South Africa - the State of the Nation 2015 - a Disaster

The State of the Nation Address on February 12, 2015, must give pause for thought.  Any international investor, be it an industrialist, planning to invest $100 000 000 in a new plant, or an individual, planning to buy a house in the sun, was given a rude warning.  The planned new legislation regarding property ownership will prevent ownership of property by ‘foreigners.  The explanation given by the President during a discussion the day after the chaotic address is that the Blacks have been dispossessed of their land over centuries.  They do not own the majority of the land, and the ‘best parts of the country’ are now in the hands of foreigners.  Ownership will be replaced by a system of leasehold, which may be for very long periods.  Of course, this new idea, borrowed from its communist neighbors, will enable a man from Soweto to buy an apartment in Camps Bay.  The simple fact that there is nothing preventing him doing so under the present system, apart from finding the money to pay for it, seems to have escaped the inspired central planners of the ANC.  The new proposal is simply a mechanism to keep investors away from the country.  Experience with the Government has shown that it uses every mechanism available to benefit the favored few, the leaders of the ANC.  A foreign-owned mining company was the subject of pressure to hand over 50% of its shares at no cost to a shortlist of persons.  When it refused to accede to this demand, citing its legal rights, the Department of Minerals and Energy summarily canceled its mining license.  Of course, the company had expected that, and was able to win a Court battle for reinstatement of the license.  However, it is clear that, when an ANC leader wants your holiday home in Cape Town, you can expect the lease of the land to be canceled.  Investors, get the message, sell your land holdings in South Africa now!

That message was reinforced during the somewhat bumbling discussion conducted by the President on the Address.  He made it clear that South Africa belongs to the Africans, a policy started by President Thabo Mbeki, the man who demonstrated the extent of his intelligence by proclaiming that AIDS is a syndrome, and syndromes don’t become diseases.  The President, assisted by the smiling sycophant who moderated the discussion, also made it clear that any non-African is considered a foreigner.  To the perceptive listeners, this was a clear warning that Whites are not viewed as South Africans.  The writing has been on the wall a long time.  Whites are not welcome!  Of course, the fact that the South African economy is crumbling slowly, rather than collapsing, is due to the fact that intelligent businessmen are losing hope gradually, and departing slowly, rather than in a precipitate flight, as the Indian businessmen did in Uganda, when Idi Amin, another lunatic African politician, declared that the Indians were responsible for the ills of the Ugandan economy.  The lesson there was very clear.  If the Government chases away the people with skills and drive, the economy falls apart.  Unfortunately, that is happening in South Africa, more every year.

The President read from the prepared speech (in a presentation that even one of his numerous wives alluded to as sleep-inducing) that the plan to force commercial farmers to hand over 50% of their farms to the workers was now proceeding, with the first 50 farms already identified.  Under this scheme, the amount that should have been paid to the farmer as compensation for the loss of, sometimes, centuries of work in developing the farm, will be paid into a fund for the benefit of the workers!  The ANC has already shown its willingness to remove the property rights of its (White) citizens by simply expropriating the ownership of minerals, replacing the ownership by granting effectively a lease to mining companies, which it feels free to revoke at any time, or to transfer to another (favored) person.  Perceptive investors will recognize the pattern.  Real rights are no longer sacred.  How long will it be before the ownership of banks or insurance companies, of IT companies, or of any other form of business will simply be removed and transferred to some other person?  If you doubt that this is likely, please consider this story.  The writer was personally present at a meeting between a representative of the ANC Military Veterans Association investment company and Minister Stela Sigcau.  That morning, a headline item in the country’s newspapers had announced that the fishing quotas of the (White-owned) commercial fisheries had been reduced by a third.  Sigcau asked the ANC man whether they had received the quota handed to them at no cost.  He replied that they had.  The Minister then asked whether they had the funds required to operate the fishing fleet under the quota (a requirement that had always needed to be satisfied before a quota would be allocated).  The ANC man replied that he thought that they had, but, if their negotiations for this were not successful, they had already almost completed the sale of the quota to a Spanish fishing company for R6 000 000.  Sigcau expressed her pleasure at that news.  The withdrawal of the quota from the existing operator had some interesting consequences.  Three processing factories were closed, and 3 000 employees were retrenched.  The fishery company, which owned the only two modern trawlers in the South African fleet that with international hygiene regulations for the export of fish leased the boats to a new company established in Argentina (rumored to be in the ownership of the same foreign shareholders), which then continued to operate them in the same area.  South Africa was deprived of the jobs and the foreign exchange earnings under the quota, and the ANC was enriched to the tune of R6 000 000.  Can you spot who were the winners and who the losers?

