Seven years ago, when President Jacob Zuma was only three years into his first term and was about to be re-elected to lead the ANC, I wrote an article entitled “Time to break the Tri-partite Alliance.” Nothing much has changed in those years, except that President Ramaphosa has now been in office for two years and the economy – and the unemployment situation that provides direct evidence of the failure of the government’s policies – is far worse than it was then.
A further pointer to failed policy is the unsustainable debt situation, described recently by the Centre for Development and Enterprise (CDE) as follows: … “debt is rising, growth is falling, and there is no real plan to get government’s finances under control.”
Many people believe that President Ramaphosa and his minister of Finance, Tito Mboweni, are in thrall to the unions and the SACP, the other two parties in the Tri-partite alliance. The government simply cannot adopt sensible policies, some of them quite obvious, because of the influence of the unions and the SACP who still favour the failed experiments of the early part of the last century. Those policies seem not to have worked anywhere but in South Africa, we appear convinced that we will succeed in converting an underdeveloped and developing country into a socialist nirvana. Our problem is that “other peoples’ money,” (Remember Margaret Thatcher’s famous quip?), is running out.
In my 2012 article, I stated:
“The tripartite alliance suits the SACP because hundreds of them get elected as MPs, MPLs and Councillors. Most would fail if they stood as SACP candidates. Instead of electing ANC mainstream candidates – probably as social democrats – the ANC ends up with far too many people committed to dragging South Africa into the economic choices of a generation ago. This creates confusion and prevents the government from uniting South Africans around the national priority of creating conditions for job growth for the many, instead of enriching the few and enraging the many. The interests of the unemployed are not and can never be the same as those of union members. Government needs to recognise this and act.”
The government did not act then and has still not acted. Gareth Ackerman, chairman of Pick ‘n Pay and co-chairman of the Consumer Goods Council of SA (CGCSA) said recently, “There is a preoccupation with considering solutions as opposed to implementing them.”
Meanwhile one hears constantly of the alarming escalation in spending on officials and workers at every level of government and the state-owned enterprises (SOEs) like ESKOM and others. They constantly need bail-outs and some of them, such as SAA, gobble taxpayers’ money to subsidise the travels of the rich while there is not enough money to spend on essential social upliftment like education, health, and social grants, to name a few.
Ramaphosa and Mboweni are not ignorant fools. They know as well as anyone else that our country can't carry on borrowing money just to pay day to day expenses. That is a recipe for disaster. Mark Cutifani, CEO of Anglo American, was recently quoted in Business Day as saying, “We’ve got to move from knowing what’s to be done to doing what has to be done.”
And yet the unions threaten to bring the country to a standstill if the government meddles in any way with civil servant numbers or compensation.
Mbuyiseni Ndlozi MP, reminiscent of a latter-day Grinch, spoke on behalf of the EFF and made plain that they did not share in the national euphoria of the Springbok’s World Cup victory. Business Maverick’s Ray Mahlaka reported on the similar spectacle of organised labour condemning the recent investment conference.
Most patriotic South Africans, of whatever political persuasion, welcomed the achievement of the conference and the promises of investment made. While it is true, as reported by Beeld, that somewhat inflated claims of success were made because at least a quarter of the investment promised came from state-owned enterprises and thus from public money, and a good deal of it had already been announced by companies as part of their expansion plans, most welcomed the investment undertakings as being welcome good news.
Not organised labour. The South African Federation of Trade Unions (SAFTU) stated as follows: “…a pure jamboree designed to raise false hopes that steps are being taken to address the very low investment levels by both the private sector and the public sector.” They are so blinded by their dislike of business that they are unable to see that every Rand invested helps towards growing our economy and thus creating jobs. People with jobs have money to spend on consumer goods. They pay taxes. Taxes raised enable the government to do all the social spending needed in many areas of our national life.
What should concern organised labour, as well as all the rest of us, is that our economy has barely grown over the past decade and the jobs crisis gets worse by the day. Despite this, the civil service salary bill has risen by a real (after inflation adjustment) 66% over the past decade. The ANC/SACP/Cosatu government has proved that it is unable to govern efficiently. There is hardly an example of good, clean, effective government in any government department or SOE. The catastrophic consequences of government incapacity are seen in the crime situation, an education system that has failed to deliver the promises of our Constitution and a health system that is demonstrably unready to render health care of an acceptable standard to our people.
Amidst all this disarray, the Medium-Term Budget speech demonstrated that while the government is long on promises and rhetoric, it has few practical solutions to a deteriorating fiscal situation and the prospect of our national borrowings continue going through the roof with interest payments consuming an ever-larger portion of the budget. Moody’s downgrading of South African investment to one grade above junk status, with a negative outlook, is well known. What is less well understood is that there are grades that are worse than junk. To use colloquial language, there is Even worse Junk and Much Worse Junk.
Konrad Reuss, MD Sub Sahara of the rating agency S&P Global told us that: “The medium-term budget had a lot of bad news but with very little action or action plan.” S&P downgraded SA to junk status in 2017 and on 6 November issued what Business Day described as a “stark warning to SA, suggesting that there is a risk of a further knock in two weeks’ time.” Reuss warned that it took a long time to come back from being downgraded to junk… “the weighted average length of time is seven or eight years.”
There is a popular idea among some of the softer Ramaphosa supporters (most of whom recoil in horror at many ANC policies) that he is unable to take decisive action because of the warring factions in his party. “Poor Cyril is trying his best.” As the years pass without discernible progress towards rescuing our economy, even President Ramaphosa must conclude at some stage that things cannot go on like his.
He – and his faction of the ANC – will have to clean the stables, get rid of some of the dodgy people who remain in his cabinet and the leadership of his party, and push for action on sensible policies that can bring about the changes needed. The sustained pulling in different directions is destroying his reputation; but far more important than that, it is killing the life chances of millions of our people.
The Socialists and Communists in the ANC kraal are not all bad people – some of them are very decent, but it is impossible to run a modern economy in a constitutional democracy when there is constant tension between diametrically opposed policy directions. The sooner the tripartite alliance is ended, the better. As Ramaphosa moves in that direction he could well find that a DA that has got its house in order, as it is doing now, will become an ally – at least insofar as helping to put the economy right is concerned, and perhaps much more.
Douglas Gibson is a former opposition chief whip and a former ambassador to Thailand. His website is douglasgibsonsouthafrica.com
This article first appeared on News24.com