had notified grant recipients of the early payment date by advertisements in newspapers.

Perhaps it is time for a reality check.

The grant provides an absolute minimum amount of money for a single person to buy food for a month.  When the Minister of Finance smugly announced an increase in the grant amount by R50 per month in 2013, on the same day the price of a two litre bottle of milk increased at Pick n Pay by fifty-six cents.  Let us assume that a pensioner uses for litres of milk per week – probably an underestimate.  That means that the cost of milk alone increased on that day by R4-82 per month, representing an increase of 9,6% of the grant increase, for one item in the shopping basket!  And that assumes that the grant recipient is supporting just himself.  The hard truth is that the average grant recipient is supporting at least another two persons.

In order for our grant recipient to see the notification about the early payment of the grants, that recipient would have to buy at least one newspaper per week – say a cost of R25 per week, or R107 per month – another 7,4% of his grant!  And that assumes that the recipient is able to read, which is certainly not a given!

To impose a rule that the grant has to be collected within a certain number of days also fails to take into account the fact that many of the recipients have to walk for many kilometres to reach a point where they can make the withdrawal.  Many of these people make arrangements to reach the collection point using the goodwill of others, and those arrangements can often not be altered merely to suit the whim of an unthinking SASSA official.  The penalty for being too poor to own a car to collect the parlous amount that SASSA so generously pays is starvation for the month!  A brief visit to any of the State hospitals around the country will show queues of hundreds of people waiting for up to twelve hours to see a doctor.  Most of those will be grant recipients – they have to be desperate to submit themselves to the incompetence and arrogance of the State medical service!  Many of those recipients will be constrained by their state of health in the outings they make to the nearest ATM to check whether the payment of the grant has yet been made.  They rely on it being available to them at the normal time.  In many cases, illness prevents them being able to collect the grant at all for the duration of the illness.

The SASSA official stated that, if the recipient missed the December grant payment window, SASSA would make a food parcel available to them, with a warning that the value of that food parcel would be deducted from the amount of the grant paid to them in January!  Does that man live in the real world?  The grant is not enough to live on, so how would making an advance payment of next month’s grant amount help, other than to postpone starvation for a month?  Of course, getting the food parcel entails a trip to a SASSA office, usually a much more time consuming and costly exercise than a trip to an ATM, and a wait there for up to ten hours to see the official concerned.

The statement that “only 35 000” recipients would not receive payment of their grants tells any intelligent observer that SASSA is a heartless organisation, with no understanding of the plight of the people they are there to serve.  “Only 35 000” is a huge number of people!  One is reminded of the comment by the Eastern Cape MEC for Economic Development, that the rate of unemployment in the Eastern Cape is “only 69%!” and therefore did not warrant any particular effort to correct the problem!

One wonders how well the top officials would respond to having their December salaries withheld for a month, because they did not spot a particular announcement in a newspaper!  It might be an interesting exercise to withhold a randomly-selected 2% of SASSA salaries each month, to gain an insight into the effects of this rather arrogant rule. 

What hardship would it cause to SASSA or to the ANC Government to leave the uncollected grant payments in the accounts of the recipients for at least a month, or preferably six weeks after the payment is made, to allow for the very real difficulties experienced by the poverty-stricken recipients in collecting this money?

Perhaps even more interesting will be the response to the unfeeling actions of SASSA at the next election, when the large number of ANC-voting poor have the chance to express their anger.

Dewani and other Symptoms of Collapse

Many people are predicting a disaster for South Africa in the coming years, pointing to all of the problems confronting the country, and others, the optimists, are saying that things will be better.  The Australians have a saying, ‘she’ll be right, mate!’  That assumes that there is some sort of natural force that takes care of all the inadequacies and the stupidities of people.  Unfortunately, any realistic assessment of the condition of the country must come to a conclusion that the odds are not on our side. 

·         Eskom:  This organisation (if one could dare to apply that description to a group of arrogant, highly-paid officials all running in different directions) has demonstrated clearly that it lacks any capability to provide the essential electricity, on which practically every economic activity in the country is dependent.  When one assesses the state of economic or industrial development of a country, the usage of electricity is one of the prime indicators.  Eskom has failed to ensure that electricity is available, in adequate and reliable quantities, in consistent voltage, and reliably.  Its predictions of delivery of bulk electricity, from Medupi and Kusile, and from the large number of power stations left over from the bad old days of the Apartheid Government, most of which have become strongly in need of the maintenance that is an essential of any modern productive facility, are more often wrong than right.  Medupi is currently six years behind its original commissioning deadline (probably because the ability of those in charge of the decisions needed more time to optimize the payoffs to themselves!), and even a date set in November for first-stage commissioning in mid-December will be missed by at least a month!  It is hard to believe that a prediction by a Minister can be 100% wrong!  The CEO of Eskom stated unequivocally on Sunday that there would be no more load-shedding for the rest of December, only to have load-shedding again on Monday.  He appeared on television on Monday to assure the public that there would be no load-shedding, only to have the statement cut off mid-stream by load-shedding.  The CEO managed to get a prediction of two minutes into the future wrong!  The spokesman for Eskom subsequently admitted that the Open Cycle Gas Turbines had failed because someone in the organisation had forgotten to order the fuel on time!  Eskom manages to supply a fluctuating voltage for a large proportion of the short times that it actually delivers electricity, causing huge problems for voltage-sensitive equipment.  That, together with the continuing failure, as well as the planned (?) load-shedding has brought South Africa to an unprecedented low on the scale of desirable investment locations.  The worst of it is that one cannot gain any confidence in the predictions and promises made by Eskom executives or the relevant Ministers.  They have all shown clearly that they have no clue of how to manage a vital element of the economy.

