South Africa is in a crisis. It has been in a crisis for
several years, with successive administrations chasing their unproven or
disproven ideologies, conducting experiments designed to prove that they are
right and everyone else is wrong, and structuring the State to facilitate fraud
on a large scale. Even before the Coronavid-19 crisis struck, the country was
in a parlous state, with unemployment at record levels and increasing steadily,
school performance among the worst in the advanced world, the country’s ranking
for economic performance among its peers in the developing world at record lows
and declining, the finances of the country in the worst state for decades, and
no reprieve in sight. The pandemic struck a country that was in the worst
possible condition.
In a way, the pandemic, although hugely destructive in many
ways, may present South Africa an opportunity to hit the Reset button, and grab
at an opportunity to retake the place it held in the civilized world before
lunatic policies and governing Party-institutionalised corruption dealt it such
devastating blows. Tito Mboweni has recognised the need, stating that the
Treasury should develop a Budget based on a zero-base process. He is fully
aware that tweaking the existing Budget will not correct the many problems he,
and the country, face. This would be an exercise in futility, a repositioning of
the deck chairs on the ship of State as it sails at full power into the
iceberg.
The first step in correcting any problem situation is to
recognise what the real problems are, and where the country would like to be. A
roadmap is useless until you know where you are on it, and where you want to go.
This should be done in a dispassionate, non-accusatory way, so that the
participants in the exercise are not compelled to defend their territory. The
process of coming to a statement of where we are now must include theoretical and
practical economists, businesspersons from large, medium and small businesses
and people who are affected by the conditions, such as housewives, teachers,
students and taxpayers, both active and retired. It is vitally important to
have a balance of views. Nothing could be more destructive to the process than to
have a preponderance of radical views, as is almost always the case when a
committee of politicians and political advisors is convened. If you need to be
convinced of the truth of this, look at the state of the South African economy!
One cannot imagine that the ANC would be so delusional as to believe that it
could benefit from the imposition of policies that would be certain to destroy
the economy.
Once we know, realistically, where we are, we need to define
where we want to go. At this point it will be almost impossible to avoid the
political rhetoric and electioneering slogans, but a factual statement of the
basics may help to define our desires. We could, for example, say that we
desire to reach a state of 3% unemployment within ten years. The question then
arises: employment in what? Let us say that we want the economy, in terms of
GDP representation, to be 5% mining, 20% agriculture, 30% services and 45%
industry. We can then break these desires down in terms of categories, and from
these derive the growth needs to reach the targets. These, in turn, will generate
the requirements, the absolute necessities, in terms of investment, education
and training, infrastructure, labour conditions and so on. It will be a complex
exercise, made more so by the need to avoid expressing the desires in terms of
political aspirations and existing policies, but the exercise will be a
valuable one, highlighting the actual needs, as opposed to what preconceived
and often wish-list policies dictate.
When this work is complete, and not before, we can start
formulating the wish-list, the configurations of the economy that we would like
to have in the desired state, in accordance with the Constitution, and
disregarding any other existing policy and legal imperatives and structures. We
could, for example, desire an open economy, attractive to foreign investment,
with equal opportunity to all its citizens and as much of the work as possible
being done by private enterprise. It will be essential at this stage to ignore
the past policies, because many people will see these as the only possible way,
while others will view them as anathema. This wish-list will then be applied to
the desired state and an assessment be made of how feasible it will be to
achieve both the desired outcome and the desired form. Revisions and
re-evaluations will ensue, until the majority accept that the statement is both
comprehensive and realistic in terms of the South African scene and the world
economy.
We will now be in a position to formulate plans to achieve
the desired state. A combination of the desired shape of the GDP with the gap
in number of qualified potential employees will result in an education outcome,
and from that we can formulate the plans for a change in the education and
training system. Similar changes will result in practically every area of
economic activity. This must be done ruthlessly. Changes will bring pain to the
participants in the existing structures, but this must be viewed as inevitable
if we are to achieve the desired state. Some pain results from every change,
but changes are essential if we are to move forward. The pain that we identify
can be mitigated by plans to retrain and redeploy those affected. For example,
it is clear that the civil service is overstaffed, underqualified and inefficient.
