Neither Red Riding Hood, nor Tito Mboweni believes CR’s statements

Johannes Wessels
@johannesEOSA1

The statements of the government and the ANC are as unrealistic as the famous stories of Baron von Münchausen: both are so far from reality that they belong to the genre of heroic fantasy. However, the differences are also glaring. Von Münchausen’s tales are creative untruths, entertaining its hearers because of the skilful transition from reality to absurdity. The ANC’s untruths are serious policy statements, parading absurdity as real truth.

Whereas Von Münchausen’s tales emanate from a witty brain, the ANC’s tales emerge from an institutionally entrenched delusional disorder.

Baron Cyril von Ramaphosa

The very first paragraphs of the January 8 declaration suggested the following reality:

The January 8th Statement… gives inspiration and encouragement…

“The people of this country have entrusted the ANC with the responsibility to… building a better life for all. Over the course of its history, the ANC has lived up to this responsibility.

“In government, the ANC led the reconstruction of our society from the ashes of apartheid misrule. 

“Prior to the onset of the global financial crisis, our policies contributed to the revival of our economy, the creation of millions of new jobs, the stabilisation of our public finances and the reduction of poverty.

“(T)hese achievements earned the ANC the confidence and trust of the South African people.”

Really? 

JSE’s head of equities voices his despair

  • The ANC has lived up to the responsibility of a better life for all: not even Red Riding Hood will believe that.
  • The government has stabilised public finances! Not even Tito Mboweni believes that (and if he does, Fitch, S&P and Moodeys don’t).
Continue reading “Neither Red Riding Hood, nor Tito Mboweni believes CR’s statements”

Loan guarantee scheme overwhelmingly inadequate: cut VAT & CIT to help SMEs

Johannes Wessels
@johannesEOSA1

The centrepiece of the Ramaphosa government’s recovery and economic resuscitation scheme – the loan guarantee fund – is as helpful as giving a desperately hungry infant a dummy, pretending it is food. Not even 5% of formal registered businesses have applied for funding and by end November about 1.8% of these firms have obtained assistance from the scheme.

It is far more affordable to cut Company Income Tax and to raise the VAT threshold to get the economy growing again, than to continue with the current package of the Economic

Why the low interest in the Loan guarantee fund?

On the one hand the enterprise world was pre-lockdown already coping with difficult conditions due to an unfriendly enterprise environment with a president that is on record that he disagreed “with the view that the most effective and efficient way to provide services to our people is through the private sector.”  Many business owners, especially in the case of SMEs, are reluctant to take on more debt in such circumstances, especially when running also the risk that their properties may be confiscated (expropriation without compensation).

On the other hand, the government, being out of pocket and not keen on disbursing billions that it would lose if the beneficiaries cannot service the loans, had asked the banks to apply their own existing loan assessment criteria when evaluating the applications. Were it a Khula or a SEFA process, the money would long ago have disappeared. So, despite utterances of concern about the low and slow disbursement process, the president cannot be surprised or concerned that the banks are circumspect.

In May already, EOSA had spelt out the devastating impact of lockdown measures on the enterprise world , arguing that the systemic damage caused to the spontaneous order of enterprises can best be ameliorated by a systemic response that would enable the spontaneous order to establish its own patterns again.

The government, however, kept its focus on basically two things:

  • Promoting Covid-19 to the highest pedestal of dangers, wilfully ignoring all other existing problems as well as the additional problems the lockdown strategy would create, and
  • Pursuing its social engineering efforts to reshape the South African economy in particular, and society at large, by limiting state relief measures to businesses complying with BEE (effectively throttling white sole proprietor businesses to death), deciding which kind of businesses are essential and which not, and pursuing anti-tobacco and prohibition agendas by bans on cigarette and alcohol sales.
Continue reading “Loan guarantee scheme overwhelmingly inadequate: cut VAT & CIT to help SMEs”

The SA Cabinet Stakes for the Worst Minister of the Year Cup

Johannes Wessels
@johannesEOSA1

The last-rounds-of-the-year-get-together at the local oog last Monday stimulated discussions on several topics:  Covid 19, lockdown, loss of jobs, closing businesses, no sport to watch, matric exams, the Zondo commission and Ace Magashule.  

It was the normal crowd:  Dooswyn Dekker, Paleface Mokoena, Trevor Emmer the Second, Koos Kwadraat and several other characters that each in themselves would warrant a David Kramer song.  We ended the evening with a toast to our wives whose curfews were not as strict as those introduced by the National Corruption Coordinating Committee of the Republic of the State of Disaster.

Back home, I sneaked in and decided it would be better to settle on the couch which contributed more to peace than the antics of numerous winners of the Nobel Peace Prize. I was still mulling over the last discussion about what we have missed most this year. The weeks without sales of liquor and cigarettes were brushed off with a “we never were without the goodies”. Of the things caused by the Religion of Lockdown, the shortage of key sport events and the abundance of walking around being muzzled by damn masks, were the two things that generated consensus in our group as being the worst.

I was still struggling to decide which of the two things irritate me most, when I dozed off…

The Bookmakers’ Betting Board

Suddenly I find myself at Greyville Race Course where the SA Cabinet Stakes are about to be run.  The trophy – Worst Minister in a Bad Cabinet – is on display in front of the main stand. It’s the final few minutes for placing bets. Looking at the Bookmakers’ Betting Board, the favourites (jockeys in brackets) are at:

  • 2 – 1 Burning Trucks (Fearfokol Mbalula), Disruptive Governance & a Disastrous State of Affairs (Nkosazana Dlamini-Zuma) and The-beach-is-banned-and-SAPS-can-close-businesses (Bheki Cele);
  • 5 – 1 State Control & Umpteenth Regulations (Braampie Patel), Cutting Tender Corners (Antie Patricia);
  • 8 – 1 Snailpace Digital Transformation (Stella Foot-in-the-mouth Ndabeni-Abrahams) and Flattening the Curve (Zweli Mkhize).