·         South Africa Airways:  No-one is willing to believe the weighty statements made by the executives and the Minister that this symbol of national pride (?) will turn around soon, and no longer require support from the State’s coffers.  An annual demand for another R600 million to ‘support the turnaround plan’ has become routine, as have promises that this will be the last time.  There has been no turnaround!  The only change has been that the annual performance bonuses (?) have increased every year, new senior management has been appointed, to allow them to dip their snouts into the gravy without doing anything to improve the situation, and the losses have mounted.  The saving grace in this situation, is that the accounts of the State-owned body have not been completed or issued for three years!  While that has spared us the depression of reading a story of incompetence, it has induced in thinking taxpayers a suspicion of the reasons for the delay.  If SAA had been a Stock Exchange-listed company, even the powerless JSE might have been induced to delist its shares, the Revenue Services would have commenced criminal action against the company, and the shareholders would have fired the entire Board and demanded that the new Directors take immediate steps to appoint competent managers to return the company to profitability.  In Germany, the senior executives would be in jail for managing a business that is manifestly incapable of paying its debts.  SAA would, in any situation with capable and knowledgeable management of the country, have been closed dow or privatised at least ten years ago.

·         South African Police Services:  Stories abound of wrongful arrests being made by the Police, of awaiting-trial prisoners walking away from custody, of people languishing in prisons for years as a result of the Police failing to complete their investigations, of valuables, such as watches, being stolen from crime scenes under Police control (?), of suspected murderers being brought to trial to face woefully inadequate accusations and unsupported allegations, of gangs rampaging through the townships of Cape Town and Durban, undeterred by the presence of the Police, who know that these conditions exist, yet fail to provide adequate staffing at the local Police Stations, in numbers or in competence, of rape victims being ignored when they lay charges against the rapists or their files being ‘lost’, of Police brutality in beating or killing innocent people.  The Police in South Africa have earned the reputation of being one of the least competent forces of law and order in the civilized world, and there are no credible signs that there is any improvement on the horizon.

·         National Prosecuting Authority:  The withdrawal of the charge of murder against Shrien Dewani was hailed by a British journalist as evidence that the criminal system in South Africa is fair.  One may be pardoned for wondering how much that journalist was paid to make that statement.  A far more apt pronouncement would have been that the case should never have been brought to Court with the evidence at hand.  It demonstrated very clearly that there is a total lack of competence at the head of an important body.  That is no surprise, given the handling of the numerous criminal charges against Jacob Zuma.  The expenditure of many millions to date, including the R2 000 000 to fly the accused from Britain in a chartered aircraft, the huge legal cost of the lengthy extradition processes in Britain, the cost of two months evaluation in a mental facility, and the as-yet unknown amount of damages that Dewani will probably claim for his arrest, extradition and harassment over a period of four years to face a charge that, in the opinion of most (uninformed) members of the public should have been a walkover, should have been handed to our honourable State President as a contribution to the upgrade of his private home.  That would have brought less ridicule to the nation!

·         State President:  The State President’s handling of numerous matters have been the subject of intense criticism over many years, culminating in the Nkandla affair, which has showed conclusively that he is either a liar or a fool, and, in any event, that he has no ability to manage the affairs of the nation, entrusted to him by the voters.  He has excused the lack of performance of his Government over the years, claiming that the demonstrated failings were the fault of the ‘previous Administration’, completely ignoring that he was the head of that previous administration, and that his Party has constituted the totality of those ‘previous Administrations’ for the past two decades.  His most recent tactic against the flood of criticism and allegations has been simply to disappear from the scene, visiting Russia and China and Australia, making weighty promises to the Party faithful at rallies and ceremonies, where he does not have to face his critics and detractors, but always carefully avoiding any answers to the voters and their representatives, the people who are entitled to know, because they pay his salaries and expenses.  It is perhaps amusing to note that, after a speech in which he urged the people to cut unnecessary expenditure, he flew to his home at Nkandla (the improvement of which at a cost of R245 000 000 he professed not to have noticed!) at a cost of R320 000!

