Patriotism and Realism

Some people are recognizing that the social fabric of the country is crumbling, torn apart by the divisive comments of the State President and the racist statements of members of the ANC and the EFF, all of whom appear to believe in the Apartheid policy of ‘divide and rule’.  Any effort made by thinking people to correct the course of the country is met with a howl of disdain and the accusation that the speaker is racist and anti-revolutionary.  The policies of the ANC Government are increasingly Marxist-Leninist, and the implementation of those policies even more so.  Man of the heads of the State-Owned Enterprises are pursuing their own extremist line of gaining revenge on the Whites, showing a total lack of understanding of the principles and operation of economics, and bringing about huge inefficiencies in those enterprises and in the wider economy.  In the midst of all of this, and at a time of economic crisis in the country while we head into a Local Government election, with all of the extremist propaganda by the Parties and unrealistic promises that either must be kept, at the risk of popular revolts and riots demanding delivery on such promises, or perverted in subtle ways to give the impression that the promises have been met, while retaining some level of affordability, it is becoming increasingly difficult to make the quiet voice of reason heard.  It is perhaps time to consider some real truths.

The Whites are not the enemy of South Africa.  White-owned businesses have grown, as have Black-owned businesses, as a result of hard work, intelligent decision-making and taking of considerable risks, often in the face of attempt by the Trade Unions and Government to ‘redistribute’ the funds they have generated and used to grow or to attract investment by foreigners who have only a reasonable profit in mind.  Foreign investors feel no obligation to support BEE objectives or to do uneconomic things in order to support the growth of Africa.  Their only objective is the recovery of a profit that is at least reasonable, and to do that with a risk exposure that is commensurate with the level of the profit.  If there is antipathy towards the South African Government or the ANC, it is the direct result of those policies and actions that have demonstrated that the South African Government views businesses, particularly White or foreign-owned businesses as a legitimate target.  In many cases, the Government has demonstrated clearly that the best way for such businesses to avoid becoming targets is to pay a bribe, sometimes cash under the table (if there is doubt about this, the author has documented at least five cases of this!) or in more subtle ways, such as handing over a large share of the business (and investment) to persons nominated by the Government, by appointing connected persons to lucrative positions in the company’s Board without them undergoing any evaluation of their capability to do the job required to earn the big pay packet and benefits, or taking in a partner into the business merely to win the contract (e.g. SAA and Eskom suppliers, Shell SA, Mitsubishi).  It may come as a surprise to the Government and the ANC that many of the foreign-owned businesses which would like to do business with South Africa are subject to stringent laws prohibiting such bribery, on risk of very large fines or imprisonment, and any attempt to extort such bribes, however they may be formulated, acts as a powerful deterrent to such foreign companies from doing business in or with South Africa.  Whites, although most of them were fiercely patriotic under Nelson Mandela, have learned that they are the pariahs of the South African economy.  Many of them have got the message clearly (including such stalwarts of South African business as Old Mutual, SA Breweries, Gencor and Anglo American) and moved abroad, where they can develop a business that has only a small part still subject to the whims and machinations of the South African Government and the ANC.  That move continues and will continue for as long as Whites perceive that they are the whipping boys of the politicians, not only of businesses, but of the White business community that is the driving force of the South African economy and the possessors of the largest part of the skills and experience available in the country.  When the move away from the country takes place, it will almost certainly take also the Blacks, Indians and Colored who have earned their way in those companies.  For as long as these conditions persist, the South African economy will continue to slide, the slope of the downward curve increasing as the resources of skills and experience diminish.

Whites are as good as Blacks, and vice versa.  This inalienable truth is well-accepted in the White community, with one important proviso.  The majority of White business persons have undergone a good education, they have gained their skills over many years of working in the companies they now manage, and they come from a background that is conducive to them understanding the requirements of business.  Many, if not most, of the Blacks who have been forced into senior positions in business and Government do not have these.  The Black culture has been very socialistic in character, which limits their ability to understand the basic principles of economics.  Examples of this abound, from Jacob Zuma’s amazingly stupid demonstration of his incapability to understand how the world works when he bemoaned the fact that the price of petrol or bread is set by the ‘capitalists’ without any discussion, by Julius Malema in his demand for ‘expropriation without compensation’ to ensure that ‘Blacks regain their land’ and gain control of all mines and banks, by Cosatu when their spokesman when he stated that ‘wage-earners run a far greater risk than the owners of business’, and by dozens of others.  Even Thabo Mbeki’s assertion that ‘AIDS is a syndrome, and you can’t get a disease from a syndrome’, a statement that was the forerunner of South Africa losing at least three hundred thousand citizens to AIDS and becoming the AIDS capital of the world, can be classified in this category, of an inadequate and untutored understanding of the real world.  The question of culture can be addressed easily, and it will not be a matter of the White culture being imposed on the Blacks.  It will be a matter of Blacks coming to understand the essential truths that dictate how this world works, as the Whites were forced to do over the centuries.  An important element of this is that the problem be addressed honestly, and acceptable solutions found to correct the situation.  The question of a good education has been discussed many times, always without resolution, mainly because the ANC has a position on it that the Party bosses want to impose on the people, without reference to the real requirements of a modern economy.  Thabo Mbeki stated, early in his rule, that South Africans should be providers of services, and he dictated that the education system should be designed to ensure that there are no intellectual elites.  This policy, along with the disastrous sacking of tens of thousands of qualified and experienced teachers and Head Masters, to be replaced by ANC members who would be more inclined to toe the Party line and to revise the history of the country, has created an education system that is totally unable to provide an education that would rank above the lowest five in the world, and that will continue to churn out hundreds of thousands of students with an inferior education that will not permit them to join the ranks of the competent business people that the country so desperately needs.  The truth of this is clearly shown by the fact that practically none of the children of Black politicians or the Black business or Government elite attend Government schools.

An advantage held by Whites is that they have undergone on-the-job training, building on their inherent capabilities, their cultural advantages and their good education to ensure that they become capable to manage large organizations.  There can be no doubt about this requirement:  time is required to learn and hone the skills required in management.  The Government has done a huge disservice to the Black population and to the country by leading them to believe that experience is not required.  The disastrous state of all State-Owned Entities and most Government entities is stark proof of the fact that the fact of Party allegiance is not sufficient to be effective in a management position.  The people who have been placed in those positions have been set up to fail, and their failure has brought not only the failure of the organizations they manage but also the faith of Whites and foreigners in the country.  The continuation of the BEE policies, even in a mutated form, will guarantee the continuing collapse of the country.  It would have been far more effective for the ANC to have understood the realities of the situation and built on the goodwill of the Whites, who would have been delighted to help their countrymen to realize their potential.

In summary, it is true that Whites are realistic.  Most of them are also patriotic, at least to the ideals that Nelson Mandela held out.  Unfortunately, the ANC under Thabo Mbeki and Jacob Zuma have shown convincingly that there is no place in South Africa for them, however much they would have wished it otherwise.  That view is not unpatriotic:  It is a realistic acceptance of the truth.  If the Government wishes to save South Africa from the inevitable results of the path it is now on, it must find a way to harness the skills, experience and goodwill of all members of the country, Black, White and others.

