Friday, 13 February 2015

South Africa - the State of the Nation 2015 - a Disaster



The State of the Nation Address on February 12, 2015, must give pause for thought.  Any international investor, be it an industrialist, planning to invest $100 000 000 in a new plant, or an individual, planning to buy a house in the sun, was given a rude warning.  The planned new legislation regarding property ownership will prevent ownership of property by ‘foreigners.  The explanation given by the President during a discussion the day after the chaotic address is that the Blacks have been dispossessed of their land over centuries.  They do not own the majority of the land, and the ‘best parts of the country’ are now in the hands of foreigners.  Ownership will be replaced by a system of leasehold, which may be for very long periods.  Of course, this new idea, borrowed from its communist neighbors, will enable a man from Soweto to buy an apartment in Camps Bay.  The simple fact that there is nothing preventing him doing so under the present system, apart from finding the money to pay for it, seems to have escaped the inspired central planners of the ANC.  The new proposal is simply a mechanism to keep investors away from the country.  Experience with the Government has shown that it uses every mechanism available to benefit the favored few, the leaders of the ANC.  A foreign-owned mining company was the subject of pressure to hand over 50% of its shares at no cost to a shortlist of persons.  When it refused to accede to this demand, citing its legal rights, the Department of Minerals and Energy summarily canceled its mining license.  Of course, the company had expected that, and was able to win a Court battle for reinstatement of the license.  However, it is clear that, when an ANC leader wants your holiday home in Cape Town, you can expect the lease of the land to be canceled.  Investors, get the message, sell your land holdings in South Africa now!

That message was reinforced during the somewhat bumbling discussion conducted by the President on the Address.  He made it clear that South Africa belongs to the Africans, a policy started by President Thabo Mbeki, the man who demonstrated the extent of his intelligence by proclaiming that AIDS is a syndrome, and syndromes don’t become diseases.  The President, assisted by the smiling sycophant who moderated the discussion, also made it clear that any non-African is considered a foreigner.  To the perceptive listeners, this was a clear warning that Whites are not viewed as South Africans.  The writing has been on the wall a long time.  Whites are not welcome!  Of course, the fact that the South African economy is crumbling slowly, rather than collapsing, is due to the fact that intelligent businessmen are losing hope gradually, and departing slowly, rather than in a precipitate flight, as the Indian businessmen did in Uganda, when Idi Amin, another lunatic African politician, declared that the Indians were responsible for the ills of the Ugandan economy.  The lesson there was very clear.  If the Government chases away the people with skills and drive, the economy falls apart.  Unfortunately, that is happening in South Africa, more every year.

The President read from the prepared speech (in a presentation that even one of his numerous wives alluded to as sleep-inducing) that the plan to force commercial farmers to hand over 50% of their farms to the workers was now proceeding, with the first 50 farms already identified.  Under this scheme, the amount that should have been paid to the farmer as compensation for the loss of, sometimes, centuries of work in developing the farm, will be paid into a fund for the benefit of the workers!  The ANC has already shown its willingness to remove the property rights of its (White) citizens by simply expropriating the ownership of minerals, replacing the ownership by granting effectively a lease to mining companies, which it feels free to revoke at any time, or to transfer to another (favored) person.  Perceptive investors will recognize the pattern.  Real rights are no longer sacred.  How long will it be before the ownership of banks or insurance companies, of IT companies, or of any other form of business will simply be removed and transferred to some other person?  If you doubt that this is likely, please consider this story.  The writer was personally present at a meeting between a representative of the ANC Military Veterans Association investment company and Minister Stela Sigcau.  That morning, a headline item in the country’s newspapers had announced that the fishing quotas of the (White-owned) commercial fisheries had been reduced by a third.  Sigcau asked the ANC man whether they had received the quota handed to them at no cost.  He replied that they had.  The Minister then asked whether they had the funds required to operate the fishing fleet under the quota (a requirement that had always needed to be satisfied before a quota would be allocated).  The ANC man replied that he thought that they had, but, if their negotiations for this were not successful, they had already almost completed the sale of the quota to a Spanish fishing company for R6 000 000.  Sigcau expressed her pleasure at that news.  The withdrawal of the quota from the existing operator had some interesting consequences.  Three processing factories were closed, and 3 000 employees were retrenched.  The fishery company, which owned the only two modern trawlers in the South African fleet that with international hygiene regulations for the export of fish leased the boats to a new company established in Argentina (rumored to be in the ownership of the same foreign shareholders), which then continued to operate them in the same area.  South Africa was deprived of the jobs and the foreign exchange earnings under the quota, and the ANC was enriched to the tune of R6 000 000.  Can you spot who were the winners and who the losers?