·         Departments of Education:  The continuing underperformance of these vital elements of a modern economy has become routine.  More money is spent every year for less result.  Tens of thousands of children are being sent out into the world with an education that is, to say the least, inferior.  They are being handed Matriculation Certificates that have the value, at best, that they attended (possibly only some of the time!) school for at least twelve years.  Employers know that the Matric has very little value, with many of the bearers being close to illiterate and probably innumerate.  It has no value in the wider world, and the degrees that are based on them have been so degraded in the eyes of the civilized world as to have little value greater than a joke.  The only plausible explanations for the acceptance by the Government of this state of affairs are that those managing (?) the country do not know any better, or that there is a conscious attempt to dumb down the voter base, to ensure a continuing supply of unknowing voters to support the ruling Party.

·         South African Broadcasting Service:  It comes as no surprise that the Chair of the Board and the CEO do not have the qualifications they claimed and stated unequivocally to possess.  After all, anyone who has attempted to enter into a correspondence with the SABC will know that there is no-one in that building who is able to read or write!  How else does one explain that an attempt to cancel a TV licence that has carried on for ten years after the first notification of cancellation has been given, without any response from the SABC, other than computer-generated accounts showing amounts of over five thousand Rands, or computer-generated threatening letters from their collection agents?  The fact that they could have been given their jobs without their qualifications being checked appears to indicate the same absolute lack of management capability of those in control (?).  If the same situation had occurred in a bank or an insurance company, heads would roll.  They are required by law to have only ‘fit and proper’ persons in responsible positions!  In Government-owned bodies, and in Government itself, it does not seem to be a requirement that ‘fit and proper persons’ are in control! 

·         Civil Service:  No-one who has ever written to any Government body could expect that a result will ensue, unless the request is written on the back of a large cheque payable to Bearer!  The telephone is almost never answered, and, when it is, the person answering has virtually any ability to provide the information requested.  Any communication with a more senior person is shunted from desk to desk, leading to the quest being abandoned in despair.  The people at the bottom of the organization show no interest or desire to assist, and those at the top are adept in the skill of delay, unless, of course, there is a benefit offered to them or the company which will facilitate the matter, owned by their wives!

In summary, any reasoned evaluation of the management capability of South Africa Inc. must come to the conclusion that it does not exist.  The result of this can easily be forecast.  South Africa will continue to decline, in world rankings for virtually everything that makes living in the country a good experience, in its attractiveness as an investment destination, in its ability to produce a new generation of leaders who understand what is required to make a country work, in the honesty or competence of its Government and the bodies of Government.

Water and Sanitation

The SABC treated the gullible South African public to yet another series of excuses and promises in regard to the supply of water and sanitation on Tuesday, November 25, 2014.  The Minister responsible (if that concept can be applied to a Minister in the ANC Government) stated that the Department of Water Affairs needed to ‘up its publicity’, to improve the communication with the public about the activities of the Department.  She was proud to declare that it was the Department that had broken the news that the ‘bucket system’ of sanitation would not meet its targets for December, set in May.  She also announced that plans were afoot to nationalise all water supplies.  The final item of her talk was a plea to the voting public to vote for the ANC in 2016, so that the Party could, finally, implement the plans it has been preparing for the past twenty years.  Of course, she admitted that many of the problems in the supply of water and sanitation services stemmed from corruption and the employment of unqualified and incompetent staff.  She stated that active programs were under way to correct situations leading to the waste of water through leaks.

One would be excused for going to sleep during such an address.  The plans have been made and repeated, year after year, for as long as the ANC has been in power.  It would be a relief to the tens of thousands of people suffering acute water shortage to know that they will no longer have to buy water from the truckers, who fill their tanks with water stolen from public resources and transport it the three kilometres to the users, as they have been doing for twenty years.  That relief would come, regardless of the fact that the cost of provision of that water is three times what it should have been, because the corruption involved in granting the contract to lay the pipeline has bled off so much of the limited funds available.  The only people who would regret that development, something that would be taken for granted in any modern democracy, would be the public and political employees who are so much a part of the skimming.