Population and Climate Change

The recent world conference on climate change has given the South African Government a new stick with which to beat the public.  The Minister of Environmental Affairs used a program on SABC TV to berate the West for their intransigence in resolving to meet the climate crisis that is threatening, praising the ANC for its forward-looking stance, and saying that the Government has plans to achieve the goal of limiting the global temperature increase to one and a half degrees (of course, the Government has plans for everything:  however, apart from the demonstrated ineffectiveness of those plans in meeting the need, the ANC is unable to implement any plans that do not pay off to its senior members).  However, the Minister failed to understand that there is a prime requirement of leadership, the adoption of the wonderful principles by the leaders themselves.  Putting that aspect aside as the subject of a future article, one must consider a major foundation for the threat of climate change that faces the world now.

One of the things that is abundantly clear about the climate change argument is that the more people there are, the greater will be the forces promoting climate change.  Some examples of this are the following:

More people require more food.  This implies that forest land, a major carbon dioxide sink and climate change moderator, is cleared and dedicated to the growing of crops and breeding of cattle for meat and milk.  Once the trees have gone, the absorption of carbon dioxide is decreased, and the factors that promote a healthy climate are reduced.  Consider that a tree could be viewed as solid carbon dioxide, extracted from the atmosphere, to a mass of as much as several tonnes each.  If that tree is not there, the carbon dioxide it represents remains in the atmosphere.

• The trend towards meat.  Cows are major generators of methane, a gas that is twelve times as effective as carbon dioxide in trapping the heat of the sun on earth.  The more beef we eat, the more Big Macs we demand, the greater the number of cows are needed, and the higher the temperature will go.
• The need for more housing, particularly in cities.  People need homes, and the increasing move towards the cities promotes the construction of housing for them, causing more land near the cities to be lost to agriculture, more concrete (a significant producer of carbon dioxide in the atmosphere) to be produced to build them, more cars to be used for transport from the new homes to the new factories, and more heat islands to be created and so to modify the local climate.  A house on a farm has a relatively low climate change impact; one in the city has a high and enduring impact.
• The need for more transport.  Where a farmer typically lives on what the local area produces, an expanding city, required by an expanding and urbanizing population, draws in food and a vast variety of other products not usually needed in a rural environment, from an expanding area, requiring ever-more transport to supply the ‘needs’ of the population, and more transport means more burning of fossil fuels for energy.
• The need for more factories, warehouses and distribution outlets, coupled with more packaging.  Where a farmer used to walk over to the neighbor and buy a gallon of milk to take home in his own reusable glass bottle, the same man, displaced to the city, drives to the supermarket where he is sold the same milk, at a price ten times as much, by a supermarket that sourced it from a milk factory, via at least one intermediary warehouse and several tens of kilometers of transport, in single-use plastic bottles made from scarce fossil fuels and destined to form an enduring part of the garbage mountain produced by the city and packed on shrink-wrapped palettes, the lot stored for days in refrigerated conditions, all requiring energy.
• More roads.  The area of land lost to a road, an airport, a dam, a pipeline or a railway line might appear to be negligible, but when all of these are aggregated, the surface area that might have been used for agriculture, or left as virgin forest to absorb carbon dioxide, is staggering.  A road is not just the tarred strip:  it includes the strips alongside, which might be as much as 200 meters wide, the intersections and all the other infrastructure required for the safe use of the road, amounting, perhaps, to as much as 20 square kilometers per hundred kilometers of road.  That is a lot of farmland that is lost to the community, or forest that is lost to the world!  And roads, airports, railway lines and all the other necessities of a modern city infrastructure do not build themselves.  They require huge amounts of energy and materials, not the least being cement, for their construction and ongoing maintenance.
• More energy.  While the Minister talked about reducing the activities that promote climate change, the Government of which she is part is constructing five of the world’s largest coal-fired power stations, each one of which will emit huge quantities of carbon dioxide and other noxious gases.  Eskom, the operator of these power stations, is exempt from the laws and regulations controlling the emissions of dangerous substances into the environment, and any carbon tax, if, indeed, it were to be levied on Eskom, would simply be passed on to the consumers, and amount to no more than another tax on the public.  The Minister used words that suggested that South Africa is a world leader in the use of renewable energy.  Nothing could be further from the truth.  The actual amount of renewable energy consumed in South Africa is a miniscule portion of the total.  Although the Government might conceivably be pleased to adopt further clean renewable energy sources, one might suspect that it has not yet found a way to ensure that a ‘finder’s fee’ be payable to the ANC before that can happen.
• More politicians at all levels, each one using an office in a large building, a fancy home, a large gas-guzzling car and a force of bodyguards with a fleet of blue-lighted escort vehicles to protect them from their devoted constituents, all producing hundreds of regulations each year that, in turn, require an ever-growing force of officials, each in a fancy office, with a gas-guzzling car to travel about in on their sterile missions, and a cadre of secretaries, personal assistants, accountants and auditors to hide their corruption.
• More industries to enable the people to hold ‘meaningful’ jobs paying at least a ‘living wage’, so that they can afford all the ‘necessities’ of living in a ‘civilized’ city environment.
• More taxes, to support the huge infrastructure of costs that would not be required by a smaller population, adding a cost factor of at least a third to a half, and probably more if one takes into account the incidental costs imposed by such factors as fees for owning or doing things, like owning a dog or getting approval to build a shed or a toll for driving on the road, all of which adds to the unproductive production requirement of a large population.

Jacob Zuma, the ‘culture-loving’ South African President, has a multiplicity of wives to produce his horde of children, 23 at the last count, if one ignores the illegitimate ones.  He is a prime example of the failure of a ‘leader’ to lead the nation, in thought as well as in deed.  He is not the only one.  The previous Swazi King was reputed to have had 900 wives and 1 800 children!  Of course, all of those wives and children had to be supported, and future means of support provided for them.  It is no surprise that Zuma’s ‘home’ at Nkandla cost about R250 000 000!  It had to be large to accommodate all of those people!  Zuma appears not to understand that, while in the distant past, a family had to be large to provide for labor to work the farm, and to account for the high child mortality rate then prevalent, the availability of modern medical treatment has reduced the mortality rate dramatically, and the evolution of the modern single-family household with its working members engaged in wage-earning employment has changed the need dramatically, but the paradigm remains deeply seated in the developing world, a paradigm that is urging the world towards a climate and resources catastrophe at an increasingly rapid rate.  For as long as a large proportion of the African population follows the examples of Zuma and the Swazi King, it is safe to assume that global warming is here to stay.

 

Supervision is not Racism

During a recent panel discussion on SABC TV, one contributor stated that the Whites were racists, supporting this claim by alluding to is observation that, although White companies employed Black managers to comply with BBEEE regulations, they did not trust the Black managers, and appointed Whites to ‘supervise’ them.  He viewed this as racist.

Perhaps a brief discussion of capitalist economics will help to clarify the position.  Let us take as a basis the assertion made by this man and assume it to be correct, in the context of his business environment.  It should be noted that it is almost certainly not correct in all cases, as will be discussed later.

A business is in operation with the prime objective of earning a profit.  Profit is achieved by earning an income, from which all costs are deducted.  A  business is not there to satisfy the objectives of Government or the Trade Unions, nor to perform charitable works, to elevate the oppressed, to train workers, or any such noble aims.  They are there to earn a profit.  If they do not, they will cease to exist, and all who are dependent on them will lose out – the workers will lose their wage-earning positions, the shareholders will lose their investment and the return on that investment they intended to earn.  Any other objective is peripheral.

