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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When CR’s 1001 Nights’ fables equal your nightmares

Johannes Wessels
@johannesEOSA1

Instead of a State of the Nation Address brimming with details about the “extraordinary measures” required to realise Vision 2030 or the “difficult choices that will not please everyone” in order to get the economy growing again, president Cyril Ramaphosa’s SONA 2019 Mark 2 was more like a story in the tradition of One Thousand and One Nights.

It was a missed opportunity.

Not as disastrous as PW Botha’s Rubicon speech of August 1985, but akin to it in the sense that the President doesn’t appear to grasp the dire economic circumstances and the drastic policy and execution mode changes required to address these.

The stories of A Thousand and One Nights originate from the virgin bride Scheherazade who staved off execution the morning after (a fate that befell numerous one night brides preceding her) by enthralling the Persian Shah-ryar through story-telling without divulging the conclusions. Shah-ryar then kept her alive in order to hear the conclusion the next night, just to be enthralled by another story that would not be concluded. SONA 2019 Mark 2 tried to work magic on South Africans, foreign investors and rating agencies by fable after fable without a hint of how this would be fulfilled.

Bullet trains or magic carpets?

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Government sabotages growth through property rights uncertainties and ignoring Moody’s warning shots

The heated debate between proponents of property protection and those in favour of  confiscation (expropriation without compensation) has been characterised by a lack of data and waged mainly on ideological and emotional arguments.  The lack of an acceptable factual basis is evident in:

  • Government, AgriSA and Afriforum operating with different figures for categorising land ownership according to race;
  • The number of farms on the list for the first round of expropriation.  (If there was such a list).
  • Uncertainty about the number of recipients of free subsidy houses (where transfer of title has not taken place) and how these properties should be counted.
  • Arguments that expropriation would kill the economy simply being countered with promises that the economy would not be harmed.

At the public consultations the facts applied were almost always derived from (and limited to) local situations and narratives with no or little attention to systemic information. EOSA therefore analysed last year’s WEF’s Global Competitiveness Index (as part of our enterprise research on relevant data and statistics) to assess whether there are some global indicators to inform the debate.  Several significant correlations are evident from the WEF data:

  • Highly competitive countries have strong protection of property rights.
  • High per capita GDP goes hand-in-hand with property rights.
  • Poor policing and high cost of crime for businesses are not characteristics of highly competitive countries.

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Turning ad hoc-decisions into “add havoc” decisions: Updated prospectus shows SA has much “emerging” to do…

If the Ramaphosa quest for pursuing economic growth and restoring full investment status for South Africa was packaged as a new venture in January it would have received substantial interest. In light of the tsunami of promises about FDI since then, it may be time to look at an updated “prospectus”.

Indicator: Economic growth is the highest priority

In his “New Deal” Ramaphosa promised to keep “an unrelenting focus on growth”. He stated: “We must be bold and determined. We should be targeting 3 percent GDP growth in 2018 rising to 5 percent growth by 2023.”

Prospectus update:

Screen Shot 2018-07-26 at 6.01.54 PM
The Messenger (25 July 2018)

Continue reading “Turning ad hoc-decisions into “add havoc” decisions: Updated prospectus shows SA has much “emerging” to do…”

If you thought the S&P and Fitch downgrades scare investors away… Government’s security & protection deficit prevents a million local would-be entrepreneurs from investing

Whilst the downgrading of investor status by Standard & Poor and Fitch already drives foreign investment away from South Africa with capital flight from the JSE, at the local front ineffective crime prevention by the Government is one of the largest disincentives for enterprise investment:  a million people would have considered home-based businesses were it not for criminality. Continue reading “If you thought the S&P and Fitch downgrades scare investors away… Government’s security & protection deficit prevents a million local would-be entrepreneurs from investing”