The Minister, her predecessors, and their bosses, the State Presidents, have been making the same sort of statements and admissions for two decades now.  They might have been credible during the first three years of ANC rule.  After all, it does take time to correct the efficient systems that the Apartheid Government put in place!  Now, after twenty years, there have been no credible actions to improve the situation, no criminal convictions for corruption for theft of any Minister or Deputy Minister.  The State President remains free to refuse to account to Parliament for the funds expended on his private home, with the Deputy President making the excuse that the State President should not be subjected to robust questioning in regard to an action found by the Public Protector to be unjust.  It is notable that the State President has not been seen in Parliament since that questioning, preferring to spend his time at the G20 and the African Union, spending taxpayers’ money and grandstanding, without benefit to the South African economy or the people.  There have been no visible actions against those who misuse public funds, no criminal actions against those who lie about their qualifications to get lucrative public positions (indeed, the ANC announced that it would retain the services of “Dr.” Pallo Jordan, who unusually, resigned his position after it was disclosed that his doctorate was not recognised in South Africa).  The Minister evaded answering a question about the waste of water resulting from pipe leakages, probably the result of years of lack of maintenance of the infrastructure or, in the case of the infrastructure laid down by the New South Africa, from the inferior design, workmanship and materials resulting from contracts being handed at high prices to favoured contractors, whose sole purpose in the contract was to maximise their profit.  Her sole bit of information in that regard was that the Department now has a program employing children to correct the situation.  One wonders what a child could do, that cannot be done by the supposedly qualified and trained employees of the Department.  One’s thoughts go to a vision of twenty-three employees of the Department of Water Affairs, diligently removing alien trees from a length of riverside, less than a hundred metres from the sea at Hartenbos, presumably as part of a plan to preserve the water that would otherwise flow into the sea less than a minute later!  Attentive observers will recall the interview of the State President by a sycophantic SABC interviewer after the State of the Nation address a few years ago, in which Zuma noted a series of areas in which the Government had failed to meet the expectations of the electorate over the years, and promised to do better in the future.  He pointed out that many of the failures were the responsibility of the ‘previous Administration’, but failed to state that the ‘previous Administration’ was also an ANC Government.  Apparently, The ANC is totally renewed at each election, sloughing off the tarnished old skin of the past five years, to start making the same mistakes and repeating the same criminal actions, unblemished and not responsible for its failings in the past!

And all the time, the country struggles on, the burden of ANC mismanagement and demonstrably poor planning and policymaking growing ever greater.  The hopes of the new democracy have died, along with the cyclically good agricultural seasons, leaving behind a country that is poorer, weaker, slipping in its economic dominance in Africa, losing friends among the economically powerful nations while it strengthens its ties with those countries that support terrorism and exercise military dominance over other, more democratic nations.

It is clear to any thinking person that, if we really want to correct the problems of the recent past, we must get rid of those who caused the problems, and start anew, with a group of honest, competent and trustworthy politicians, preferably people who are willing to come clean with the voters and the taxpayers, and who are willing to turn their hopeful words into concrete action.

Political Parties – a Dictatorship?

 

To many, political parties are the epitome of Government in a democratic system.  The principle is that they roll up the views of the voters in a coherent way, enabling the Parliament to convert them to legislation that complies with the will of the majority.

But is that really so?

Far too often, the leader of a political party reaches that position by buying favours from colleagues, with promises of high position or of benefits in the form of hand-outs, of lucrative contracts or of personal honours once the leader has gained power.  Many times, the campaign to gain leadership is couched in a devout belief of the desire to improve the lot of one’s fellow man, to impose an economic order that will be more beneficial to the masses.  Most of these are no more than empty words.  In the African context, the ‘average voter’ does not have the mental equipment, the education or theoretical knowledge, to evaluate what the aspirant to the highest post is promising.  The choice becomes an evaluation, in personal terms, of the man and the promises.  A chant of ‘Yes we can’ has the ability to raise an unknown and untested Trade Unionist to the Presidency of the United States.  The donation of three cows to a village is enough to sway the chief of that village to ensure that the villagers vote for a man who has over seven hundred criminal charges against his name and a record of inability to manage his own finances.

How did this come about?

The Party system works by using groups of carefully selected Members to choose delegates to decide who will be the Party’s candidate.  Already at that stage, the elements of dictatorship become evident.  The most vociferous of the Members become members of the electoral body.  Once they are ensconced, they choose those who offer them the greatest benefit to go on to the next round of voting.  At that point, the real electorate is already being presented with a selected range of candidates to go to the next round.  The real wishes of the electorate are excluded, unless the person ultimately chosen is so wildly unpalatable to the electorate that they put their foot down at that point.  At this point, the election of the United States President, from a very small pool of potential, diverges from the South African system, in which the President is elected directly by the delegates, with no say at all by the wider electorate.  That is how it has been possible for the man who is probably amongst the least suitable to hold the highest office in South Africa to gain that position of power.  Once there, he has the power to dictate to the Party what will happen.  He has the power to ensure that anyone who does not toe the Party line (i.e. the line that he dictates) is disadvantaged, by being held back from rising through the ranks as a result of diligent and intelligent work, by losing government contracts, by being penalised by the South African Revenue Services, by being harassed by the Police.  He also has the ability and the power to dispense largesse from the public coffers, by appointment to lucrative positions in the ever-expanding Civil Service, by dispensing Government Grants, by directing development activity to the required position.