Another point made by the President, alluding to the rolling load-shedding by Eskom, the country’s monopoly electricity supplier, was that the problem was a challenge, not a crisis.  That view is totally opposed to the view held by the majority of South African industry and commerce.  He said that the Government ‘is doing whatever it can’.  The performance of the Government in this arena has been abysmal, to say the least.  The current repeating blackouts, recurring at least two or three times each week for up to six hours at a time, is costing billions in economic performance.  The problem has been known to exist since at least 2003, when the Government was alerted to the need for more generating capacity.  In the nature of the ANC Government, planning for the future is way down on the list of priorities, particularly when the investment required does not produce votes for the ANC at the next election.  No new investment was made.  Indeed, in 2008, when Eskom warned that maintenance requirements would reduce the capacity of the plants below the minimum required, it was decided to reduce the maintenance schedule by 80%!  It does not require a rocket scientist to understand that this situation was certain to induce a terminal disease, which is now in its final throes of bringing the country to economic collapse.  The cost of such electricity as is actually delivered is slated to increase by nearly 13% in April, an increase that is likely to bring many industrial users to their knees, and to drive away foreign investors who planned to establish industrial plants in the country.  The President hopes that the electricity woes will be solved by the construction of nuclear plans (almost certainly by the Russians, who have already announced that they have signed the contract with South Africa) for completion in 2025.  The construction of the power plants at Medupe and Kusile (both projects already five years late on a five-year project plan!) show no improvement in the possibility of them coming on line any time soon.  The President skirted the subject of the lack of nuclear skills in South Africa, saying that the country had such skills in the Apartheid years, and those skills would be revived after the abandonment of the nuclear weapons program.  He carefully omitted mention of the fact that the ANC Government had dismantled the center of nuclear excellence that had been built up by the Apartheid Government, reducing the employment of 1 800 nuclear doctorates to a supervisor and cleaning staff, which were stripping the copper cable of the buildings for sale in order to pay the bills.  The abjectly poor performance of Eskom in planning and maintenance of its existing power infrastructure, and the instruction given by the Eskom CEO to disregard the requirement to blow high-pressure steam through the turbine feed pipes at Medupe, a necessity to ensure that no foreign objects are present which might damage the turbines, and a requirement of the warranty on the turbines, in order to save a week in the coming into operation of the first phase of the plant, must give any thinking person pause at the prospect of Eskom or the ANC Government operating any nuclear facility, which is, in essence, a controlled nuclear explosion.  The thought of scientists from Chernobyl training the South Africans to do the work is equally frightening.

The opening stages of the State of the Nation Address, when the Opposition parties had to demand the reinstatement of the cellphone signal before they could participate in the address, a demand which had to be repeated three times before the Speaker reluctantly agreed to attend to the matter immediately (the switching off of the cellphone signal constitutes a serious breach of the Constitution as well as other laws), followed by the interference tactics of the Economic Freedom Fighter MPs, demanding to know when Zuma planned to ‘pay back the money’, which resulted in the Speaker calling in the ‘Parliamentary Security’ to expel the EFF MPs, including the many of them who had not participated in the interference (both the expulsion of all Party members and the use of armed ‘security’ personnel, presumed to be Police, being serious breaches of the Constitution and other laws).  The refusal by the Speaker to inform the Chamber whether the ‘security personnel’ were Police, after she had been questioned several times, led to the Opposition Parties walking out.  What followed was a more-than-usually bumbling and inept speech by the President, repeating his election speeches and plans that have been on the agenda since he ascended to the Presidency. 

Zuma has displayed convincingly his inability to lead the nation.  Indeed, he has demonstrated convincingly that he has ‘lost the plot’.  The fact that other members of the ANC, who might have been considered possible President material, are willing to go along with this dishonest and incompetent President must be taken as a serious warning of the inability of the ANC to continue to manage (if that could be considered to be an apt description of their stumbling from crisis to crisis) the once-powerful South African economy.