When we know the necessary minimum configuration of the civil service, a
performance evaluation can be performed to determine who is both capable of
doing a meaningful job in their position and is actually doing it at an
acceptable level. Those identified as being good in their present jobs will be
retained or transferred to a similar job elsewhere, where a need is shown.
Those who do not perform adequately can be put on a ‘B List’, while those who perform
acceptably but whose jobs are no longer required, will be put on an ‘A List’. The
A List can be offered a total retrenchment package, for example, of a value
equal to their retrenchment packages plus, say, 12% plus benefits for a year,
which can be drawn down as the interest on a loan to be advanced by the government
plus a monthly salary, and they can be given leave of absence for three months
to put together a business before the arrangement comes into effect. They will
be supported in their efforts by a team of qualified experts in their chosen
field and provided with retraining they may need. In this way, they will be
given an opportunity to establish a business that, for example, is able to
tender for the activities that they previously undertook as employees, or any
other business. Of course, any attempt at illegally influencing the granting of
tenders would disqualify them from the scheme. In this way, a large number of
small businesses will be able to be established. Those on the B List will
simply be retrenched on the normal terms, although they could be introduced to
the business establishment support teams, or to retraining programs.
The restructure of the economy will require considerable
changes to existing laws, probably including the BEE laws, the labour laws
restricting the employment of workers, the generalization of Union settlements
to non-participating employers and the setting of minimum wages, the laws
entrenching tribal kings and chiefs in a position of almost unfettered power
over their ‘subjects’ at high cost to the fiscus and the economy, the laws
establishing numerous inefficient and economically non-productive bodies, and
many others, as well as the passing of new laws to ensure that the civil
service does its designated work honestly, efficiently and at lowest cost. Included
in the latter could be laws that increase the penalties for dishonesty by 50%
in the case of a person in a position of trust, such as a Mayor taking a bribe
to allocate a contract illegally, or a bank director defrauding the depositors.
This would underline the need for adherence to the doctrine of trust,
particularly in elected officials. Other similar laws would penalise attorneys
who persist in defending unfairly any person known to them to have committed
the criminal act, on the basis that attorneys are officers of the Court, and
should be expected to uphold the law, to the extent that they may act only to
ensure that the client is given a fair trial. In this context, ‘fair’ should be
applied to the client as well as to the prosecutor and the Court.
It is fair to say that a majority of thinking people are
dissatisfied with the status quo. This is reflected in condemnation of an
unfair, ineffective and unduly slow legal system, by citizens advising foreigners
and foreign-based fellow citizens not to return to the country and not to
invest in it, in racial bias between groups which previously strived to achieve
the miracle that Nelson Mandela stood up for. It is shown by the near-insane
call by the EFF to allow White businesses to die, echoed by the ANC Mayor of
Ekhureleni, at a time when the country needs every job it can manage, and every
cent of tax revenue. It is proven by a de facto real unemployment rate of 50%,
when 5% would be considered by any thinking politician as a disaster, by the
fact that South Africa has dropped in the ranks of economically-successful
nations every year for the past decade, and has not achieved anything near its
potential in the past 25 years. The need for a major overhaul of the economy is
highlighted by the flight of major mining and industrial companies, such as
Anglo American and Gencor, to foreign fields, by the continuing withdrawal of
foreign investment capital from what should be the major developing economy in
the world, as well as by the dismal financial reports regarding the performance
of the economy. South Africa cannot afford to wait the months or years that
seem to be normal in ‘urgent’ actions by the government, such as can be seen in
the lengthy inactivity in combatting gender-based violence and the prosecution
of those whose criminal actions have been extensively documented in reports by
investigative journalists and the Zondo Commission.
The time for action is now, before the situation as
deteriorated so much further that no rescue plan will achieve a result within
less than twenty years. A naïve expectation that the ANC government will take
the necessary steps in time to prevent the disaster becoming a catastrophe, an
expectation that Cyril Ramaphosa would do that shortly after his accession to
power, and then again shortly after his election more than a year ago, has been
shown to be an illusion born of hope, not a realistic extrapolation of past
conduct, and will inevitably lead to the collapse that seems, in any realistic view,
to be imminent.