When a business employs a person in any capacity, it expects him or her to perform according to expectations.  Job descriptions are written, performance appraisals are conducted, rules and requirements are set and discussed with the employee.  This may be formal or informal, depending on the sophistication of the organization.  Generally, in a free society, the business will employ the person it considers best able to perform according to expectations, and the degree of supervision will be designed to cover the areas of uncertainty – more initially, and less as confidence is gained in the capabilities of the employee.  Under the rules and regulations applying in South Africa, the business is not free to employ the best person for the job.  It is obliged to employ a certain proportion of management and other staff from designated groups.  This, in itself, is a significant constraint on the economic effectiveness of the business.  Of course, in some cases, the business is fortunate in finding a Black employee who is sufficiently well-educated, sufficiently experienced and coming from an appropriate background, which enables that employee to function as effectively as the business requires.  Unfortunately, this is not always the case, and the less-perfect employee is taken on in the hope that he or she will learn the job, gain the experience and the educational requirements, and modify an inappropriate world view over time, and so become an effective employee in that position.  Until that happens, the degree of supervision must be intensified, in order to ensure that the outcomes of the work of the employee are adequate.  In some cases, this may take the form of a ‘shadow-manager’, someone with the required qualities who is able to correct what is done incorrectly, to guide the decision-making process and to ensure that the outcomes are correct.  In this way, the business is able to satisfy the BBEEE regulations and to perform the functions that it must to earn the profit that is the essential element of its existence.  It is not racist.  The BBEEE regulations that force the employment of an under-educated, under-experienced and otherwise inappropriate person are the racist elements of this situation, not the way that businesses are forced to deal with the problems that arise from them.  Those regulations presume that every person is born with the capability to be an effective manager, Director or even State President.  It needs little intelligence or understanding to realize that this is not the case.  In the same way as a child needs many years of education to be considered capable of doing most jobs, the educated child is merely a beginner when it comes to coping with the processes and decisions inherent in any management position.  Even a university graduate requires years of experience, of exposure to the real world and of guidance from a more experienced person, before he or she can be considered to be competent in a senior management role.

To revert to the prime objective of a business, the making of profit, it is clear that the BBEEE regulations inject a very large cost element into a business, unless the business is able to employ the right person for the job without any constraints.  There can be little doubt that, if a Black person stood out as the best person for a job, the business would hire him or her.  The same would apply if a White person stood out as the best.  In a situation where the Black candidate and the White candidate were equal in suitability, the compatibility of that person to the organization might become a deciding factor, a factor which might then take on racial overtones, but even then, the factor of compatibility would probably also include a consideration of the level of friction caused by the employment of a Black person in White surroundings, or vice versa, a factor relating to the efficiency and effectiveness of the business.  In the making of profit, race is certainly not a material factor.  It is very seldom, even in good business conditions, and almost never in the currently hard business operational conditions, that a business would consciously decide to impose on itself an additional, unnecessary cost factor, such as the employment of a ‘shadow manager’ to supervise a Black manager, unless it considered t to be necessary to do the job.

The man who complained that ‘White businesses do not trust Black managers’ and are therefore racist should, in fact, be grateful for the opportunity those businesses grant to the Black employee to learn how to do the job from a White, who almost certainly does not enjoy the requirements of his position.

The Black employee is not to blame for not fulfilling the job requirements, nor is the business to blame for not believing that he cannot.  If there is anyone to blame, it is the Government, for forcing the business to put him in that position in an unqualified state.  The White who might otherwise hold that position would have gained it by having acquired a good education, which the Government does not provide, by having worked his or her way up the ladder, gaining relevant experience and knowhow over a long period, and by having absorbed the culture and outlook required to put the education and experience to work.  It is well-recognised that Indian and Jewish businesspersons are generally excellent.  One of the reasons for that is that both of those races have a culture of including children in business matters from a very early age.  They absorb the thinking and understanding that will be needed in their future lives, and they are able to extract from their education and experience that which is relevant to the business problems they now face.  Unfortunately, Blacks, as well as many Whites, do not have that advantage, and have to learn it the hard way.  Many do not.  Black managers who are supervised by Whites should consider themselves to be very fortunate to have the experienced tutelage, and they should apply themselves to the learning that can come of it.  That learning will be considerably hampered by a belief that they are the victims of racism.

Zuma believes that the World Trusts South Africa

President Jacob Zuma has told the South African people that the world likes South Africa, and that they will invest in the country.

We all know that politicians are essentially honest people.  They would not lie to us.  That is even more true of the State President than it is of other, more menial, politicians.  Zuma has proven to the South African public that he can be trusted, that what he says is always the truth.  His statement that he showered after having sex and so would not contract AIDS was taken as gospel truth by millions of young men, who admire him to the extent that they would give their lives to support him.  His information to the electorate that the ANC had been granted a right by Heaven to govern the country until the second coming of Jesus was obviously also true, and was believed by sufficient voters to return the ANC to power in the last election.  His statement that he was not aware that his homestead at Nkandla, which had been planned to cost R38 000 000, ended up costing R246 000 000, was obviously also true.  After all, he is a busy man, visiting the Chinese and the Russians in his unreliable Presidential aircraft that cost only R35 000 000 six years ago, and negotiating deals that benefit the country, while he struggles along on his (world’s largest) Presidential salary, and he would not have noticed that the cost of his private residence had increased seven times.  His assertion that he did not owe the State any refund on the expenditure on ‘security upgrades’ to Nkandla was certainly also true, given that any finding by the Public Protector is viewed by the ANC and its adherents as lies and vicious attacks on the integrity of the governing Party.  After all, the Minister of Police found that to be the case, although he had difficulty in persuading the Opposition Parties in Parliament of the validity of his reasoning, but he is, in the end, only a mouthpiece for Zuma, and does not have the silver tongue of his boss.  Zuma has also proven his integrity when he denied having entered into a contract with the Russians, under which, his detractors allege, he and the ANC would have earned a finder’s fee of many millions of dollars at the expense of the country (in the same way as they did for the Mitsubishi turbine deal and the Shell fraccing deal, although there might be the teeniest trace of doubt about the veracity of this statement as a result of the publication by the Russian embassy of the terms of the contract the following day, but this doubt was ended by fervent denials by the Department of Public Works (the body ultimately responsible, along with the Police, for the over-expenditure on Nkandla) and senior officials at Eskom, which stated unequivocally that no such contract had been entered into, although shortly before Christmas last year it was announced that the ‘preliminary contract’ with the Russians, which had never been entered into, was now to proceed to the next stage.