The office of State President is no longer a democratically-elected position, subject to the will of the people, and to the obligation to provide full explanations of expenditure and policies.  It is a dictatorship, in the worst traditions of African Independence.  It seems no longer to carry the prime obligation of complying with the Constitution, in law or in spirit.

Worrying signs of this progression are evident in the intention of the Minister of Defence to embark on another spending splurge on weapons and munitions that have no conceivable use in the context of South Africa, other than the generation of huge commissions to those in power and the entrenchment in the minds of the Generals that their best benefit will lie in the support of the Party against a transfer of power through the ballot box.  Another sign is the invasion of Parliament by the Police, a sign that the Party views its control of Parliament as a right.  Yet another sign is the slavish adoration of the Great Leader, Jacob Zuma, by the Party Members who, one after the other, stood in Parliament to proclaim that he had done no wrong in receiving a benefit in the hundreds of millions of Rands through the construction of his private residence at Nkandla, in the face of all the facts, the finding by a Constitutional watchdog, the Public Protector, and the cogent arguments by virtually every Member of the Opposition Parties.

The time has come for all South Africans to take stock of what their democracy, their grand achievement only twenty years ago, has become, and what it is well on the road to becoming.

Democracy and Taxes

http://today.moneyweb.co.za/article.php?id=793440&cid=2014-11-19#.VGwXy2PDvEJ

Democracy and Taxes

 

It has become standard in the modern world to separate the operations of Government from the people who pay the bills.  This situation is nowhere more evident than in the new South Africa.

It should be an essential understanding of Government that the people who make the laws and those who apply them are the servants of the people.  They are there at the will of the people, and they are paid by the taxpayers.  No matter how the machinations of Government are constructed, the taxpayers and the ordinary citizens are the ones who supply the money to keep them there.  South African Airways, although, supposedly run as a business (although there are no obvious signs of any real understanding of the principles of business in that organisation) is, in the final analysis, an organ of Government, and it will remain so until the Government chooses to divest itself of that millstone.  As long as there is any public investment in the corporation, it must be held to the rigid standards of good governance and transparency that should be applied to any organisation owned by the public.  Eskom is another example of an organisation established and funded by the people, by means of diversion of tax money to support it, by guarantees given by the State to enable it to borrow the funds that it says it needs, and by the payment by citizens and taxpayers for the services it provides.  The SABC and Sanral are yet other examples, and there are many more.  And there are as many examples of incompetence in the performance of their duties to provide the services they are supposed to perform, subterfuge, arrogance towards the public and dishonesty in their operations and their reporting to the public, who are their ultimate owners.

This situation has come about because the politicians have succeeded in their efforts to separate what they do from the decisions of those who pay for it.  The continual harping on the needs of the ‘poorest of the poor’ has succeeded in convincing the electorate, the taxpayers and the recipients of Government largess, that the prime objective of Government is to provide a security blanket for those who cannot provide for themselves or who will not take the steps that are necessary to provide for themselves.  Those good-hearted people, and those who see their best benefit lying in a system that provides for them, albeit poorly, without the necessity for them to do anything for it beyond casting a vote twice in every five years for the party that promises the most, fail to understand that the money must come from somewhere!  The vast bulk of employees do not understand that the money required to pay their salaries and wages does not magically appear in the bank account of the employer every payday.  They do not understand that their efforts on behalf of their employer are what ensures that the money is there to pay their wages.  Government, on the other hand, enjoys the situation that, if it needs money, it can simply take it from the taxpayers.  They do not understand the effort, the risk and the imagination it takes to earn the money that Government simply takes.  However, in the end, if Government fails to provide the conditions in which the taxpayers are able to earn that money, the flow of funds to the Government will simply dry up.  If the Airports Company simply increases the rents and levies payable by the companies operating at the airports, the cost of flying, an important element of the economic life of a country, will become too high to be justified by the benefit to the entrepreneur of those flights.  If the cost of electricity, an important indicator of the health of an economy, is simply pushed up because the State-owned monopoly supplier of electricity is incompetent to do the job, the industries and businesses that use electricity will simply close down.  If the cost of road transport escalates to almost double because the agency responsible to the construction and maintenance of the roads decides that it needs more money (a decision that is neither transparent nor honest, and very questionable in the light of the huge salaries and bonuses paid to senior executives who are manifestly incapable of doing their jobs), the tourist business will slow down, internal transport will ultimately die, and all of the businesses that rely on a good road transport system will fail, either spectacularly or miserably.  If the alternatives to all of these services are eliminated, either by Government edict or by incompetent and short-sighted management of the public-owned organisations that provide them (do not forget that Spoornet put a huge effort into destroying the long-distance rail service that was such an important factor in building the economy of the country in pre-ANC times), the alternative to road transport is severely restricted, and the collapse of the road transport system is facilitated.