Another point made by the President, alluding to the rolling load-shedding by Eskom, the country’s monopoly electricity supplier, was that the problem was a challenge, not a crisis.  That view is totally opposed to the view held by the majority of South African industry and commerce.  He said that the Government ‘is doing whatever it can’.  The performance of the Government in this arena has been abysmal, to say the least.  The current repeating blackouts, recurring at least two or three times each week for up to six hours at a time, is costing billions in economic performance.  The problem has been known to exist since at least 2003, when the Government was alerted to the need for more generating capacity.  In the nature of the ANC Government, planning for the future is way down on the list of priorities, particularly when the investment required does not produce votes for the ANC at the next election.  No new investment was made.  Indeed, in 2008, when Eskom warned that maintenance requirements would reduce the capacity of the plants below the minimum required, it was decided to reduce the maintenance schedule by 80%!  It does not require a rocket scientist to understand that this situation was certain to induce a terminal disease, which is now in its final throes of bringing the country to economic collapse.  The cost of such electricity as is actually delivered is slated to increase by nearly 13% in April, an increase that is likely to bring many industrial users to their knees, and to drive away foreign investors who planned to establish industrial plants in the country.  The President hopes that the electricity woes will be solved by the construction of nuclear plans (almost certainly by the Russians, who have already announced that they have signed the contract with South Africa) for completion in 2025.  The construction of the power plants at Medupe and Kusile (both projects already five years late on a five-year project plan!) show no improvement in the possibility of them coming on line any time soon.  The President skirted the subject of the lack of nuclear skills in South Africa, saying that the country had such skills in the Apartheid years, and those skills would be revived after the abandonment of the nuclear weapons program.  He carefully omitted mention of the fact that the ANC Government had dismantled the center of nuclear excellence that had been built up by the Apartheid Government, reducing the employment of 1 800 nuclear doctorates to a supervisor and cleaning staff, which were stripping the copper cable of the buildings for sale in order to pay the bills.  The abjectly poor performance of Eskom in planning and maintenance of its existing power infrastructure, and the instruction given by the Eskom CEO to disregard the requirement to blow high-pressure steam through the turbine feed pipes at Medupe, a necessity to ensure that no foreign objects are present which might damage the turbines, and a requirement of the warranty on the turbines, in order to save a week in the coming into operation of the first phase of the plant, must give any thinking person pause at the prospect of Eskom or the ANC Government operating any nuclear facility, which is, in essence, a controlled nuclear explosion.  The thought of scientists from Chernobyl training the South Africans to do the work is equally frightening.

The opening stages of the State of the Nation Address, when the Opposition parties had to demand the reinstatement of the cellphone signal before they could participate in the address, a demand which had to be repeated three times before the Speaker reluctantly agreed to attend to the matter immediately (the switching off of the cellphone signal constitutes a serious breach of the Constitution as well as other laws), followed by the interference tactics of the Economic Freedom Fighter MPs, demanding to know when Zuma planned to ‘pay back the money’, which resulted in the Speaker calling in the ‘Parliamentary Security’ to expel the EFF MPs, including the many of them who had not participated in the interference (both the expulsion of all Party members and the use of armed ‘security’ personnel, presumed to be Police, being serious breaches of the Constitution and other laws).  The refusal by the Speaker to inform the Chamber whether the ‘security personnel’ were Police, after she had been questioned several times, led to the Opposition Parties walking out.  What followed was a more-than-usually bumbling and inept speech by the President, repeating his election speeches and plans that have been on the agenda since he ascended to the Presidency. 

Zuma has displayed convincingly his inability to lead the nation.  Indeed, he has demonstrated convincingly that he has ‘lost the plot’.  The fact that other members of the ANC, who might have been considered possible President material, are willing to go along with this dishonest and incompetent President must be taken as a serious warning of the inability of the ANC to continue to manage (if that could be considered to be an apt description of their stumbling from crisis to crisis) the once-powerful South African economy.

In the words of Alan Paton, we cry the beloved country.

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