In the light of this, and other, overwhelming proof of Zuma’s unrelenting honesty and trustworthiness, the announcement he made at Davos that the world likes South Africa, and that they would be making investments in the country must be believed, at least until after the municipal elections.  This announcement was necessary to prepare the South African industrialists for the massive flow of funds into the country, thereby staving off a further decline in the Rand (already at about one-sixth of its value when the ANC took office) and a further downgrading of the country’s credit rating.  This massive flow of funds will, no doubt, make it possible for the nuclear agreement with Russia to proceed, so providing ample power to the economy, which has been brought to its knees by the malicious actions of Jan van Riebeeck in 1652, when he and the Whites he brought to the country to destroy the mighty economy that the Black nations, particularly the Zulus under Shaka had built up, failed to foresee the proclivity of the future ANC Government to fail to maintain the infrastructure constructed by the equally vicious Apartheid Government, or to divert some of the money bled off by corruption to new construction, or, even better, to the development of alternative energy sources, so that the pledges made by Zuma to combat climate change could actually be implemented.  It is not necessary to say that the credibility of Jacob Zuma’s assessment of the investment world’s view of South Africa is enhanced by confirmations of his statement by Rob Davies, the Minister of Trade and Industry and Pravin Gordhan, Minister of Finance (the new, new old Minister), both arch Communists – after all, we know that a prime principle (one of the few) of a Communist is that the whole truth must be told at all times.

South Africa is fortunate indeed to have Jacob Zuma as State President.  He adds enormous credibility to the country by his careful reasoning, by his comprehensive understanding of economics, by his lucid statements of his beliefs and objectives, and by his utter honesty and careful avoidance of circumlocution at all times, as evidenced by his straight and complete answers to questions in Parliament.  That good fortune is doubly so at a time when economic forces and the forces of White capitalism are conspiring to bring down the economic might of the country, so carefully developed over centuries by the Black people in the face of opposition by all White Capitalists, who have nothing more to gain from such a collapse than everything they have built up over generations. 

The only country that has greater good fortune in these difficult times is Zimbabwe.

South Africa at Davos

South Africa has sent a team of about eighty to the World Economic Forum at Davos, a sure indication of:

1. The desperate need of the country to pull the wool over the eyes of the investment community.  Jacob Zuma will, doubtless, take the lead in this, attempting to do to the world what he and his Party have done to the gullible voters in his home fiefdom.
2. An urgent need to bleed whatever is left to be taken from the South African taxpayers, a desire to enjoy whatever is left before the axe falls.

It is ironic that Jacob Zuma will lead the group.  He has shown convincingly that neither he nor his Party have any ability to manage a modern (or any other) economy.  He has also proven to the world that his primary interest, apart from remaining in power for as long as possible, to take what little is left, while he works to ensure that his successor will not instigate investigations into what he and his cohorts have taken from the country (like the quarter billion Rands for the construction of his private homestead at Nkandla, as one small example) and to prevent the criminal charges still outstanding – 749 at the last count, but, no doubt to be supplemented by further charges when the injured persons consider themselves to be safe from State retribution for speaking the truth – from finally being brought against him.  His credentials would be sufficient to deter even the boldest investor putting money into the country he has managed to a new low, quite apart from the fact that, by making an investment in the country, they are implicitly support the criminal conduct of the South Africa Government in ignoring an unequivocal High Court judgment requiring it to place under arrest a man, Omar al Bashir, who is the subject of an International Criminal Court Warrant of Arrest on charges of genocide.  It is to be noted that Zuma is known to be a frequent visitor to this wanted criminal!  The purely financial reason for not wanting to invest in South Africa is clear in the fact that the value of the Rand has crashed by 30% in the past year, and is now about one-quarter of its value when the ANC came to power!  If you desire to lose a substantial part of your investment, put it in South Africa!

Zuma will be supported by a group of sycophants and yes-men, and even the new new Minister of Finance, Pravin Gordhan, cannot claim to be free of responsibility for the state of the country.  He took over the portfolio, for the first time, coming fresh from a spell as Commissioner of Inland Revenue – the tax collection agency – during which the SARS systematically applied blackmail and undue means to force companies that the ANC wanted for its own to enter into deals that were not in the interests of the country or of the economy, and were not supported by any law.  SARS was assisted in this by the South African Reserve Bank, which instructed the commercial banks to freeze the accounts of a wide range of companies associated with their target company.  This action, accompanied by an appointment of the target company’s legal representative, was designed to prevent that company from defending itself at law, an action that was completely in contravention of the Constitution and one of the prime tenets of any civilized legal system, the right to representation in a Court Hearing.  The fact that SARS got away with this form of conduct is a good indicator that they will be comfortable using it again.  After his appointment as Minister the first time round, Gordhan managed the financial side of the economy with such success that he managed to allow his boss, Jacob Zuma, to bleed a quarter billion Rand from the taxpayers for his private purposes, and any claim for innocence that he might have made would have to be silenced by his deafening silence when Zuma spent over a year ducking and diving the findings of the Public Protector that he had unduly benefitted from the State funds, as well as failing to raise even the slightest protest when Zuma prevailed on the Minister of Police to dish out the flimsiest possible excuse for his actions to Parliament, even though Gordhan was a Cabinet Minister at all relevant times.  In the view of most taxpayers, all of the multitudinous Ministers are culpable in their tolerance of the misdeeds of the State President.  When the truth ultimately comes out, it is certain that most of them will be shown to have benefitted hugely from their positions while contributing practically nothing to the struggling economy.

So, if you plan to go to Davos, treat anything you may hear from Zuma and his lackeys with the highest possible degree of suspicion and skepticism.  Better yet, don’t waste your time listening to him spouting the untruths that the long-suffering South African public have come to expect from him.

Why is South Africa Failing?

The question that is being asked seldom attracts a complete answer.  While the reasons given below are not complete, they are more accurate than the Government is willing to concede.

The Government blames all the problems on three main factors:

1. The collapse of the world commodity market.  This is a factor that any competent market observer could have foreseen two years ago, or even longer.  It has been clear for a long time that the Chinese economy was reaching a turning point in its headlong growth of expenditure on infrastructure.  New buildings were being completed and remaining unoccupied, the market for its exports was reaching a peak or even starting to decline, and the centrally-planned economy was showing signs of strain, which were not being addressed, adequately, or sometimes at all, by the government.  In the case of South Africa, the policies of the Government and its inability to restrain the excesses of the trade unions have been having the effect of holding back the ability of South African businesses to capitalize on the boom conditions, and setting the ground for the current economic decline long before it started. 
   Not only did the Government fail to foresee this development, it failed to maximise the benefits to the economy of the boom while it ran, and they frittered away what little cash it produced in pork barrel political investments, hand-outs to the ANC voter base, abjectly poor management of whatever it did, corrupt practices which involved opting for large bribe-producing projects rather than run-of-the-mill maintenance, rather than making the strategic investments, often at small scale, that would help to develop the industrial, agricultural and mining base of the economy.
2. The evil White capitalists, who have withheld from investing the large sums of capital they have accumulated on their balance sheets.  There are three main faults in this reason.  The capitalist system is blamed for not doing what the Government wants it to do, but capitalists will refrain from making investments unless they are assured that the investment will pay off in the form of increased, or at least stable profits in the long term.  The ANC Government has failed dismally in this.  It has, instead, assured the capitalists that committing themselves to the South African economy is an almost sure way of inviting the ANC to raid their fixed assets by means of laws to demand the donation of shares of their businesses or costly employment of unqualified people as Directors, managers or simply employees under the disguise of racial equity, and it has invited the trade unions to hold them up, like highwaymen, demanding ‘protection money’ in the form of excessive wages and benefits demands in order to avoid ruinous strikes and violent confrontations, often leading to murder and arson.  These tactics work, in the short term, because the fixed investment is too valuable to abandon, but they teach the capitalists, who are neither short-sighted nor stupid, that South Africa is not a good place to invest.  Those who can, move to another investment destination, withholding any further non-essential investment in the local economy, and those who do not have this option available to them, simply sit back, to ride out the storm with as little exposure as they can manage, in the hope that a new Government will be in place within the foreseeable future.
   The fact that many of the capitalists are White is a result of a long history, not the least of which is that the European nations that founded the economies of Africa were capitalists for centuries in the past.  They do not suffer the negative effects on investment that the tribal structure of much of Africa remains saddled with, and they have not had to undergo the long learning process that many of the leaders of the ANC do not appear to have completed.  The recent rambling speeches of the State President bear testament to this.  He appears to believe implicitly that the market price for a good is determined by a meeting of all concerned parties, apparently without regard to the realities of input costs, the value of innovation, the scarcity of the good or its components, the price offered by other potential purchasers, reward for risk-taking, or the myriad other factors that go to influence the final price.  Of course, his limited understanding of how the world works is based on the education and brainwashing he received from the Soviet Union and its lackeys, and remains influenced by the Communist ‘brothers’ around him, many of whom continue to hold high positions in Government.  None of these people appear to understand that the ignominious collapse of the Soviet Union was caused, among other reasons, by the failure to understand the workings of the market economy, and not by the nefarious schemings of ‘capitalists’, who, seemingly, had nothing better to do than spend three-quarters of a century in plotting to bring an end to the ‘worker’s paradise’ that was responsible, under Josef Stalin alone, for the killing of sixty million of its subjects and the subjection of hundreds of millions to abominably poor living conditions and education.  Of course, not all capitalists are White.  There are many Black, Coloured and Indian capitalists in the country, and, remarkably, most of them do not support the ANC.
   The belief that White capitalists are all evil is equally without foundation.  Many White capitalists have gone along with the stated motivation of the Government, in supporting the training of the previously disadvantaged, in supporting charities to help the (predominantly Black) poor, in providing assistance to the Police, the Education Departments and to other worthy causes.  Their actions in this regard have been damaging to their own businesses and to their long-term interests, and have been undertaken almost solely to benefit their fellow man, and not in the belief that this benefit would accrue to themselves, except in the broadest possible way.  It is a fact that a large proportion of the donations that have brought about the partial recovery of the AIDS disaster caused by the ANC denial that AIDS was a disease (remember Thabo Mbeki’s humiliating speech that ‘AIDS is a syndrome, and syndromes don’t cause diseases’, and the equally humiliating pronouncement by his Minister of Health that onions and garlic cured AIDS, not to mention the comment by Jacob Zuma that he showered after having sex, and so could not have contracted the disease?) is provided by the (predominantly White capitalist) United States, and that 60% of US citizens regularly make voluntary donations to charities.  Neither Whites nor capitalists are inherently evil, nor is the United States, as propounded by Zuma’s idol, Robert Mugabe, and hinted at by Zuma and many of his stooges.
3. The unwillingness of the Press and other media to support the ANC, confounding every attempt by the noble ANC, the champion of the people, to bring an understanding to the mass of South African voters of the benefits of ANC actions and policies.  Unfortunately for the ANC, the free media has within it many astute, educated and knowledgeable people, who are able to pick out of those actions and policies the likely unrealised potential effects of what they are doing and plan to do, as well as to come to the truth of the many acts that the ANC seeks to conceal under the many words which shower on the public to withhold from the public what is really happening.  The media are, if they are truly free, the champions of the public, the poor and ignorant ANC voters as well as the jack-booted evil White capitalists.  They are able to take a transcript of a Jacob Zuma speech and point out to the public the abject lack of understanding and comprehension contained in it.  They can analyse the probable results of a proposal, such as the recent one by the Minister of Water Affairs to steal the privately-owned dams of White farmers in the Northern Province and distribute the water contained in them to ‘the poor’, at the almost certain cost of the demise in short order of the farmers who built those dams, at high cost to themselves, to ensure that they are able to survive the sort of drought conditions that now pertain and that were foretold at least several years ago, without the ANC Government doing anything to forestall the almost certain results.  Bringing this knowledge to the attention of the public is their duty, as it is of the Government, and the fact that they are critical of the Government in doing that is not disloyalty, as the ANC claims, but the unbiased performance of that duty.  The fact that the ANC is shown to be lacking, in foresight, in intelligence, in moral standards and in the expected level of integrity in the performance of their duties is the fault of the ANC, not of the media.

The truth of the matter is that there are many reasons behind the collapse of the economy.

The collapse of the commodity markets is a factor, but this was a probable event, able to be understood and acted against in the decades prior to the present.  South Africa failed miserably to take advantage of the boom conditions while they pertained, because the Government saw the private business sector as a cow to be milked as much as possible, without making provision for the future.  It encouraged the wildly excessive demands of the labour unions, because the increased affluence of the workers was sold by the ANC as a direct result of the efforts of the ANC.  It was not.  It was a result of the success of the capitalists who had built those businesses to the level of success they enjoyed, offering increasing numbers of jobs to a poorly-educated and –trained workforce, and making up the deficiencies of those workers at the cost of the investors.  Those businesses were operating in the real world, where the price of an ounce of platinum is determined by the forces of supply and demand, not by negotiating by unequal partners across a table, and where supply is determined by whether a mine can produce those ounces of platinum at a cost that will enable the company to reward the capitalist investors for the risk and the time they wait for the reward, and the demand is determined by how many ounces are needed by the users, by the cost of alternative ways to meet the need, and by how many ounces can be purchased at a particular price.  There are no secret negotiations involved in the process, no bribes being passed under the table, no consensus of like-minded parties, only the setting off of needs, demands, supply and costs to reach a coldly-calculated value.  There is no space for consideration of the needs of the ‘poorest of the poor’, for the wish to placate a demanding Government or trade union.  If the cost is too high, the sale will not be made, the production will reduce and, with it, the demand of the labour required to produce.

Part of the cost of production is every element of direct and indirect cost that is required to make that production.  The direct costs include wages, benefits to labour, levies to Government at all levels, including the compulsory payments to the Companies Office, to the Ombudsman, to the adjudication of labour disputes, to Sanral for toll fees, the cost of electricity paid to Eskom and incurred by the need to have and operate stand-by generators when Eskom fails to supply, for fuel to transport the products out and the raw materials in, including the levies paid to Government, for SETA levies, to provide for the training of the potential workers to the point where they might become productive, and all such similar costs.  The indirect costs include the loss of earnings on the shareholding transferred to non-productive shareholders under the BBEEE schemes, as well as the loss of earnings caused by unjustified strikes in support of demands for excessive wages and benefits. 

