The economy at an irreversible tipping point, caving in like the Antarctic ice shelf?

Johannes Wessels
@johannesEOSA1

The South African economy now resembles the slow-melting Antarctic ice shelves where a sudden instability and crumbling emerge, causing a dramatic cave-in of these buttresses and an inevitable and unrelenting acceleration of glacial flows into the sea. It is as if the long period years of economic melting caused by poor policies, public service inefficiencies and rampant corruption have brought the country to an irreversible tipping point.

The Helmond Glacier in Greenland

There are signals of a sudden surge in movement in the destabilisation of trust and hope in a better future.  This has already triggered an acceleration in the erosion of both the country’s productive knowledge and its capital base.  

Fund managers of local financial service providers told EOSA of a substantial increase in local investors exiting local equities and investment instruments, shifting their investments off-shore.

And wealth managers of European banks who have escaped the January northern winters to visit their South African clientele, remarked that in almost every meeting with clients they were asked whether they do not know of someone in Europe who may be interested in a South African golf estate villa, seaside mansions or Lowveld game farm. They do not easily get interest from South Africans to invest in real estate here.

“We are open for business” is an irritating toddler tune

Continue reading “The economy at an irreversible tipping point, caving in like the Antarctic ice shelf?”

The celebration of rampant incompetence

Johannes Wessels
@johannesEOSA1

As grotesque neon-light signboards shout their messages out in the darkness of night, the ANC’s signature of their quarter century of rule has been rife in evidence in the first weeks of 2020. No, not the good life of liberty that the movement had promised, but the embrace and celebration of rampant incompetence.

Nowhere was that more obvious than:

  • in the jubilation about matriculation results;
  • when senior well-decorated police officers didn’t know their right from their left at the funeral of Richard Maponya;
  • in both the presentation of and applause for the platitudes in Pres. Ramaphosa’s ‘January 8 speech’.

Matric results: better outcome than Bantu education?

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30 years on: Is Ramaphosa preparing his version of FW’s “to-the-dustbin-with-ideology” speech?

Johannes Wessels
@johannesEOSA1

Thirty years ago (on New Year’s Eve 1989), FW de Klerk knew that the South Africa was on the verge of massive change. The combined debilitating effects of apartheid’s shackles on the economy (including sanctions) and the impossibility to continue with the disenfranchisement of the majority of the population, prompted him to prepare his watershed 2 February 1990 speech in which he effectively pulled the plug on apartheid.

Will the combined negative legacy of the transformational drag on the economy and the implosion of state-owned enterprises (SOEs) prompt Ramaphosa to discard the ANC’s ideological stance in 2020? 

Continue reading “30 years on: Is Ramaphosa preparing his version of FW’s “to-the-dustbin-with-ideology” speech?”

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. 

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Treasury’s document: Small shift in common sense; no giant leap in ideology

Johannes Wessels
@johannesEOSA1

Will the most important Government document on economic policy since the ANC threw GEAR (Growth, Employment and Redistribution Policy) into reverse, namely Treasury’s “Economic transformation, inclusive growth, and competitiveness: Towards an Economic Strategy for South Africa”, convince both Moody’s and potential investors that South Africa is a stable investment destination?

Since its release end August, the Treasury document attracted both support and condemnation. For some it signals a first ray of the much-delayed New Dawn promised by Ramaphosa’s 2017 manifesto; for others, a total onslaught on worker’s rights and a selling out to the forces of unbridled capitalism. 

Much bolder than the elaborate National Development Plan (NDP) that received mere lip service during the Zuma-Ramaphosa era from 2014 – 2018, Treasury’s document bluntly concludes:   

The current state of the South African economy is unsustainable. Low economic growth entrenches poverty and inequality… Addressing our economic challenges requires an immediate focus on policies that will raise South Africa’s potential growth.”

Ideological drift sand

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Ramaphorian air spray no longer conceals the stench of a decaying economy

Johannes Wessels
@johannesEOSA1

President Cyril Ramaphosa’s commitment to revitalise the economy reminds one almost of president Zuma’s commitment to combat corruption: spraying air freshener to divert attention from a rotting carcass.

Read instructions on the can for effective application…

The person who promised in his New Dawn manifesto a growth rate of 3% in 2018 through “an unrelenting focus on economic growth” has delivered after 18 months a growth rate of 1.3% in 2018 and negative growth up to date for 2019. Some people would say low growth is still growth, however economic growth below the population growth rate impoverishes the population.

He presides over an economy in worse shape than when he assumed power: one characterised by:

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