In the words of Alan Paton, we cry the beloved country.

State of the Nation – Karoo Fracking – Eskom Power Failures

One of the comments made by President Jacob Zuma during his 2015 State of the Nation Address related to a plan to use natural gas to drive the stand-by generators, rather than diesel fuel.  A little later in the address, the President commented that there is an abundance of natural gas in the Karoo, the exploitation of which on a test basis has been approved by the Minister of Energy, without the full consultative process having been completed.

The cynics amongst the audience immediately put 2+2 together, to come up with 20%.  It is noteworthy that the controversial project to exploit the Karoo shale is to be undertaken by Shell SA, in which the ANC has acquired a 20% stake during January 2015, and that the gas emanating from that project is the subject of an instruction by the Government to Eskom to become the fuel of choice.  One might be forgiven for wondering whether the recent power shortages suffered by the public at the hands of Eskom might have been engineered in order to ensure that the Karoo shale project proceeds, thereby paying handsome dividends to the ANC.  If this were not the case, one might wonder why the ANC and Shell SA have got into bed together at this stage.

Of course, in normal circumstances, no reasonable citizen would ask whether a governing Party would put its electorate to the extreme distress that the South African public and the South African economy are suffering merely to profit from such an underhanded deal.  In the case of the ANC, however, such a question might be pardoned, given the long history of such dealings in South Africa.

Of course, this is a rumour, and not yet proven fact.  It is the course of conduct one might expect from a Party that does not believe that it will be re-elected, and, of course, one could not apply that sort of thinking to the ANC.  Or could one?

Whatever the answer, the question is one that several people are already asking, and the Government, or, perhaps, the Public Protector, would be well-advised to investigate, in order to put to rest the suspicions raised against the most strongly-distrusted President in the history of the country.

No allegations are made or implied in this blog.  Just asking.

Global Warming

The population of the planet is growing at a rate that was increasing every year, and every one of those people has to be fed, clothed, housed in some way.  A large and growing proportion of those people are becoming more affluent, in their terms.  They are demanding jobs that pay more than the tiny minimum that has allowed the Chinese economy to grow at ten per cent or more each year for the past decade, and those jobs are being provided in cities that were mushrooming daily.  And that growth, those demands, are not confined to China.  India is achieving close to the same growth.  Japan and South Korea has done it too, only a couple of decades ago, and the African countries are aiming for the same achievements.  The problem is that such improvements in living conditions are good, at the scale of the individual, but disastrous at the scale of the planet.  Fertile agricultural land is being appropriated to build the cities, forcing agriculture to work harder and to mechanize more to extract more production each year from less land and that reduced amount of land is also becoming less fertile each year, as the goodness is drained out of it by the fertilizers and pesticides.  The insects that fertilize the land and pollinated the plants are disappearing, more each year, forcing farmers in some areas to pollinate their fruit trees by hand.  The people in the cities need electricity for light, heating and to run the machines in the factories that pay their wages.  They need transport from their new homes to their new jobs, and, as their wages and their savings grow, they want to enjoy more of the ‘good things’ in life, things such as their own car, a television set, new and more fashionable clothes every year, even vacations abroad or the occasional short break over a weekend, now only a two-hour flight away.  Where people used to stay home and read a book, or pop round to the neighbor for a chat, they are now flying cross-country for an evening at a casino or a weekend at some fashionable beach resort, generating a demand that keeps an average of three thousand aircraft in the air at any one time over the United States alone, burning fuel at the rate of thousands of gallons each hour.  All of this generates economic activity and economic growth, the key measurements of the effectiveness of the government.  And all of this uses energy, in one form or another.  Cement is being produced in ever-increasing quantities to meet the insatiable demand for housing, factories, offices, shops and roads.  Coal is being mined at an unprecedented rate to supply the power stations, with vast tracts of land being strip-mined to meet the demand, oil is being pumped from ever-deeper wells, shale deposits that contain previously unrecoverable resources of oil and natural gas are being drilled and fractured to force them to release their treasures.  And all of that oil and coal is being burned, more every day, and the carbon those fuel sources contained is being disgorged into the atmosphere.  Earlier regulations, to limit the quantities of visible pollutants permitted to be released into the air, changed the brown skies that people of earlier years had come to see as signs of their success in their drive to ‘the better life’, so that the skies are now blue once again in the more advanced economies, but that improvement has merely hidden the ever-increasing volume of invisible carbon dioxide that is being added to the atmosphere.  And all the while the huge forests of the equatorial areas of the Earth are being cut down, to provide fancy wood for the increasing number of people demanding the ‘good life’, or to make space for the farming activities required to supply the hamburgers and the maize demanded by the hordes of new customers.  At the same time as the load of carbon dioxide in the atmosphere is increasing at three or four per cent a year, equatorial forests in South America, Central Africa and Asia, the ‘lungs’ of the planet that take that carbon dioxide out of the air and convert it to timber, are decreasing at four or five per cent per year.  Huge stretches of old forest are being cut down, the exotic hardwoods that have taken centuries to grow being shipped off to the markets to provide jobs for relatively few ‘sophisticated’ people and large incomes for the organizers of the activity.  One definition of ‘sophistication’ is ‘wasteful and conspicuous expenditure’.  That definition seems to fit the lifestyle of all the good people.