Contrary to Government view, the cost of transferring a shareholding to a Black shareholder, even if it is paid for at an agreed price, is the loss of earnings to the original shareholders who would have earned that share of the profit.  If a company earns R100, and a shareholding of 26% is transferred to a Black shareholder who played no part in bearing the risk or the capital outlay of setting that company up and putting it in business, then the original shareholders have lost R26 per year.  Paying them a price of R260, probably over five or ten years, is far from adequate compensation for the profits and capital growth they expected, and even paying interest of 30% p.a. would, in most cases, not compensate for the loss.  If that investment is coupled with representation on the Board by persons who would not, in the ordinary course of events, have been chosen for that role, it compounds the problem, because the original shareholders, who have clear ideas of where the company should go, now have to accommodate the wishes and desires of people who, in most circumstances, have little understanding of the business and, probably, considerably less capability to make the business succeed than the original shareholders.  If they were the equal of the original shareholders, the chances are that they would have set the business up for themselves!  Again contrary to the deeply-held belief of the ANC, a business is not a training ground for less-skilled operators, certainly not at the top management and Board levels.  That is a fact that is implicit in the fact that progression to those top ranks has always been accompanied by years of exposure, development of skills and capabilities and experience.  The ANC has attempted to upset that natural order by the legal requirement to bring in people at top level who have none of those qualities, and the result has been a catastrophic collapse of the competitiveness of South African businesses, accompanied by the brain-drain of skilled Whites, who could have sustained those businesses but who have seen the writing on the wall – qualified Whites have no future in South Africa.  They have taken their skills, knowledge and experience to foreign climes and, understandably, have seen that their South African competitors are now soft targets.  The foreigners who might have added their capital and skills to the country have also recognized that, unless they are Chinese, Russian or Guptas, they are seen by the ANC Government as legitimate targets.  They have seen numerous examples of the Government bodies working in illegitimate and internationally unacceptable ways to squeeze them, and they have pulled back from the country to await a more honest and more perceptive Government.  The losses to the ‘poorest of the poor’ have been huge.  Tens of thousands of jobs have been lost directly, and hundreds of thousands of potential jobs have evaporated, along with the substantial foreign exchange earnings they would have brought.  The development of the economy has been reversed over the twenty-one years that the ANC has been in power, taking a country that was the hope of the world to put it in the category of most corrupt, least effective, ratings-degraded, Zimbabwe-style basket case economies.

Another profound reason for the current failings of the South African economy is that the ANC believes that a country can be operated in a political way.  Businesses need firm rules within which to operate, not a constantly changing set of conditions that are unclearly defined and subject to the whim of a dictator-style Minister.  A business cannot be an ANC-style democracy, where every decision is debated ad infinitum and then agreed, probably too late, to accord with the whims of an uneducated majority.  A business needs decisive management which is capable of assessing the objective facts and making decisions, and then putting them into effect.  It cannot take into account the desire to mollify an undefined body of the ‘poorest of the poor’ – that can only be taken into account in the way that the taxes of successful companies and businesspeople pay.  Building houses for the workers and their large families, supporting the education of their children, meeting a ‘corporate social responsibility’ that has nothing to do with the objectives of making a legitimate profit all fall within the responsibilities of the employees and the Government, particularly in a country in which many businesses are hanging onto survival by their fingernails.  The surest way to bring an economy to its knees is to foist all of the Government’s wish-list requirements on the people who are making the economy work.

Another reason for the continuing failure of the South African economy is the substantial amount extracted from the economically productive sector by means of taxes, levies, fees, increased costs of property taxes, electricity and water (in order to subsidise the non-productive sector, including the social grants, the free education at university level for the tens of thousands of matriculants who would otherwise have gone on to the unemployment roll), the massively-expanding Civil Service of overpaid and underperforming persons, and other disguised Government take.  The fact is that the money that the Government extracts from the small productive sector to redistribute to the poor – another way of saying that it bribes the voters to support them at the cost of the taxpayers – would, in normal circumstances, have been applied to development of the business, with a small proportion being peeled off to reward the investors who took the risks and provided the capital, knowledge, contacts and skills, which reward would have provided reassurance to potential investors, local as well as foreign, that South Africa is really open for business.  The more the Government take, the less will be the new investment and the slower the development.  And of course, as the development and investment fades, the economy declines, and the actions of the top politicians become more erratic, more determined by the desire to grab what they can while it, and they, are still there.  The extent to which that is happening can be readily gauged by the intensity of the Government’s desire to ensure that the media toes the Government line, that the investment funds remain in the country, by compulsion if necessary, and that the businesses that remain effective are brought within the control of the regulations that bleed them.

Probably the largest single reason why the South Africa economy is failing is that the Government’s focus is on its voter base, the ‘poorest of the poor’.  In a business, the concentration of top management must be on the business activities that produce the most profit, with attention being given to those that cost the most.  The same applies to an economy.  The Management of the economy cannot afford to place its greatest effort on the sector of the economy that produces practically no taxes, the lifeblood of a Government.  The greatest effort should be applied to maintaining and fostering the growth of the sectors of the economy that presently, and in the future, provide the greatest contribution to the GDP.  That attention, if competent and up to the task, will continue to support the flow of taxes to the Government as well as providing the jobs to the people, whose income will supplement those taxes.  In time, those activities will trickle down to the lower levels, enabling those who now receive an adequate education to enter the fields of the economically active, contributing to the fiscus and dragging their comrades along with them.  This process may be supported by programs designed to accelerate it, by tax concessions and other incentives to enhance it, but it cannot be the central focus of Government thinking and action.  Like it or not, the poor contribute very little to economic improvement, and the best ways to improve their lot is not to subsidise them, but to find ways to motivate them to work their way out of poverty, using their skills, abilities and self-motivation to achieve for themselves what the ANC has failed so completely to do.  The fact that they may well decide to cast their vote in favour of a Party that is pro-business (NOT anti-poor) is a factor that should motivate the Government in power to maximise the success of that process, but never to support it to the detriment of the economic activities that make such self-rescue possible.  The obvious way to do that is to prove an excellent education (rather than finding excuses why the poor education is becoming worse) and relevant technical training, to make the youngsters able to earn a living immediately, rather than making it possible for them to continue their schooling by means of ‘progressing’ to the next grade by the simple expedient of failing twice in a grade, or giving them free university education as a means to postpone their coming onto the labour market for four or six years, while they hold back the education of those who are able and willing to succeed.  Best of all, adopt policies that reward effort and ability, and, wherever possible, drop any notion that someone is ‘entitled’ to something merely by virtue of his or her presence.

The World’s Investors are all Over-Reacting

After the ANC January 8 electioneering and repetitive explanation speech, President Jacob Zuma, went to pains to explain how the thousands of investment bodies that have committed funds to South Africa over the years have over-reacted to his multiple sacking and replacement of the Minister of Finance, leading to them bringing about the crash of South African securities and of the Rand.  He could not understand how his capricious and dictatorial behaviour, still without a credible explanation, could possibly have a bearing on the view by those bodies of the stability of South Africa, explaining multiple times that the Minister of Finance is supported by a trained and experienced staff, implying that the appointment of a total newcomer to the portfolio, a man who has demonstrated his unpopularity by being forced out of office as Mayor of a failing municipality and having his home burnt down by an angry mob, had no bearing on the decisions that will be made by that person in his new office.  His surprise at the world reaction to his actions was a little spoiled by two announcements made during the interim.  The first was the announcement that the Cabinet had approved the proposal to investigate the intention to waste a huge amount – R1.5 billion and rising – on the unaffordable construction of a fleet of nuclear power stations.  This was to be expected from the Zuma-compliant bunch of lackeys in the Cabinet.  After all, they will be the biggest beneficiaries of the finder’s fee that is rumoured to have been negotiated with the Russians, as has, no doubt, been done in numerous other large foreign contracts, starting with the Arms Deal in 1997, which reportedly attracted commissions of about $386 000 000, and will perhaps form the basis of a good end-of-term pay-out for this failed and discredited President (unless, of course, he uses it to support a coup d’état to make the end of term some distant event, as is ever more frequently being rumoured to be Zuma’s intention when his ten years maximum term expires).  This is Africa, after all, and we use African solutions for African problems.