Every thinking South African is aware of the rapidly increasing number and scope of the threats to the South African economy.  If they apply their minds, they can see that the country is sliding ever more quickly down the competitiveness slope, that even the basket-case economies in Africa and Asia are progressing more quickly and more sustainably than is South Africa.  Many economists and leaders of business and industry are expressing the view that South Africa is rushing towards the tipping point, beyond which it may not be able to recover without a lengthy period of traumatic economic surgery.  Several of the more realistic of these are already saying that the economy is beyond that point, that even an economically sane and competent new Government will have extreme difficulty in correcting the disasters that the Marxist-Leninist policies of the ANC are building.  Even worse, many of the top leaders in business are withholding comment in public, fearful of the punishment that will be meted out to them by the Party, a group of people who are increasingly adopting the North Korean imperative of unrelenting praise and glorification of the Great Leader, Jacob Zuma, from whom all largesse flows!  Those leaders of business are working quietly in the background to ensure that their businesses are insulated from the economic crash that they discuss in private.

Some economists who should know better, such as Ryk van Niekerk, feel compelled to state that the economy will not collapse, while they point out that the Government headed by Jacob Zuma is the worst Government South Africa has had to endure in over a hundred years.  One cannot help believing that the protestation that ‘things will get better’ stems more from a pious hope than from any understanding of the situation.  It is clear that things will not get better unless the people who pay the bills, the taxpayers, take urgent and effective action to recover control of how their money is spent. 

Thinking democrats, the people who believe that the Government they pay to do the work that they require and authorise must comply with their wishes, must take urgent steps to recover control of the Government from the politicians who see the country as their fiefdom.  They must take meaningful action to make the politicians understand that they are prepared to pay the taxes only if they are satisfied that those taxes are being applied, efficiently and effectively, and, above all, honestly, to achieving the objectives that are needed to ensure that the income that pays those taxes will continue, and will grow.

Nkandla - The End of Democracy in South Africa?

The Nkandla story has had thinking South Africans inflamed for many months, but never more so than during the debate in Parliament on the report of the committee investigating whether President Zuma should be held responsible for the cost of the upgrades to his private home, a bill that exceeds R246 000 000.  Predictably, the ANC Committee found that Zuma could not be held responsible.  Amidst all the rhetoric, several facts stand out clearly:

1.    In accordance with a Cabinet memorandum, itself a questionable method of controlling the excesses of Ministers and the President, Zuma was entitled to State funding for improvements to the security arrangements at his home.  Most of the expenditure did not relate to such security matters.

2.    Zuma appointed architect Minenhle Makhanya as his agent to oversee the construction.  Makhanya instructed that the upgrades were implemented.  In addition to this role being illegal in the process of expending public funds, an interesting point arises.  In South African law, an agent is a person appointed by the principal to act in his stead, and his actions are imputed to the principal as though the principal himself had so acted.  Zuma has claimed that he did not know what was happening at Nkandla.  Two conclusions may be drawn from this statement.  Either Zuma is clearly lying about his state of knowledge, because he was personally present on site on at least several occasions, and so could not have known at least the approximate extent of the expenditure, or he has acted in a way that is so negligent as to defy belief, a conclusion that is probably as damaging to him in his role as the Chief Executive of South Africa Inc. as the conclusion that he is a simple, and simple-minded, liar.  Or, probably, both.  However that is viewed, the simple fact is that the agent acted on behalf of Zuma, and Zuma must bear the consequences for those actions.

3.    Zuma has stated in Parliament that the total cost of the home was paid by the family from a mortgage loan, but he has consistently failed to provide any evidence of this.  Either he is lying about the mortgage loan, or the family has managed to scrape together R246 000 000 during his career as a politician.  Zuma is known to have had limited financial skills, so he must be a brilliant investor, or, more likely, the numerous allegations of his involvement in corruption are correct.  An investigation into his tax returns is likely to yield fascinating results, both in terms of how he earned the money, and whether he has paid the taxes on those earnings that he is so loudly demanding at the G20 should be paid by productive corporations.

4.    The funds that were used to pay for the upgrades were diverted from community projects, projects that were funded by vote of Parliament to uplift the ‘poorest of the poor’.  This diversion was handled in an underhanded way, which is, to say the least, illegal.  Zuma would have us believe that he had no knowledge of the source of such funding.  This alone is sufficient to demand his removal from office.

5.    Zuma has consistently refused to answer the questions of the Public Protector, an office established under the Constitution for the explicit purpose of protecting the public from the sort of excess and illegality represented by the actions of Zuma in this matter.  His refusal to answer questions, his lengthy delays in responding to the Public Protector, and his ignoring of the findings of the Public Protector are all in flagrant contempt of the Constitution, and are certainly grounds for his impeachment.