“So what?” the naysayers ask.  “Three per cent per year is not noticeable.  At that rate, it will take thirty three years for the present amount of carbon dioxide in the air to double, from under four hundred parts per million to eight hundred.  Four hundred parts per million is only 0.04 per cent.  It will take fifty years for the carbon dioxide to reach even one per cent.  There are much bigger and more pressing problems to worry about.  The American economy is presently growing at only two per cent per annum, and it needs the export sales to China and India, much more than it needs to worry about some maybe problem in a hundred years.”

The statement is repeated in practically every other country, wherever a politician puts his or her job on the line by espousing a cause that would reduce the fragile economic upswing that was only now starting to happen, after seven years of bust.  Only a year ago, Julia Gillard almost lost her job as Prime Minister of Australia when she and her Party imposed a ‘carbon tax’, a measure designed to force the large producers of carbon dioxide to seek other alternatives or, failing that, to find ways to do what they did at a lower cost to the planet.  Of course, as was to be expected, the levying of a universal tax on any production of a greenhouse gas results in the cost of that tax being passed on to the consumers, increasing their already high cost of living while the Government uses the funds collected by it, not to develop cleaner energy sources, but to buy the votes of the increasingly large poor section of the voting population.  The fact that the poor are poor largely as a result of the increasing tax burden on the economy apparently has failed to come to the attention of the voters, who want only more benefits from the Government.  They all seem to believe that the Government can wave a magic wand and create the money that would be distributed to them as an indication of how much the political party in power cares for the people.

Global warming is a real and pressing problem that will inevitably affect every person on Earth.  The only question is what you will do about it.

For further thoughts on this subject, read ‘Preparation’, by Nicole Stuart at Amazon.com

Eskom is only the tip of the Iceberg

 

Eskom is a summary of the crises facing South Africa.  The corporation, which, until the ANC put its cadres in to ‘manage’ it, was known as a reliable, forward-thinking and efficient producer of electricity.  It was one of the factors that enable the country to thrive, when all other African countries were languishing in mediocrity.  Since the ANC has had its fingers in the pie, the corporation has abandoned the principle of planned maintenance.  It has, in fact, forgotten how to plan.  Its management capability has sunk to an historic low, along with the staff morale.  The interruption of supply from Koeberg nuclear power station was caused by a worker dropping a piece of scaffolding onto a critical transformer.  That single event should have sent waves of near-panic through South African society.  If the standards of care applied in a simple maintenance procedure are as indicated by that event, it raises significant doubts about the capability of the present management of the corporation to operate what is, in fact, a controlled nuclear explosion.  That event, coupled with the copious evidence that has become available in recent months regarding the incapability of Eskom to do anything to at least a minimum standard of competence, must put up a huge warning sign to the public of South Africa and of the world.  Eskom is not capable of operating nuclear reactors in a safe manner.

