Betting on the “good ANC guys”: Building sand castles in an hourglass

Johannes Wessels
@johannesEOSA1

The perception of numerous commentators and business leaders that South Africans should mobilise behind president Cyril Ramaphosa, Pravin Gordhan and Tito Mboweni to support the “good guys” in the ANC to ensure an economic recovery, is not only simplistic: it is utterly naive.

It is also not new. It is a rehash of the theme of the 1970s when the National Party was assessed as comprising good guys (the verligtes) and bad guys (the verkramptes) with many commentators arguing the case to support the verligtes. The person who eventually took the quantum leap with a definite break with apartheid (F W de Klerk) was not counted amongst the verligtes. He was seen as rather conservative and a natural choice to chair the Ministerial Council for White “Own Affairs”.

Verlig-verkramp focused primarily on how Nationalist MPs were oriented on apartheid. That analysis had no eyes for another fundamental division: The PW Botha approach with the security structures of the military and national intelligence as key players versus those who preferred a civil-oriented approach with parliament in the fulcrum. De Klerk belonged to the latter faction. Botha and the securocrats had commenced talks and interaction with both Nelson Mandela (then in Pollsmoor) and the ANC in exile, but De Klerk was largely uninformed and excluded from these discussions.

Playing whilst the resource base is shrinking…

Verlig-verkramp was an insufficient perspective to detect the person who would make the decisive break with apartheid.

Now, many commentators and business leaders still cling to the hope for action and clear policy direction, contrary to what is happening in reality. The hope that “Ramaphosa knows what is required” is based on viewing the ANC as comprising a “good ANC” and a “bad ANC” and that the good guys will restore the country to a golden growth path. Treasury’s document on economic policy is clung to as a lifebuoy.

The good guys are supposedly led by Ramaphosa, Mboweni, Pravin Gordhan and Gwede Mantashe, with the bad guys represented by Ace Magashule, Faith Muthambi, Supra Mahumapelo and others.

This cowboys-and-crooks-perspective is naïve. It also fails on at least four grounds. 

The good men didn’t see the rape since they just turned a blind eye

The majority of the so-called “good ANC” were vocal supporters of Zuma during his presidency, including Ramaphosa.  The latter is not on record of upholding the Constitution when it was trampled by the ANC caucus who supported Zuma in ignoring the Public Protector’s report on Nkandla. Neither was he amongst those who supported a vote of no-confidence in Zuma.

He, and Gordhan, were voiceless when the sovereignty of Parliament was raped by the blocking of cell phone signals and they meekly accepted that pretence that the blame rested on some low over-eager official. 

As the striking poster against Gender Abuse states: “Good men don’t look away.  They act against abuse!”.  That dictum did not apply to the so-called good men in the ANC when the constitution was violated.

“The good guys” accepted state capture & corruption when the ANC made 5000% profit

If the “good ANC” comprises those against corruption and the “bad ANC” those that enjoy the fruits of corruption, it could in some individual cases have a semblance of sense. However, both the “good ANC” and the “bad ANC” readily played along when Chancellor House, the ANC’s investment arm, creamed off millions as the BEE partner to Hitachi Energy Systems in what was clearly a corrupt deal.

Through Chancellor House, the ANC positioned themselves as the local partner with influence and received a R14 million “success fee” for assistance in securing the contract. In addition, they obtained a 25% sweetheart deal in Hitachi Power Africa (HPA) that landed the contracts for the boilers at Medupi and Kusile. That stake in HPA was later sold by Chancellor House, raking in a 5000% profit.

Hitachi was taken to task by the US Securities and Exchange Commission (SEC). They coughed up R266 million as settlement fees to avoid prosecution, not acknowledging fault, but accepting that they may never claim innocence again: the SEC settlement would become null and void should Hitachi ever “make or permit to be made any public statement denying, directly or indirectly, any allegation in the complaint or creating the impression that the complaint is without factual basis”. 

The good and the bad ANC remained mum over the state capture that they were aware of and from which the ANC had benefitted.  They also remained mum about the R14 million awarded as a “success fee”. Not one of the good guys came out against the corrupt benefits the ANC had gained from this incident of raping tax payers and every single electricity consumer. 

State capture to milk SA tax payers through Eskom for the sake of the ANC predates Zuma and the Guptas and the “good ANC” happily played along.

  • This disregard for constitutions and human rights also manifested in Ramaphosa’s praise-song of Robert Mugabe. Not a word of critique and another classical “hear no evil, see no evil and speak no evil” performance, as was the case with Zuma during his deputising stint.