6.    Zuma has been protected by the ANC from having to appear to answer questions in Parliament about this matter.  His role as President does not put him above Parliament or the law, but enhances the need for him to provide the fullest information to the Representatives of the People.  His failure to fulfill that obligation shows the contempt in which he holds the Constitution and the organs that uphold it.

7.    The ANC is willing to go to extraordinary lengths to shield this man from his legal and moral obligations, and so must be construed to be complicit in his breaches of those obligations.

What should be concluded from this event?  Certain conclusions are inescapable.

1.    President Zuma will go down in history as the worst President ever to lead South Africa, Prime Minister Hendrick Verwoerd included.  He has brought the country to a new low of honesty, integrity and competence.

 

2.    The ANC has proven that even an advanced nation such as South Africa has the capability to become an African banana republic.  There is an increasing belief in South Africa, even amongst the Black population, that ‘things were better under Apartheid’!

3.    The outrage felt by the public, particularly the tax-paying public, in South Africa is such that the country has edged significantly closer to an outright revolution.  It is fair to say that the economic stability of the nation will be severely impacted by the fallout of the Nkandla Scandal, coming on top of the Arms Deal Cover-up and the Marikana affair.

4.    Thinking and moral investors will cross South Africa off the list of possible investment destinations, to the extent that that has not already been done.  They will see that it is a country in which no organ of State feels itself obliged to comply with the terms or the spirit of the Constitution, and therefore a place where the laws of the land no longer have any meaning other than what the ruling Party decides they have.  This has been a long time coming, twenty years in fact, but it has now reached the status of a new Apartheid, ignorance of property rights, extreme corruption, in which a loss to corruption of R30 billion is considered to be an improvement and a situation of more than two-thirds of municipalities fail to obtain a clean audit, a country in which the education system, if it can be said to exist at all, is ‘improved’ by adjustment of the pass mark to 30%.

5.    All of those South Africans who wish to live honest and productive lives will be looking for places to which they can emigrate.  It has been a disturbing trend in South Africa that people believe that the only way to succeed is to join the corrupt system, and feed off the incompetence that has been fostered by Zuma and his cronies.

6. The ANC has proven that democracy as a concept has no meaning in South Africa.  The Party is prepared to ignore all the safeguards that the Constitution has put in place to protect the people against the excesses of the political leaders and the dishonesty of the cadres they have appointed in positions of power.

If there is to be any hope for South Africa, President Zuma and his Cabinet, together with his Party, must be removed from office soon.  A five year wait until the next election is too long for the country to survive as a democracy.  In the meanwhile citizens should be alert to moves being made by the ANC to bring the military into the fold.  Remember, when the citizens revolt in Africa, the first step of the sitting dictator is to impose military rule. 

Certainly, that is unconstitutional, but who in the present Government has shown any regard for the Constitution?

State Criminality

One of the essential elements of a developing State is an insistence by the Government on the maintenance and observance of private property rights.  If a citizen is to exercise his or her ingenuity and invest funds and time in the development of new businesses and new ideas, that citizen has to have the assurance that the results will be available to him or her.  Would you take the trouble to grow a vegetable garden if you knew that the products would be taken by a passer-bye without even a ‘thank you’ for the trouble you have taken, the money and effort you have invested?  Of course you would not!  It is more likely that you would join the ranks of the thugs that prey on the far-sighted and hard-working citizens who become the victims.  Investing the money, the time, the effort and the risk required to create something that did not exist before, and would not exist apart from your effort, would make no sense.  If you had the drive to do it, the chances are that you would move to a different neighbourhood where you could retain the fruits of your effort, a neighbourhood where the prevailing view was that you should be rewarded for those efforts, where the people in control could recognise that what you take out of the work is a fitting reward for the contribution you make to the good of the community.  Soon, those neighbourhoods that supported the ‘rights’ of the thugs to take from the productive members of the community would be denuded of those creative and hardworking members who drive the economy of the community, leaving behind the parasites, the criminals and the leaders who permitted and encouraged the institutionalised criminality.  The neighbourhood that offers protection from deprivation of your rights will benefit by the addition of the efforts, skills and intelligence of those driven from the places where theft, in any form, is not only tolerated, but also undertaken by the authorities.

South Africa under the ‘leadership’ of the ANC, unfortunately, has come to view private ownership as evil, except, of course, when that ownership is in the hands of the Party favourites.  The change has taken place slowly, each step being promoted with plenty of rhetoric about the need to protect the ‘poorest of the poor’.  The private ownership of mineral rights has been taken away.  The right if a businessman to choose his employees has been compromised.  The contract between employer and employee has been skewed to the extent that an employee has all the rights and the employer none.  There is a plan to take 50% of the ownership of productive farms from the farmers who have invested the funds, the time and the ingenuity to build them to provide the food supplies to the nation, and to hand that share to the workers, without compensation to the farmers who have built them up to provide the nation with food.  The argument that the workers also built the farm is specious.  They were paid for their work, while the farmer took the risk, and, if the pay was not sufficient, they had the right to withdraw their labour and apply it elsewhwere.  The ownership of mines, banks, insurance companies and all other businesses of any size is required to be ‘shared’ with members of the ‘previously disadvantaged’ groups.  The fact that such transfer of ownership is paid for from the dividends received from the shares transferred is designed to confuse the gullible – it is a simple donation by the remaining shareholders of a part of the business and the income from it that would have flowed to them, in the absence of this State-sponsored criminality.  It is State-mandated theft.