Zuma’s perplexity at the workings of the world financial system was enhanced by Ramaphosa’s explanation to the ill-informed voters that the crash of the Rand is a worldwide phenomenon, that we are all in a market that is subject to a downturn, and our suffering is shared with all other developing markets.  What he failed to mention is that the rest of Africa, with the exception of the leading light for the ANC, Zimbabwe, has grown at a rate a multiple of our own declining GDP growth, that we have repeatedly failed to benefit from opportunities that have been grasped by other developing, and particularly African, economies, and that, in addition to the President’s foot in mouth disease, the ANC Government has developed a remarkable ability to shoot itself in the foot with everything it does. 

The ultimatum to which President Obama was forced, to comply with the US demands by the end of 2015 was missed by the Departments of Agriculture and Trade and Industry, and the triumphant statement by the Minister of Trade and Industry, Rob Davies, that we had clinched a ten-day overdue deal with the United States to allow us to enjoy the benefits of the AGOA Act was promptly negated by a further statement by President Obama (a Black President, in case racists start complaining that the United States is acting in a racist way towards South Africa) notified the world that the facility of AGOA will be available to South Africa only if US goods are actually on South African store shelves by March 15, 2016.  Obama has almost certainly lost patience with the prevarication and delays so frequently displayed by the South African Government!  That is not surprising – many South Africans feel the same way.

Ramaphosa’s explanation that the ANC Government has nothing to do with the crash of the Rand was complemented by a TV interview with Mr Kingsley Makhubele, an executive of Brand SA, that the justice system works in South Africa, which is, supposedly, good news for tourists and investors, who should flock to the country in droves, appreciating the good and honest governance of the country.  He gave as an example the case of Oscar Pistorius, completely overlooking the fact that a Judge of the High Court failed to understand the application of a basic principle of law, that a person who intentionally acts in a particular way should be considered responsible for the foreseeable consequences of that act, and so sentenced him to five years for culpable homicide instead of fifteen years for murder.  That is a principle that first-year Law students were required to know (.e. in the past – one cannot be sure of the situation now, given the abjectly poor standard of education in the universities).  He also failed to mention the case of Annie Diwani, who was shot and killed in Cape Town by a contract murderer for the paltry sum of R10 000 – presently less than $600!).  Her husband, accused of masterminding the crime, was brought to trial in Cape Town after years of legal wrangling in the British Courts about his extradition, at a cost running into millions of dollars (his return was in a chartered aircraft, and he was placed in a mental institution for about two months at State expense before coming to trial), and acquitted when the Court found insufficient evidence to convict him of the charge of murder, notwithstanding that the two men found guilty of the actual deed made statements implicating him!  One would be forgiven for wondering who was paid off to present such an amazingly poor case in the glare of the world interest focussed on the case!  He failed to mention the case of the German tourist who was stabbed on the Durban beachfront some years ago.  His wife appealed to the crowd to call an ambulance, to be told by a Black man “Let the White pig die!”  (Durban is the site of the 2022 Olympics.)  The moral of the story is twofold: first, do not take at face value what any President, Deputy President, Minister, politician or State employee tells you about South Africa; and second, if you plan on coming to South Africa on honeymoon, vacation or investment negotiation, hire several (foreign) bodyguards to ensure your safety.

In conclusion, immediately after Jacob Zuma spouted his pathetic plea for improved understanding of the South African situation, the currency tanked again, dropping to R17.99 to the dollar – when the ANC came to power 21 years ago, it stood at R4.30 to the dollar!

Given these lessons in practical economics, tourists and investors would be well-advised to cross South Africa off their list of destinations, at least until the voters understand that the only recovery possibility for the country lies in sweeping the ANC incompetents and kleptocrats from power.  They will join the ranks of thousands of others who believed that the Rainbow Nation of Nelson Mandela still exists, until they learned the hard way.

South African State-Owned Companies are Properly Managed!

It is now official, coming directly from the Deputy State President.  South African State-owned companies are properly managed and so will not need to be privatised.  The glib statement was made by Cyril Ramaphosa during a question and answer television discussion which included a large share of the top brass of the ANC.  The fact that there were no gasps of astonishment from the ANC leadership, no cries of ‘Liar!’ entitles one to believe that those leaders all subscribe to the view of Ramaphosa, supposedly an experienced, competent businessman, that the State-owned companies are in fine fettle.

An item on the news today mentioned that Citibank has withdrawn a R250 million facility previously granted to South African Airways, on the ground that the risk of collapse of that State-owned company and default on the loan was too high.  The suggestion was made that the facility would be reinstated if a Government guarantee were to be made available.  A recent letter of the Legal Advisor of SAA stated unequivocally that the company was de facto insolvent and trading illegally in an insolvent condition.  SAA recently made a spirited attempt to subvert the directions of the Treasury to honour an agreement to lease five Airbus aircraft from Airbus, a deal struck when SAA found that it could not pay for the purchase of ten aircraft, preferring to lease them through a local company.  The proposed lease would have cost SAA significantly more, and it would have provided those involved with a very lucrative source of corrupt funds, and yet the Chair of SAA, rumoured to be a close friend of Jacob Zuma (possibly even to have had a child by him) remains in office, enforcing a lunatic and illegal policy of demanding a 30% share in the companies that do business with the airline.  That policy alone acts to push up the operating costs of SAA dramatically.

Another news item referred to the fact that PetroSA, another ‘well-managed State-owned corporation, was in a similar position after having cost the country (I.e. the taxpayers, not the ANC) about R1,5 billion in the past two years, with more to come.

Recent experience with the South African Post Office, with a registered letter posted from Midrand to Pretoria, a distance of less than 50 kilometres, taking more than five weeks for delivery, while the delivery service to a post-box in the Bryanston Post Office was unaccountably suspended for more than three months, after a year in which postal strikes interrupted service for about eight weeks, all with no notification to the customers.

Spoornet, which provides (?) essential rail services to mines, refineries, forestries and agriculture, undertook to provide a specified number of rail trucks per week to a mine, exporting a valuable bulk, semi-processed mineral to Durban Harbour.  When the first train was called up in accordance with the agreement with Spoornet, it simply failed to arrive, with no explanation.  Many telephone calls were made to track down the reason for the failure, with no result.  Eventually, a Director of the company discussed the matter with his partner and close confidant, a Black advocate, who informed him that the matter could be speedily resolved by payment of a fee to the advocate of R300 000 (approximately four days demurrage on the freighter waiting to be loaded in Durban Harbour.  Payment was made and the train arrived within three hours.  Subsequently, the advocate advised that the delay in service was the result of the mine company not employing a Black company to arrange the delivery of the trains.  Seeing the obvious illegal blackmail, the mine employed such a company, and the trains ran smoothly for a few deliveries, and then stopped again, unaccountably and without notification.  After a day spent walking the corridors of Spoornet Head Office in an attempt to find a responsible Manager to resolve the impasse (one of the people interviewed who referred the two Directors of the mining company to someone else, and they were referred again to him after seven hours of fruitless effort, was asked by one of the Directors what work he did.  The reply?  “I hold down a position.”) the two Directors barged into a meeting of the General Manager of Spoornet with several Heads of Departments and demanded to know the reason for the refusal of service.  The reason was given the following day.  The Black company arranging the service had failed to pay an amount to Spoornet.  After proving that the company had met every obligation to Spoornet and to the Black company, the General Manager was adamant.  The mine had to pay an amount of R260 000 to settle the debt of the Black company to Spoornet.  Payment was made under protest, and the service resumed.  A visit to the Black company to resolve the problem and recover the money revealed that the three Directors of that company had each purchased a new 7 Series BMW.  Numerous companies, employing tens of thousands of workers, have withdrawn from South Africa as a result of the high cost, unreliable service and outright dishonesty they have experienced in their dealings with Spoornet.