If the continuing crises caused by Eskom (yes, even by the strange definition of the Minister of Energy, that a crisis is a disaster that is unplanned) were the sole major problem that has arisen under ANC management of the country, it would be a warning sign that cold not pass unheeded.  Unfortunately, it is not the sole crisis.  Look at the other ‘isolated’ problems which the country is facing:

·         South Africa Airways is a public body that failed to publish annual accounts for more than two years, because such publication would show that the corporation is insolvent.  Unfortunately, the fact of insolvency is not created by the publication of the accounts.  A corporation is insolvent if it is financially unable to pay its debts.  The fact that the demand for repayment has not been made does not make it solvent, nor does the fact that it does not disclose its inability to pay.  South African Airways has continued to trade in an insolvent state, to the knowledge of its shareholder (ultimately the South African State) for years, being saved from actual collapse from time to time by the continuing injection of taxpayer money, as a way of papering over the cracks caused by incompetent management.  If South African Airways were privately owned, its Directors and top management would have been behind bars for their breach of the laws regarding insolvency.

·         The South African Police Services seem, to the public, to be little more than a band of thugs, showing remarkably little capability of controlling crime, or of investigating those actual crimes that it does turn its attention to.  Stories abound of criminal acts reported to the Police without any attention being paid to their investigation or prosecution.  A group of German investors known to the writer speak to their many investor friends of the seventeen criminal acts reported to the Police at Brakpan, including several where a Police officer was present at the apprehension of the criminal and obtained written and signed acknowledgements of guilt from those accused, all without any trial of the accused resulting.  The fact that a Commissioner of Police could have been found guilty of corruption speaks for itself.  The fact that he was a senior figure in Interpol at the time has caused incalculable damage to the image of the country amongst investors abroad.  Yet there is no sign that any meaningful action is being undertaken to correct this situation.

·         The South African Broadcasting Corporation was headed by a Chairperson of the Board who lied about her educational qualifications.  The requirement that the senior officials of banks, insurance companies and other financial services organisations should be fit and proper persons, with the correct qualifications, is a recognised part of the law relating to privately-owned companies, yet that seems to have been flagrantly ignored.  The Minister chose to ignore the findings and recommendations of the Public Protector, reappointing the CEO, who was found to have lied about his qualifications, and also to have breached the regulations in granting himself and his girlfriend substantial salary increases.  The Minister’s explanation was that ‘he has done nothing wrong’!

·         The Department of Education has continued to show a remarkably high level of incompetence, bringing the South African education system to a position of 183 of 187 countries.  The latest ‘achievement’ of under 75% of children passing the Matric examination was ‘regretted’, but the fall from 78% was explained by the ‘new curriculum’, for which, apparently, the teachers were nor prepared!  The fact that 150 000 youngsters failed to pass an examination for which they had been studying for twelve years was totally ignored.  The fact that the lowering of the pass marks required, in order to achieve even this lamentable result, is also ignored, although this has had the result of bringing the qualifications achieved at South African schools and universities under suspicion.  Before the ANC took over management of the education system, a South African degree was recognised unquestioningly around the world; now it has practically no value.  South African businesspeople will attest that a matric, and even a degree, is now no longer an indicator that the applicant for a job will be able to perform to reasonable expectations.

·         Spoornet has done more to destroy the export capability of South African industry than any other of the ANC-managed public bodies, with the possible exception of Eskom.  Examples abound of trains being unavailable for the transport of export commodities, either on time or at all.  It is not unusual for customers being compelled to employ the services of a Black-owned ‘Consultant’ to negotiate the availability of trains.  One client found that Spoornet failed over a period of several weeks to make the trains available, as they had been promised in writing, until the exporter, which was paying demurrage on a ship waiting to load in Durban at the rate of $25 000 per day, until a Black ‘Consultant’ was employed at a cost of R300 000, after which the trains suddenly arrived at the siding!  That client has ensured that every potential foreign investor in South Africa has come to know of this.  The result has been the withdrawal of at least two billion dollars of potential investment in the country.

·         SANRal, the body entrusted with the development and maintenance of the roads system in South Africa, has repeatedly shown an arrogant disdain for the desires and needs of the South African public, the ultimate owners of the Corporation, with the imposition of the e-toll system, after effectively selling off the right to recover tolls on practically every major arterial road, which were previously funded entirely by the taxpayers, at the cost of a significant reduction in the economic activity for which those roads were built.  The refusal of SANRAL to make publically available the details of the contracts underpinning the e-toll system, and the very high cost of operating that system (which any competent manager would have warned of at an early stage in the planning), have clearly demonstrated the high level of managerial incompetence and the distance of the corporation from the final owners of the corporation.  SANRAL is a clear case of a Government entity running wild.