They are followed at 10 – 1 by We’re-more-productive-when-we-strike (Senzu Mchunu), We can Riot but not Write (Angie Motshekga) and Unemployment is Our Pride (Walter Nxesi).      

The horses that are clearly not favourites are To Hell with the Taxpayers (Pravin Gordhan) at 33 -1, No-Abalone but Polluted Rivers (Dallas Creecy) and Forward to the Fiscal Cliff (Tito Mboweni) at 50 -1 and My Fellow South Africans aren’t all ‘Our People’ (CR) at 80 – 1.

See who are the sponsors

Continue reading “The SA Cabinet Stakes for the Worst Minister of the Year Cup”

Elastoplast for the knocked-out economy

Johannes Wessels
@johannesEOSA1

Just as a heavy punch on the side of a boxer’s head can disrupt his brain’s neurovascular coupling processes causing him to fall like a log, the lockdown blow had disrupted the intricate flow of funds in the economy. BankServAfrica’s figures for Black Friday confirmed consumers are still on the canvas: turnover declined by a whopping 52% and there was a 30% decline in the number of in-store card transactions.

The pockets of the majority of individuals and a substantial share of businesses now resemble those of the state-owned enterprises.

People are hesitant to spend with unemployment dramatically higher than before lockdown, due to the government turning off the income tap for most enterprises for at least 3 months, declaring them non-essential (in the case of the hospitality sector almost 8 months). The government has thus achieved not only the lengthening of the jobless queues but also driving the rest of the population closer to poverty.

It was a cruel knock-out blow by the government

The religion of the developmental saviour

The subconscious neurovascular coupling process ensures oxygen supply in nano-seconds through blood flow to the brain segments most active at that split second. A boxer can recover from a knock-out if there was no rupture of arteries and quick restoration of normal flow of blood in the brain. If not, there can be permanent brain damage, even death.

Our thought processes depend on continuous uninterrupted subconscious processes. Likewise, an economy depends on the continuous uninterrupted flow of funds that is totally unregulated in the sense that no entity controls or directs the trillions of individual transactions by billions of consumers (both individuals and enterprises) buying their daily requirements and selling their products and services, either worldwide, or at a lower scale in different countries.

The Bleak Friday data indicates the government’s lockdown punch caused chronically reduced demand.

Continue reading “Elastoplast for the knocked-out economy”

The waves societies choose to ignore at their own peril: face masks are the new ‘Heil Hitler!’

Johannes Wessels
@johannesEOSA1

In the last months of the Year of Covid-19, the world experienced a massive resurgent wave. It wasn’t a wave of deaths by coronavirus, but a lockdown tsunami engulfing individual and civil liberties. The excess deaths caused by governments’ decisions to relegate non-Covid health issues to the realm of non-essential treatments, also became more visible for those who had eyes to see…

Another heaving wave – poverty due to the swelling unemployment and enterprise demise that the lockdown measures and the autocratic disruption of economic life brought about – also gained momentum. The impact thereof is certain to dwarf that of the virus itself.

If the worldwide death toll of 1.359 million attributed to Covid-19 is divided by the daily average global death toll of 158 085 (for 2019) and one fills the annual calendar according to deaths by cause, the feared pandemic with its vicious waves is closer to a ripple than a tsunami. EOSA developed a Cause of Death Calendar that shows:

Continue reading “The waves societies choose to ignore at their own peril: face masks are the new ‘Heil Hitler!’”

Ramaphosa’s bold plan (2): weak on detail, strong on flights of fancy

Johannes Wessels
@johannesEOSA1

Two recent key government speeches gave rise to two important questions:

  • Is the inability of the government to effectively implement its policies & plans (?) worse than its inability to table concrete action plans, underpinned by clear strategies, designs, milestones, budgets and target dates?
  • Why can even Thabo Mbeki see the president is naked whilst organised big business still praises the beauty of his imaginary clothes?

The president’s tabling of the Economic Reconstruction and Recovery Plan (ERRP) was lame and lacked detail, whilst the Minister of Finance’s Medium Term Budget Policy Statement (MTBPS) left one with a feeling there is not much grasp within the collective government on how to prevent SA from slipping rapidly, if not tumbling, down the slope.

Instead of rekindling confidence and inspiration, vague and mixed messages fuelled doubt and a disbelief that the government can prevent SA from boarding the proverbial bus to Argentina (debt default). I put the following three arguments to illustrate this assessment:

  • Will the government stand solidly behind Mboweni’s strategy of freezing public sector wages for three years when they cannot deal with the much easier route to stop financing the effectively bankrupt SAA? Recall also how Pravin Gordhan in 2018 (knowing well that Eskom was not only overstaffed, but the personnel besides overpaid) overruled the Eskom Board and management when they had decided on a zero salary increase as part of addressing the Eskom viability issue.
  • Can one rely (trust would be too much to ask) on the government’s undertaking to reign in public expenditure? This, when they had failed multiple times to table a comprehensive plan on how to deal with Eskom’s debt and the growing debt burdens of other State-owned Enterprises (SOEs).
  • How is the “growth through infrastructure roll-out” approach different from numerous previous attempts – since the days of Thabo Mbeki – to strengthen the country’s economic fibre by infrastructure investments announcements, with the emphasis on announcements?

Flipchart notes or a detailed plan?

The Enterprise Observatory of SA reckons four fundamental problems underpin the ERRP and the MTBPS:

Continue reading “Ramaphosa’s bold plan (2): weak on detail, strong on flights of fancy”