Now the Department of Trade and Industry is embarking on the next phase of the theft.  It is planning to deprive the owners of the patents that are sorely needed in this country of their rights, by enforcing the granting of licences to use those patents at a low or zero licence fee.  Of course, this is done to benefit the ‘poorest of the poor’, so no-one can argue the morality of it.  We all know that the ‘poorest of the poor’ is a form of Holy territory, not to be exploited (except by the governing Party).  We all know that the benefits of those patents should be made available to the country, that we can’t afford to pay for their use, so the jackbooted Capitalists who invested their ingenuity, their time, their money to create those patents, must simply hand over the rights to use those patents at a price to be determined by the noble political leaders in the interests of the ‘poorest of the poor’.

To put the story in a context that even the most obtuse can understand, let us imagine that you, a hardworking man or woman, have sold a possession that has taken you half a lifetime to acquire.  You are walking down the street in South Africaville, the money in your pocket, when a thug steps out and sticks a gun in your face.  “Give me half of what you have in your pocket,” he says.  Surprised (or perhaps not – this is, after all, South Africaville) you respond.  “Why half?”  The thug looks at you earnestly.  “I’m being fair to you, to leave you with half of what you have worked for!”  He is surprised that you do not understand the fairness of his act.  After all, half is better than none!  “What right do you have to take half of what is mine?” you ask, flabbergasted.  “My friends all agree with me that I am entitled to take half of the fruits of your labour!  That is the democratic system!”

That is emphatically not the democratic system.  It is the socialistic system!  It is theft, pure and simple.  The fact that the majority of voters agree that the Government may act in a criminal way does not make it less criminal.  We need to evaluate our actions, and those of our Government, on an objective basis of right and wrong.  That objective basis must comply with the standards of the civilised world. 

As citizens of a country, we have an obligation to support the provision of certain services, such as (effective and honest) policing, the construction of roads (preferably roads that will not develop potholes in the first rainstorm), education (of a standard to make our children able to earn their own way in the world).  We do not have an obligation to pay a bloated, ineffective and corrupt Civil Service.  We do not have an obligation to pay for thirty-two Cabinet Ministers, none of whom seem to have any understanding that they are the servants of the people and, as such, they have an obligation to inform the people of what they are planning, what they have done in our behalf, and the real truth of the areas for which they are responsible.  As citizens, we are entitled to expect value for our money, and a true accounting of the use of it.  As citizens, we are entitled to retain all of the assets and income that we and our ancestors have worked for.

We are not the fiefdom of the ‘new royalty’, the band of thugs who believe that everything we own is ultimately the property of the State (a different way of describing the Association for Nepotism and Corruption), to be exploited for the benefit of the people who can’t or won’t work to produce their own income.  We are not a resource to be exploited by the Government for its own ends.

To revert to the proposed change in the laws relating to the rights of the owners of patents, it is clear that the ANC-led Government is determined to undermine the rights of ownership which are an essential of a law-abiding economy.  The proposed changes will continue to reduce the incentive for people to invest in the future, or, possibly worse, to move away to a new country which understands that an entrepreneur will invest only if he can reasonably expect to receive a return.  There will be an increase in the stagnation of the economy that is already evident, and the only likely promoters of a recovery from that stagnation will choose to escape to a more enlightened, more honest country.

Some of the readers have asked what can be done, in the face of a Government that is increasingly irrational in its actions to preserve the power of the ANC.  Short of an uprising by the enlightened citizenry, the obvious solution is to employ the tactics of Ghandi.  Apply passive resistance.  Make every action by Government as difficult as possible.  Raise objections to every tax, delay payments to Government, and compliance with its demands, as long as is possible under the law.  Talk to foreign investors and inform them of the true situation in the country.  Write to foreign newspapers to tell them of Nkandla, the Arms Deal, the deprivation of private rights of ownership, the new Apartheid, Marikana.  The greatest strength of the Marxists who are running the Government is the apathy of those who are being exploited by it.  The situation in South Africa will not improve unless the people who are supporting the policies of the Government by paying their taxes, tolls, levies, licence fees, airport taxes, electricity bills and the numerous other demands of Government and Government-owned organisations show their dislike of them.  In the end, the person who pays is entitled to call the shots.