A Word of Advice to the SA Minister of Finance

In an interview prior to his planned post-Easter Roadshow to the United States, Minister of Finance Gigaba stated that he would reaffirm the ANC Government’s commitment to fiscal prudence, and all the other nice things they have been promising for years, but consistently failed to deliver. He then went on to explain that the Government would undertake a drive, spearheaded by him, to use the Government’s annual spend of R500 billion to promote Black Economic Empowerment, in accordance with its (new-old) policy, which was designed to deprive White Monopoly Capital of a part of its lifeblood, in the process assisting the Small and Medium Enterprises to develop. The theory sounds good, particularly to the voters, deprived of formal employment by the ANC’s policies over the 23 years it has been in power, until one starts to examine the facts.

The first thing that should be taken into account is that the economic strength of South Africa was built by that Capital, which has now become substantially owned by Black citizens, in the process creating millions of jobs, which paid over to the citizens a multiple of the money accruing to the shareholders, and to the fiscus taxes totaling tens of times the dividends the shareholders received. That strength was built on the capital, the risk-taking, the management capability and the enterprise of the shareholders, the lenders and the employees, Black as well as White.

The BBEEE policy provides for an overcharge of up to 90% of the value of the work done for the Government or goods supplied to the Government if provided by Black enterprises, who, in any event, will sub-contract much of the work to qualified Whites and purchase almost all of the goods supplied from White-owned companies. Apart from the fact that a substantial part of the surplus cost will flow to corrupt cadres, that is a huge burden for the Government (read the Taxpayers) to bear, one that no commercial enterprise could survive, even if it were a financially-strong, effectively-managed and competitive entity. In the current state it will be destructive, where the Government is heading towards insolvency, with falling revenues, debt of over 53% of GDP, increasing loan-carry costs probably biting off an additional 10% of the revenue stream (even before taking into account the expected decline in that revenue stream), management at all levels that has been shown to be hopelessly incompetent and corrupt to a level that is surprising even in Africa, a rapidly-retreating foreign investment body of former well-wishers, a new group of Ministers who have, in many cases, already shown their abysmally poor capability to actually do the job (unless that job is defined as kowtowing to their corrupt boss), a cadre of Ministers who consistently refuse to comply with their constitutional obligation to account to Parliament, and a Parliament, the ultimate oversight body, that has repeatedly shown that it will support the dishonest President, even at the cost of breaching their constitutional Oath to represent the citizens of the Republic.

Gigaba confidently states that the foreign investors will understand that his statement of the plans for ‘inclusive growth’, even though they specifically exclude the most productive part of the economy, represent a responsible way of managing the economy. He seems not to have heard Einstein’s definition of insanity as doing the same thing over and over and expecting a different result. The present insanity is the same as the insanity that has systematically brought a vibrant economy to its knees over the 23 years of ANC misrule. They believe that a policy that states support for a small part of its voter base will make up for the systematic destruction of tens of thousands of (previously) sustainable jobs by a corrupt group of ANC cadres who want to acquire, at practically no cost, viable businesses, and do so by using the Department of Minerals to cancel the mining licenses of operating mines that were generating tens of millions of dollars of foreign exchange each year in the export of processed minerals, by using SARS to impose bogus tax claims, including penalties, amounting to tens of millions of dollars on honest companies in order to drive them to the point of accepting nominated (ANC cadre) shareholders at practically no contribution in cash or in expertise of any sort (other than the ability to make the tax demands go away. They have also bled the foreign and local investors dry by failing to provide trains for transport of export goods as agreed in writing by Spoornet until a huge bribe had been paid by way of ‘consulting fees’ to ANC hangers-on, by delaying tax queries until the last day of the six-month response time allowed for decision on objections by taxpayers against an assessment (using the principle that the SARS demand be satisfied by payment before an objection could be considered), and then reimposing the same demand, possibly at a slightly-reduced amount, the following day, over and over, so dragging out the effective resolution of the objection for at least several years. They have reinforced this tactic by appointing the attorney of the taxpayer in question as a ‘collection agent’, requiring him to pay over to SARS any amount paid to him by the taxpayer, so effectively depriving the taxpayer of the ability to avail himself of legal advice, by using the South African Reserve Bank to freeze the taxpayer’s bank accounts, as well as those of all other companies which shared a director or even an accounting firm, thereby imposing a form of illegitimate compulsion that goes well beyond a right to collect any legitimate tax demand, and then, when all of this fails to achieve the objective, by demanding disclosure of all documentation held by the taxpayer’s attorney in respect of that taxpayer or any remotely-possible connected party, totally ignoring the right of the client to confidentiality in its communications with its legal adviser, and then, when that fails to beat the taxpayer into submission, to threaten the attorney with a VAT audit that, in all probability, will suffer from the same level of illegal conduct that he is protecting his client against.