·         The Municipalities under the control of ANC cadres have been found to have suffered losses in the hundreds of billions of Rands by corruption and probably multiples of that by inefficiencies, leading to a culture of rioting and destruction of properties by communities who have been deprived of the public services to which they are entitled.  Numerous municipalities have been placed under administration as a result, and this process continues.  Nowhere in the world is this phenomenon so clear as in South Africa under the ANC.

·         Parliament has been shown to be ineffective as an organ of Government, with a clear reluctance by the Speaker to permit any debate that might tend to show the corruption, dishonesty or ineffectiveness of the ANC.  This tendency was arguably started under the Presidency of Thabo Mbeki, who showed remarkable effectiveness in stifling any attempt to debate the Arms Scandal in the late 1990s, and has been continued under his successor, with the ‘debate’ on the Nkandla Scandal creating a new lowlight in the history of democracy in South Africa.  It is remarkable that a claim by the President, the man responsible for the effective government of the country, that he did not notice the expenditure of R245 000 000 on his own property, should have been made and then could have been accepted by the Members of Parliament, the men and women who have undertaken the sacred duty of representing the people of the country.  It is even more remarkable that Zuma should now make his first appearance in Parliament, the body to which he should be accountable for his and his Administration’s actions, on February 12, a few days short of six months (!) after he was effectively driven from Parliament by the active questioning of his conduct by the EFF.  It is even more remarkable that it could have taken twenty years of witnessing the arrogance, the corruption and the ineffectiveness of the ANC in their management of the country, its organs and its economy, for the official Opposition Party to have finally started to show signs of growing a backbone.

There are numerous other examples of the crises facing South Africa now.  The State of the Nation address tonight will almost certainly be a whitewash of the Government’s ineptitude, arrogance and corruption, rather than a clear statement of a well-considered plan to bring the country back to the state of optimism that existed under President Mandela. 

At that time, the country had problems, but its citizens also had hope. 

Now the country has a seemingly endless array of crises, each of them major and probably beyond any hope of recovery under the ANC.

One can only hope that the successor to Zuma as leader of the Party will recognise that the party has been so tainted that the best course of conduct will be to step aside, and allow competent managers, rather than graft-seeking politicians, to take over the recovery efforts.  It was clear to thinking persons a decade or longer ago that the country had entered a decline that, without a dramatic about-turn, would inevitably lead to a crash, from which it would probably take years to recover, even with the efforts of the best people available.  Unfortunately, it appears that the crash is now inevitable and imminent.

The Soweto Attacks

 

The recent xenophobic attacks by Soweto residents on foreigner-owned stores raise a number of questions that seem to demand answers.

·         Are these attacks a form of Apartheid?  They certainly seem to be, with the local shopkeepers association demanding that foreigners be banned from ownership of businesses in Soweto.  That view is in compliance with the new tack taken by the ANC since the accession of Thabo Mbeki to the Presidency, and more strongly since Jacob Zuma has been threshing about in a desperate attempt to remain relevant to the part of the electorate that forms the base of the ANC’s power.

·         Do Soweto residents give any thought to the idea that the foreign shopkeepers are more profitable that their local counterparts?  That profitability probably derives from their understanding that lower prices usually translate into higher sales, meaning that the exclusion of the foreign shopkeepers means that they will pay a higher price for their goods.  This failure of understanding is, of course, endemic in the ANC, which is setting national economic policy on the basis that the world owes the ANC a free ride.

·         What is the immigration policy of the ANC?  Anyone who has attempted to obtain a work visa for a highly-qualified German engineer, or any of the hundreds of skills that are in desperate need in the country, will know that the process is long and slow, and extremely uncertain, often to the extent that it is easier to establish the part of the company that needs these skills outside South Africa.  On the other hand, it seems that a qualification as a Pakistani shopkeeper permits almost instant granting of the required visa.  It is hard to imagine that the average foreign shopkeeper in Soweto has undergone the same rigorous tests and approval process that a (White) German engineer would.  Is this another example of the new Apartheid being applied by the ANC Government?  How many of the shopkeeper class have been permitted residence in South Africa in the past twenty years?  Apparently well-founded rumours have it that the total of Pakistanis residing in South Africa is presently about 500 000!  If that figure is even 50% accurate, on what basis were they granted such visas?