Of course, the prime example of a well-managed State-owned corporation is Eskom, which has single-handedly brought about a significant share of the decline in the GPD of the country by its inability to provide a reliable supply of electricity to industry.  The very high cost of that electricity has had effects that are more long-term in character, driving away companies that might have invested in new industrial capacity.  In case there is a statement from the ANC that we don’t really need investors from the USA or Europe (no longer favoured sources of investment, in view of the country’s developing rapprochement with Russia and China), many of those investors are South Africans, who would have liked nothing better than to invest in a way that will benefit their homeland, if only there was a Government they could trust, managed by politicians who they could believe to speak the truth!

If Cyril Ramaphosa can claim that these examples of State-owned corporations are well managed, one must have strong doubts about his ability to manage the country, and one must further take extreme care to check the accuracy and veracity of any statement he must make in the future.  On the evidence of this statement alone, Ramaphosa has disqualified himself from any future position of trust in the Government of South Africa, as much as his boss did when his indiscretions were revealed in their nakedness!

Water Shortage – a Reason for State Theft?

During a televised panel discussion – more of a question and answer session during which carefully-selected ANC cadres put prepared questions to leaders of the ANC for the purposes of a publicity campaign in preparation for the upcoming municipal elections – the Minister of Water Affairs let slip a frightening new idea.  She stated that the Government is taking steps to ensure water security to the ‘poor people’ of the country.  One of these steps is the plan to “remove control of privately-owned and –constructed dams from the White farmers” and make the water they contain available to the community.  There are several aspects of this statement that need careful consideration, because of their very wide implications to the agricultural and investment community.

A brief background to this comment is a statement made by the State President that the ANC is the leader in ensuring racial harmony and equality throughout the country.  This statement is no more than a barefaced lie.  The ANC, and particularly the State Presidents since Nelson Mandela, have been a potent force in the racialization of the country, after the racial conciliation of Nelson Mandela.  Jacob Zuma has put considerable effort into ratcheting up the racial tension, presumably in the hope of attracting the votes of the increasing poor Black sector of the economy, making statements such as that blaming all the problems of the country on Jan van Riebeeck, the first Governor of the colony in 1652, a man who was in that position for only seven years, and other statements to the effect that White capital is purposely depriving poor Blacks of work opportunities by their recruitment policies and by holding a ‘monopoly’ position in many aspects of the economy.  Of course, statements such as this are, at best, cheap politicking and, at worst, purposefully intended to enhance the racial divide, a remarkably stupid action given that the Whites represent probably 90% of the knowledge assets and 95% of the experienced skills base of the economy.  The reasons for this are partly historical, in that it requires many years for a manager of an organization to acquire the ability to manage effectively (as has been so clearly demonstrated by the abjectly poor performance of the ANC cadres who have been elevated to top positions in organisations such as Eskom, Spoornet, SAA, Petro SA and numerous others without having gained the necessary experience and competencies, and partly the result of the incredibly poor education that the ANC has foisted on the country since its accession to power 21 years ago.  Whatever the reason, the fact is that driving the Whites away, which appears to be the policy of the ANC and the EFF, will certainly result in a catastrophic collapse of all sectors of the South African economy.

One aspect is that the statement is a clear indication of the intention of the Government to steal the dams owned by the White farmers, who constructed these dams for two main reasons.  The first reason for the construction of the dams is the need to manage the flow of water over the farm lands.  In South Africa, the rain tends to be irregular and in huge quantities at one time, leading to drought conditions or to flooding, with the erosion of the valuable top soil being a frequent result.  That is important to the farmer, any farmer, including one of another racial group, although the concentration of the new policy on White farmers tends to demonstrate the fact that Black farmers have, historically, been less prudent in the management of water flows to prevent erosion.  The second reason, of course, is a desire to ensure the availability of water in times of scarcity.  As a water-poor country, that investment has been a prime reason why South Africa, in the past, was a substantial exporter of food to the world.  Now the Government plans to deprive the White farmers (please note that the plan does not seem intended to apply to Black farmers) of their right to use the water they have worked to save.  The water will become subject to the management of one of the many incompetent Government bodies, to be made available to communities and Black farmers that have invested nothing to make it available, so depriving the (productive) White farmers on an essential element of their farming and food-producing activities.  What little water the management body may deign to make available to the White farmers will, no doubt, be at a high cost, as per the example of Eskom, and the discretion of allowing that ration to the White farmers will hand the Government another tool to drive the White farmers from the country at no direct cost to the Government.  Farmers with experience know that a valuable asset such as water is not to be wasted.  They know equally that the cost of building and maintaining a dam is high, in terms of cash, time and deprivation of the use of the land it occupies.  Farmers do not build dams capriciously, or to deprive others of the use of the water (this latter has been shown admirably by the generosity of White farmers in springing to the assistance of Black farmers in the present drought by the provision of water from their own resources, often at the risk of running out of water themselves, or providing grazing or fodder to suffering Black farmers).  The dams that the Government now plans to steal are very important assets that are needed for the continued life of the farms.  Appropriation of them by the Government will be akin to a theft of the seed grown by the farmers (perhaps on the basis that the starving poor need them now, while the ‘wealthy’ farmers will need them only in the future and, in any event, can afford to buy more) or the appropriation of the lambs or calves produced on the farm.

A frightening thought is the extension of this sort of policy by the ANC.  They have already stolen the BBEEE proportion of the share capital of companies and of their allocation of salary and related expenses by companies in order to reduce the number of unemployed, almost always at significant cost to the companies involved in terms of profitability and longevity, and to the country in galloping inflation and nose-diving international competitiveness.  The demand that a proportion of the shareholding in mining companies be held by Black shareholders who are unable to offer either capital or skills has been one material cause in the reduction of investment by foreign companies in the industry in South Africa and the driving away of some investors who were already here (one international client alone left the country, with $254 000 000 –R4,3 billion at the current rate of exchange - of direct investment already made and the cancellation of several other investment plans in local industry, helped by the illegal and immoral actions of the South African Reserve Bank and the South African Revenue Services, and numerous other clients, hearing the story, have backed off intended investments in the country).  The results of these regulations are clear to see in the current state of South Africa.  However, they have been implemented by Zimbabwe, that model country in the field of economic management, so, to the State President, an earnest admirer of Robert Mugabe, they must be right! 

One can only wonder which sector of the economy will be the next target.