William Saunderson-Meyer writes on the thin rationale for the recent World Bank loan to the SA govt
Historically, the World Bank and the International Monetary Fund have been objects of fear and revulsion in South Africa.
Pre-1994, the National Party government considered them to be the sinister tools of international Jewish capital, instruments with which to bully South Africa into making unwelcome and dangerous policy changes. Post-1994, the African National Congress and its alliance partners, the Congress of SA Trade Unions and the SA Communist Party, have much the same opinion but from a radical ideological perspective. These are the evil embodiments of Western economic imperialism, cunningly retarding the growth of socialist nations by smothering them with US dollars.___STEADY_PAYWALL___
Given the emotional backstory, it was interesting to see the ANC’s response this week to the announcement of a World Bank loan to the South African government of US$750m (about R11.5bn) on extremely generous interest and repayment terms. This bonanza follows upon previous capitalist largesse to the tune of $4.3bn from the International Monetary Fund two years ago, the first such borrowing by the ANC since it gained power.
When the IMF loan was solicited by SA in 2020, President Cyril Ramaphosa and his finance-cluster team spent a lot of time dampening the outrage of the ANC left, trying to reassure them that despite this apparent sellout, the Illuminati were not about to take occupation of the Union Buildings. This time, however, it appears to be all sunshine and light on the ANC benches, with not a peep of protest. The reality of having to fill a gaping and ever-growing hole in the fiscal bucket has forced the governing alliance to grit its teeth and bite its tongue.
Meanwhile, the technocrats were giddy with relief at the arrival of the World Bank cavalry. Treasury Deputy Director-General for asset and liability management, Duncan Pieterse, enthused: “Across the world, these World Bank development policy loans require governments to achieve certain policy or institutional objectives. This is a loan that acknowledges the actions the government has taken both to respond to Covid-19 and to implement its reform agenda,” he crowed.
It was left to the ANC’s fully-owned subsidiary, the Economic Freedom Fighters, to articulate the misgivings of many ANC members, particularly those in the Radical Economic Transformation faction that is trying to unseat Ramaphosa. EFF Secretary-General Marshall Dlamini railed against the loan on the SABC —isn’t it curious how much air time the EFF, representing a tenth of the electorate, gets on the public broadcaster, compared to the Democratic Alliance, representing double that number? — warning that it was part of a programme “to sell off the country piece by piece”.
“There are many other ways of raising money before we rush to those who are going to colonise and take over the country,” said Dlamini.
Well, except for those living in LaLa Land, we know there aren’t “many other” alternatives to prop up SA’s parlous government finances. But hard left suspicions regarding the multilateral lending institutions are not entirely irrational. Large infusions of World Bank and IMF bailout funds bring dependence and with dependence comes pressure for behaviour modifications.
Sometimes it’s the carrot, sometimes it’s the stick.
It’s an indication of the World Bank/IMF fears of a post-Ramaphosa apocalypse that, so far, it’s all been carrot. These powerful institutions are leaning over backwards to accommodate financing requests from the SA government because they are keen to support Ramaphosa in the face of the RET challenge. Whatever his limitations, they reason, the alternatives are assuredly worse.
That means applying lots of lippy to camouflage porky. Announcing the loan, the World Bank gushes about the progress the Ramaphosa government has made in reforming the economy. For us ordinary ouks who find ourselves at the sharp end of an administration that is corrupt, incompetent and paralysed by timidity, here’s the World Bank reminder of why we apparently should be celebrating the great strides that apparently have been made by Ramaphosa.
It says South Africa has taken “bold steps” to mitigate the effects of the Covid-19 crisis and used it as an “opportunity to tackle structural reforms”. Among the “major breakthroughs” have been its management of the electricity crisis, climate change and the digitalisation of social grants and health programmes. There’ve also been “promises of reform” in several other areas, including visas and water affairs.
These are desperately thin justifications. It’s like your bank manager offering you a massive low-interest home renovation loan based on you having raked the lawn and promised to fix a dripping tap.
It’s particularly unfortunate for the World Bank that they handed over that fat brown envelope of dosh in what has been a dismal news week for Ramaphosa. The evidence for his administration’s pace-setting reform agenda has not been much evident.
On Monday, the Special Investigations Unit released its interim report, 18-months in the making, into the government’s administration of Covid-relief funds. The fund comprised taxpayer money, the IMF loan and substantial donations by the country’s wealthiest families and biggest businesses.
The SIU examined less than a tenth of the R152.5bn spent by the government between April 2020 and September 2021 on Covid-relief tenders. It found that R7.8bn – more than one of every two rands spent – had been stolen.
Almost two-thirds (62%) of the 4,549 contracts scrutinised were irregular. If Ramaphosa gives the necessary approval, the SIU has in its sights at least another R179bn of contracts with just 91 businesses, that it wants to scrutinise.
By the standards of the basket-case countries of which they habitually come to the financial rescue, the IMF and the World Bank is possibly not be overly concerned at this evidence of large-scale corruption and cronyism. They pour billions into the African continent and most of these nations are far more corrupt than South Africa is.
It should, nevertheless, be a flashing warning light. The scale of the Covid looting is of Zumaesque proportions but occurred under an avowedly “clean” Ramaphosa administration. It follows a televised address to the nation during which Ramaphosa made a solemn promise that “not a cent” would be stolen, that “every cent” would be accounted for.
The scandal also reaches the highest levels of Ramaphosa’s administration, to encompass his former health minister and his former presidential spokesperson. Cyril was shaken, but not stirred. Both remain high-ranking ANC office bearers. No one has been prosecuted.
Even if the multilateral lending institutions are pragmatic about this being a country governed by a criminal syndicate, they should worry about the calibre of the syndicate’s leaders. Many of Ramaphosa’s cabinet and the ANC’s national executive are simpletons and seem to relish taking turns in putting their idiocy on public display.
This week it was Stella Ndabeni-Abrahams, Minister of Small Business Development, speaking during a small, micro and medium enterprises (SMME) roadshow in Mpumalanga. “As a government,” said Ndabeni-Abrahams, “we have a responsibility to enforce regulatory compliance in the SMME sector and close businesses that are trading illegally.”
No, she wasn’t speaking about the thousands of companies that have stolen billions of Covid funds. She was speaking in the wake of raids by EFF, Patriotic Front and ActionSA stormtroopers on employers in the hospitality sector, seeking to intimidate them into firing undocumented Zimbabwean and other African migrant workers.
Judging by the level of ANC economic insight displayed by Ndabeni-Abrahams in this key portfolio, the World Bank and IMF may well face future delays in getting their loan repayments. Perhaps they’ll have to switch from carrot to stick.