·         What exactly is the policy of the Government regarding the establishment of industries in South Africa?  Is it the intention to subject foreign-owned businesses to greater restrictions than locally-owned businesses, such as a need to provide training for local competitors?  This certainly seems the case if Small Business Development Minister Lindiwe Zulu is to be believed.  Of course, no-one would doubt the clear statement of an ANC Minister, even if that statement were certain to result in an even greater abhorrence of South Africa as an investment destination than already exists.

·         Where are the Police in the whole story?  It seems that the presence of the Police at the scenes of the attacks on foreigner-owned businesses and the looting of them was more to protect the looters than to stop the looting.  Of course, it seems that the Police felt free to join in the looting.  That this is not unusual is clear from the case of the missing watch, taken from the home of Oscar Pistorius while only Police were present.  It is not remarkable in the South African context that nothing has come of that particular looting, nor that the likely punishment of the Policeman caught on film stealing toilet paper from one of the shops will probably be an administrative penalty (read one week suspension on full pay).  Looting in this country is endemic, ranging from the misuse of State funds to build personal mansions, right down to the theft of rolls of toilet paper, and all forms of looting are equally reprehensible.  When one official gets away with it, all other officials are effectively given a licence to loot and plunder.  The only possible cure for this epidemic is to lock them away and throw away the key.

Zuma's Explanation on Eskom to Investors at Davos

President Jacob Zuma has explained the failure of Eskom to supply electricity to South Africa by pointing out that the electrical infrastructure of South Africa was never designed to supply electricity to eleven million households.

That is quite an admission, coming from a man who is notorious for making promises that he cannot keep and probably never intended to keep.  What it says is that the ANC, which ‘has a good story to tell’, failed to understand that electricity, and power generation in general, is one of the markers of development of any country.  He explained to the listeners at Davos, polite people who don’t attempt to put a speaker on the spot, that the South African Government is taking steps to resolve the difficulty, and that South Africa will soon have a reliable electricity supply.

The truth is that the problem is multifaceted. 

·         The number of households being supplied with electricity, most of it free in accordance with the ANC’s plan to make itself attractive to the voters by being the Party of ‘handouts to the poor’, is increasing dramatically, but the usage of electricity by households is a small fraction of the amount required to support the development necessary to create the jobs to employ all of those people.  The huge influx of Africans, Chinese and Pakistanis after the statement by President Thabo Mbeki that South Africa belongs to the Africans, a statement that implied that the ‘Africans’ do not include the Whites who built up the infrastructure that Mbeki was offering to the rest of the continent, has resulted in a massive population growth, many of them people who are not employed, and probably will not be employed in their lifetimes as a result of the ineptitude of the ANC in generating economic growth and the abjectly poor education all the children receive, making them unfit for any job other than manual labour.  And, of course, the closeness of the ANC to the South African Communist Party and to Cosatu goes a long way to ensure that even the manual labour jobs are being priced out of the market.

·         The failure of Eskom to ensure an adequate and reliable supply of electricity is largely a result of

o   the failure of the ANC Government to authorise the capital expenditure known to them since 2003 to be essential to meet the needs of the country,

o   the failure of Eskom under a series of heavily salaried CEOs, all of whom received large bonuses for their ‘good performance’, to ensure that the essential maintenance was carried out.  This is a failure that is common to all of the organisations that the ANC cadres manage.  In 2012, the executives at Eskom were instructed by the then CEO to cut back maintenance by 80%!

o   the incompetent project management by Eskom of the Medupi project, which was projected to come on stream six years ago at a cost of about 20% of the current projections.  Statements made in November 2014 that the first portion would be in operation by December 15, 2014, only three weeks in the future, were abjectly incorrect, and the date was corrected to January 15, 2015, and, since then, to sometime in March!  It should be noted that the Department of Energy failed to put the year to that date, no doubt having learned that a firm date for a promise to be met is a sure way to attract criticism.

o   the brain drain from Eskom, in common with every other part of the economy, as a result of the flagrantly anti-White statements and policies of the ANC Government, and coupled with the BBEEE policies which state clearly that no White male has any future in the country, has resulted in a serious lack of skills of every type in Eskom, a lack which is presently only partly compensated by the employment of dozens of skilled contractors from abroad.  This condition has not been publicised by Eskom or the Government, probably because that would raise questions about the cost of such contractors and consultants, a cost which could have been saved by employing the local talent and by generating a pool of such local talent by the simple means of ensuring that the schoolchildren are given an education adequate to ensure that their latent abilities are developed to the level needed.  But then, of course, it was Mbeki’s policy to develop a nation of lowly-skilled artisans sufficient to meet the needs of a service-based economy.  One wonders where Mbeki and, by implication the ANC, planned to source the skills needed to develop the economy.

