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.