The “good guys”are often closer to Marx than the market

It is a fallacy that the low economic growth phase is merely due to corruption and pilfering. A toxic anti-business environment in policy and practice, as well as superb management failures in public institutions, are far closer to the root of poor economic performance and lack of job creation. The anti-business mode of thinking manifests in:

  • the centrist belief of the government as the conductor and leader of the economy (read: the developmental state with both Ramaphosa and Gordhan ardent disciples thereof);
  • the conviction that the private sector is worse equipped than government departments and state-owned enterprises (SOEs) to render efficient services (Ramaphosa’s own opinion) ;
  • the belief that government is superior to firms doesn’t stop there, they are convinced that they know better than private sector investment managers where pension fund savings and other investments should be channelled to and that government should therefore impose non-entrepreneurial conditions like:
    • race (BEE) from the level of the boards of directors through senior management to the level of employment;
    • prescription for asset investments;
    • minimum wages;
    • prescribing subcontractors and even forcing firms to procure from more expensive “emerging firms” under the pretext that this kind of “competition”would benefit the consumer;
    • suspending property rights through confiscation (expropriation without compensation).

(No “good guy” voiced a concern about these.)

Pravin Gordhan, the key “good guy” during the Zuma-fiasco is a case in point. There is no doubt that Gordhan was the symbol of spending in accordance with the rules and the arch enemy of corruption within government. That stance, however, is not akin to being a champion for enterprise freedom and an environment that is enterprise friendly.

As a staunch communist, he is wedded to central control with government not only the key mover, but also the ultimate decider about how society should be structured. There was neither hesitation to interfere in the sovereignties and competencies of non-state institutions, nor an inclination to stimulate the business climate.

In addition, his budgets as Minister of Finance were characterised by steadily hemming in the space in which enterprises can take decisions. The budgets were tilted towards transformation and state control and thin on economic freedom and private sector growth.

He also maintains a strong workerist line: when the Eskom Board indicated a zero increase for Eskom staff (clearly overpaid as measured against Eskom’s own productivity history) Gordhan instructed Eskom to negotiate. The outcome was an average increase almost double the inflation rate.

Some of the “good guys”are just out of their depth…

Try promoting investment with fake news. That is exactly what Mantashe as Minister of Mineral Affairs recently did in Australia at a mining conference.  He sang the praises and potential of hazenile, a mineral only existing as an April fool’s day prank.  Mantashe spoke about the massive hazenile reserves and the potential it has for energy storing batteries. 

If a minister of an important portfolio for economic development cannot distinguish between fact and fable, it doesn’t bode well. As Mantashe, on the subject of cadre deployment, had remarked many years ago: “What do you expect when you make a mouse the manager in a cheese factory?

But BEE cemented mediocrity as a yardstick since race is – as in apartheid – of more importance than productivity and creativity.

Weekend Post (8 September 2019)

Are the captains of industry wakening up?

There are indications that key players in the private sector are becoming irritated with the “good guys” being less reliable for delivering on a business-friendly approach than “Mr Delivery” is with their pizza.

At a Sanlam corporate event with Gordhan handling comments and questions, Stephen Koseff of Investec said government had to take a stand against the unions: “Until unions change their philosophy from job protection to job creation, we are stuck.” Good guy Gordhan was, however, adamant that the government could not be seen to be retrenching people.

Alan Pullinger, CEO of Firstrand, urged at the AGM that government should speed up reforms, otherwise “there could be no escape from the economic crisis”. 

If Government will not take the leap, productive knowledge will do the jumping…

It reminds of Dr Anton Rupert who, in the early 80s, urged PW Botha to jump over the abyss confronting SA to a future that would encompass all the inhabitants. Botha’s response was that before he could jump, he needed to know that he would be able to reach the other side. 

The captains of commerce and industry thereafter became more actively involved in pursuing policy changes and even ignoring some of the racial impediments that were still on the law book, utilizing the Urban Foundation and the Private Sector Council on Urbanisation as vehicles for policy change. They achieved the scrapping of influx control and the acceptance of leasehold ownership for black South Africans outside the homelands: effectively pulling down two mighty pillars that supported the apartheid structure.

They worked for local change, since, due to sanctions their capital and productive knowledge were stuck in SA.

This time around, the productive knowledge is doing the jumping, since Government is so unwilling to dump its suffocating centrist approach. But they jump to a future outside South Africa:

Changing the anti-business approach of the ANC to one conducive for investment is a tall order, especially if the “good guys” are sometimes closer to Marx than the market, acting like mice managing cheese factories and turning a blind eye to corruption and the abuse of institutions.

Hypnotically ignoring the dwindling resource base

Like verlig-verkramp, the good guy, bad guy analysis underestimates the real challenge. Ramaphosa still builds sand castles like the NHI, expropriation without compensation and bullet trains for passengers, hypnotically ignoring the fact that the resource base is a steadily diminishing reserve… 

With no signal of the ANC’s version of a F W de Klerk quantum leap in ideology, the loss of productive knowledge is accelerating…

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