o   The current state of the South African economy, with the economy declining at an increasing rate every month, with SA Bonds being downgraded on a regular basis, and with the promises of Government to make the changes necessary to bring about recovery being observed only in the excuses that Zuma gives at each State of the Nation address, precludes almost any large-scale corrective capital expenditure being made.  The funds are simply not there, and the world financial community is simply no longer willing to pump money into this failing economy.  The QE program of the Federal Reserve has come to an end, and the support that the South African bonds gained from the fact that they offered 5% greater return than the cost of the money will not be there, while the crashing Rand makes any investment in Rands a risky affair.  The only option that will be available to the Government to fund the investment that is urgently required by Eskom will be to print money.  This is a hazardous option in every way, as has clearly been shown by Zimbabwe, but the actions of the ANC in bringing the country to this crisis demonstrate very clearly that the leadership of the nation is either oblivious to the risks, or is willing to undertake them in the hope that they will be able to hang on a little longer, to pad their Swiss bank accounts a little more, and to build fortified palaces to retire to when the gullible public realises that the party has come to an end.

What does all of this mean to South Africa?

The best guess is that the electricity crisis will continue and worsen, until a new Government is able to convince the world that it really means business, probably by replacing the corrupt and incompetent ANC cadres in every field of Government with honest, competent and hardworking people who have the good of the country at heart, not only their own pockets.  That process can start only after the next general election or, as seems to be increasingly likely, after the brewing revolution throws the ANC out of office.  One can only hope that the process of dissolution of the economy will leave enough behind to start the rebuilding process.

Davos and the Redistribution of Wealth

 

A report by Oxfam has predicted that 50% of the world’s wealth will be in the hands of the wealthiest 1% of the population by next year.  What is amusing about that prediction is that it comes at the time of the latest Davos meeting.

Davos is a gathering of the super-wealthy and the top Government leaders.  It presents a wonderful opportunity for the politically-inclined to profile themselves to the world media, to show a passion for improving the lot of the world’s poorest.  It is equally a wonderful opportunity for those with wealth and buying power to exercise that buying power to secure their position in the next round of money-grabbing, and for the politicians holding the strings of power in their respective countries to negotiate the price for the year’s round of corruption.

Has any decision that has come out of Davos done anything to improve the state of the world for the 99% who will by next year hold less than half of its wealth?  Has it ever occurred to you why the money-hungry politicians see Davos as an extremely important event?  Have you ever seen a poor politician attending Davos?

Any thinking citizen, especially one living in South Africa, where the greed of the politicians, satisfied at the cost of the taxpayers and the expense of the poor, must be concerned when the nation’s leaders, right down to the CEO of Eskom, the demonstrably least competent power utility in the world, find Davos a must-go meeting.  Certainly, their dealings with the super-wealthy could be conducted behind closed doors in other places, but the concentration of influence-peddling in Davos makes it the premier venue to wrap up the deals for the coming year.

The amount of public money spent on these conferences and visits, if the Government were a public company, would require a detailed report to at least the Board of Directors.  Why should Jacob Zuma and his cohorts be immune to the need to justify their actions, and to report on their achievements, or lack of them?  Every concerned citizen has witnessed the disregard (or possibly fear?) that Zuma and the Ministers and heads of the public bodies funded by taxpayers’ money have of reporting to the representatives of the taxpayers.  Zuma ran from Parliament in August, when representatives of some of the people demanded an accounting by him for the money found by the Public Protector to have been incorrectly appropriated by him for the building of his Nkandla palace.  Now, the Speaker has announced that Zuma will appear to answer questions before Parliament in March, six months later!  She has chosen to exempt him from questioning before, during or after his State of the Nation propaganda speech in February.  Can this be an acceptable level of accounting by the President to the people?  Will the Speaker permit questions to be asked of Zuma regarding the deals he makes at Davos, Beijing or Moscow?  Will she demand that Zuma actually answers such questions as may be asked?