Zuma still does not get it

All knowledgeable observers are in agreement.  South Africa is in the early stages of a financial crisis.

Business confidence has collapsed, and is still heading south at an increasing rate.  The investor world is in agreement that the country is one tiny step away from junk status.  Economic growth has collapsed, with the World Bank and the IMF in agreement that growth this year will be considerably less than 1%, less than half of last year.  The Rand is testing new limits against all other currencies.  The cost of living is skyrocketing, with prices moving up on a daily basis.  Local companies are looking elsewhere for new areas of investment, with the assurance that the South African market is close to dead.  Inbound foreign investment is dying off rapidly, and existing foreign direct investments are fleeing the country.

The only body that sees a different world is the ANC.  Gwede Mantashe, after the State of the Nation fiasco, stated in a TV interview that we are not in recession.  ‘Recession,’ he said in an arrogant tone, ‘requires three quarters of negative growth, and we have not had that yet.’  His one concession to the truth was that telling word ‘yet’.  Even Mantashe apparently knows that South Africa is on a slide under the leadership of the ANC.

Zuma read his normal SONA speech, apparently oblivious of the fact that he now is acceptable as a leader of the nation to fewer than 16% of the population.  He spoke passionately about how some Black soldiers had died at the Battle of Delville Wood, a hundred years ago, after they had been badly treated by the Government.  He raised the point that, fifty years ago, the residents of District Six, which was a slum, were moved to another area to make way for Whites, a development that never took place.  He also referred to the school riots in 1974, including the killing of Hector Pietersen, riots which were instigated by the ‘freedom fighters’ in order to create martyrs in the fight against Apartheid and have since been sold by the ANC as spontaneous outbursts of student anger.  He referred to the fact that the University of Fort Hare, a Black university attended by Nelson Mandela and Chief Buthelezi, is celebrating a hundred years of existence, conveniently ignoring the mantra that the Apartheid Government refused education to the Blacks.  All of these references were undoubtedly a snide racist attack on the Whites and the Party he claims to be White-dominated, the DA, and then he went on to denounce racism and announce a campaign against racism.  It is a sure sign of the duplicity of the man, a clearly racist attack followed by a denial that he meant it.

The speech made the apparently important point, reiterated in his post-SONA interview a day later, that Government plans to cut the costs of international travel while Zuma’s travel budget has been exceeded by sixty million Rand), the size of international delegations (only a fortnight after an eighty-man delegation attended the World Economic Forum at Davos, during which Zuma failed to attend a panel discussion on Africa), the after-budget parties (although SONA is preceded by a praise singer extolling the virtues, imagined or otherwise, of the Great Leader of the Nation) and similar petty cash items.  Mantashe made the point after SONA that not all of these were new.  After all, he pointed out, there had never been any rule regarding the size of delegations!  Really?  Any competent businessman imposes limitations on expenditure, and demands accounting of the results of the expenditure, which has never been done by the ANC Government!

Zuma carefully avoided any mention of:

• the hijacking of the Government by the Gupta family, together with his own family,
• his admission to the Constitutional Court that he had breached the Constitution and his Oath of Office in regard to his own plundering of State resources and in contravention of a binding Finding by the Public Protector, rumoured to be in excess of R150 000 000,
• his subversion of the rule of law in co-opting the Minister of Police to produce a fictitious report exonerating his boss from any liability for repayment of the stolen funds used for Nkandla, using the flimsy excuse offered by all evil men, including the Nazi war criminals at Nuremburg, that he was following orders,
• his blunder in replacing a standing Minister of Finance with a failed nonentity, which was followed three days later by an about face, all without reason (other than an outright lie) or explanation, although it cost the economy an immediate R500 billion with much more to follow in the form of dramatically-increased cost of borrowing,
• the downgrading of Government securities by the Ratings Agencies, taking them to one tiny step above junk status, which will remove them from the list of permissible investments for most of the organisations that have provided funding to the country and to its banks,
• his breach of a High Court Order that the Government enforce a Warrant of Arrest of al Bashir, permitting him to flee the country while telling the huge untruth that ‘his name was not on a passenger list (!), an outright breach of the legally-binding Treaty of Rome and a flagrant statement of support for a terrorist leader accused of genocide,
• the fact that South Africa’s economic performance alone brought the economic growth of the African continent down from 7,4% without inclusion of South Africa to 4,3% with inclusion, stating that the country faced difficult external economic conditions, of which, apparently, the rest of the continent was unaware,
• the continuing brain drain, of all racial groups, fleeing the disastrous conditions in the country to seek their fortune in other economies, all subject to the same economic conditions,
• the collapse of the mining industry under the weight of trade union demands for uneconomic wages, supported by ruinous strikes accompanied by extreme violence,
• the abject failure of the education system to provide an acceptable education to millions of children, even at the highest cost in the world as a proportion of GDP,
• the continuing disasters in State-Owned Entities, such as Eskom, SAA, SABC, PetroSA,
• the worst drought in fifty years, exacerbated by a total lack of preparation of the necessary supportive infrastructure, even though the drought was known to be on the cards for several years, and by a lack of foreign exchange and economic strength to import the necessary food to prevent widespread starvation,
• the status of South Africa amongst the lowest in the world on indices of
• transparency,
• corruption,
• education,
• attractiveness as an investment destination,
• security of investment, after the country cancelled Treaties in this regard with European countries, the source of most of the foreign direct investment,
• ease and speed of starting a new business.