Gigaba totally ignores the fact that, under the ANC, business in South Africa has becoming extremely difficult and expensive, quite apart from the declining economy’s effects on the market, with dozens of rules and regulations to comply with every month, most of which have no conceivable use in the management of the company or the economy, nor that the Government bodies that undertake the controls of every form of activity are abjectly poor in the performance of their functions. A request to the Companies Registrar for disclosure of the directorships held by the requesting party fails to elicit any response. A birth certificate, which was paid for in advance three years ago, remains outstanding, with the Department of Home Affairs (the Ministry previously managed(?) by Gigaba and before him by Nkosazana Dlamini Zuma, an aspirant President who managed the Department so badly that the United Kingdom was forced to impose a visa requirement on South Africans for the first time ever) promising that they will look into the matter. An enquiry in writing to the Department of Education that manages the certification of new SETAs (a registration required before training can be offered) failed to elicit any response for five months, notwithstanding fortnightly reminders, leading to the company wishing to offer such training at an advanced level of professionalism, to refer prospective trainees to a sister organization established in Germany, leading to the loss of hundreds of thousands of Euros per year in fee income, as well as the loss of several highly-qualified lecturers. An offer to provide a subsidized project to establish a minimum of 350 000 sustainable jobs over a period of three years drew an interested response from the Premier of KwaZulu Natal, whose ‘personal representative’ demanded an up-front payment of 30% of the total cost of the project (which was to be subsidized by payment of 60% of the total by a foreign investor), stating that “You should not be concerned, because the payment includes the Premier and the MEC for Economic Development”.

The examples set out above have cost the country in excess of US$254 000 000 investment, an amount that was already committed, in addition to at least several billion dollars of investment under consideration. At least 300 Black people lost their jobs as a result of the dishonesty and corrupt actions of the ANC Government, and many of those jobs were at junior management level, with plans already in operation to upgrade their capabilities to a more senior level, and several hundred thousand prospective jobs were canceled when the investors realized that their main function in assisting the Rainbow Nation to achieve the aspirations of Nelson Mandela was simply to be bled dry by the crooks that run the nation.

Mr. Minister, please do not believe that the foreign investors are stupid, that they have permanent rose-tinted spectacles when they read your drivel. Please understand that they have seen it all before, and that your pious protestations, no matter how badly articulated they might be by you, merely serve to plunge the country deeper into the morass of disbelief inculcated by your racist, communist President. Your amateurish efforts to pull the wool over the eyes of the American Division of White Monopoly Capital, which you court for their money while proclaiming to hate with your very soul, will be assessed by people who are smart enough to know what the real truth of South Africa is.

Mr. Gigaba, if you wish to pull the country out of the hole your Party has dug for it, what you must do is vote in favor of the Motion of No Confidence against the President, admit to what you have done wrong, and allow competent and honest politicians, if there are any left after so many years of your Party demonstrating that the easy way to wealth is to exploit the sucker citizens, to take over the reins of Government and start the long and painful process of rooting out the corruption and incompetence that have become deeply ingrained in every part of the Government and Civil Service over the past 23 years, so that 52 000 000 people can say with pride that they are part of the Rainbow Nation.

Stop the lies to foreign investors, to South Africans and, above all, to yourself.