Zuma read his speech, badly, as though he was going through the motions.  He believes that his hold on the Party is strong enough to enable him to muddle through to the end of his term (remember the FBI’s Mc Carthy and his famous files on Congressmen?) and possibly even longer, by use of his seven thousand-strong personal security force.

After witnessing Zuma’s State of the Nation address, one can be left with only one thought.  Zuma really does not get it, and the ANC will continue to support him for as long as they can, to continue their depredations.  They have no interest in governing the country.  Their only interest is what they can take from it.  Joe Slovo, the leader of the Communist Party responded, in the early years of the ‘new South Africa’, to a question why he believed that the proposed form of government would succeed when all others that had tried it had failed.  “Communism needs capital, and South Africa has that capital.”  “And when the capital is exhausted, what the?”  His famous response was “Then we’ll try another system.”

Cry the Beloved Country.

Business must work with Government to Save the Economy

The State President has had an insight into some of the conditions that underlie growth in jobs, taxes, foreign exchange earnings and, presumably, corruption opportunities.  He is now calling on business to cooperate with Government in growing the economy.  It might be instructive to him to learn Lesson 101 in Economic Management of an economy, a lesson which the ANC Government has either forgotten or never learned.

The lesson is simple.  Everything in an economy depends on business:  taxes, exports, jobs, all of economic activity depends on businesses of different sorts and sizes.  They might be multinational companies operating huge industries or mines, employing hundreds of thousands of personnel at all levels, or they might be one-man shows manufacturing bead jewelry.  They all have several factors in common.

A business needs labor at a reasonable cost.  If the cost is too high, the business will close its doors, or find a way to do what it does with fewer or cheaper employees, or relocate to a country in which the cost of labor is more affordable.  The Government’s populist stance in promoting ‘worker rights’, a ‘living wage’, compulsory adherence to trade union enforced wages, the promotion of ‘human rights’ which have no relevance to the real conditions on the ground, and its failure to provide qualified employees, in terms of education, skills training, reliable quality of qualifications and similar factors that gain votes but do not help employees to contribute to the activities of the business are all factors which strangle or kill businesses, and keep foreign investors from making an investment in the country.

A business needs to know that it is welcome in the country.  This does not mean that the President should spout his insincere slogans, while undermining ‘Capitalists’ or, even worse, ‘White Capitalists’ at every Party congress.  It means that the Government must make a thorough evaluation of every law and every policy that might deter businessmen.  It must remove the possibility (probability?) that some Government body will act against the business in order to coerce the owner/shareholder into parting with a slice of it in favor of a Party favorite.  It must remove the silent white anting of the business by requiring placement of cadres in senior positions, where they can set about the process of silencing comment from the business about things that the Government might view as unfavorable to it.  It must remove the corruption practiced by SOEs such as SAA and Eskom in demanding a shareholding in the supplier company in order to gain a supply contract.  It must remove the possibility of large fines or penalties being imposed on a company in order to allow a favored entity to acquire the business at a fire-sale price.  It must ensure that no penalization of the company can occur in its dealings with a Government body for any but the most valid economically-driven reasons.  It must cease holding the view that a business is a legitimate target from which to suck the blood in order to advance Party ends.

A business must believe that the costs of doing business are reasonable in the light of the facilities and benefits offered to it for that cost.  The high fuel levy was intended to ensure the availability of good roads, not to supplement the cost of social grants.  If the policy is that the ‘user pays’, that policy must be implemented even-handedly.  That means that taxis must not be exempted from the road tolls, and that the cost of such tolls must be applied to the specific purpose of the users, not to subsidize the living of Party favorites.  The costs of doing simple things under Government regulation or with Government imposed bodies must be reasonable.  This includes such things as registering a company, submitting returns required by Government or paying the numerous levies, fees, costs and other matters, including the cost of land taxes, electricity, water, rail or road transport, or even employing workers.

A business must believe that the assets that it builds up will continue to be available to it, not to fill gaps left by Government incompetence or corruption, such as the attachment of farm dams to supplement the water supply to the areas in which no provision for continuing water supply has been made, no regulation may be passed to require a farmer to hand over half of his farm to wage employees without any effective compensation.  If there is no such assurance of property rights into the future, the business man will either not invest or withdraw from the investment, to the cost of all.

How does the Government find out what business wants? 

The answer is not that it turns to the Russians or Chinese for advice on how they do it.  The answer is to ask the businessmen!  And the first step to getting a real answer is to ensure that those businessmen trust the Government and the representative of the Government.  It may come as a rude surprise to the dearly beloved President, that businessmen and –women do not trust either the President or the ANC Government.  Most businessmen have experienced the duplicity of Government, the doublespeak and the outright lies.  They have suffered under the campaigns against them to vilify the Whites and the Capitalists in order to curry favor with the trade unions, the SACP and the ‘poorest of the poor’.  Most know that their desires will not really be heeded.  Most know that the speeches that Zuma is now making are no more than lip service, a normal method of sideling the people who are the absolute foundation of the economy while the Government pursues its own desires of enrichment and reelection.

Unfortunately, all businesspeople know from experience that the pious protestations of Zuma are without substance or true intent.  A leopard does not change its spots, and more than the ANC will suddenly put the interests of the people first.