Snowballing to state failure

William Saunderson-Meyer on whether Ramaphosa will be able to get a grip on things


Murder and mayhem are up. Child literacy and the rand are down.

Punch-drunk from being the continual bearer of bad news, the media houses fall back on the trite and tested. It’s all celebrities — many of them criminals and most of them unappealing — and inanities. And it’s all calculated to reassure us that life in our abnormal society is proceeding, um, normally.

In the past fortnight, I’ve read no fewer than three articles purporting to be political analyses which, upon reading, turned out to be yet another round of exhortations to “optimism” and “positivity”. But it’s not optimism or reliance on feel-good platitudes that is needed.

What is needed, especially from the government, is to get to grips with nasty realities. Instead, the Presidency budget vote this week was a reminder that the African National Congress is dangerously out of touch.

President Cyril Ramaphosa, his face agleam from his Recommended Daily Allowance of good cheer, assured us that tourism is booming, overseas investment is flooding in, the energy crisis is under control, a national electricity blackout is implausible, and that universal healthcare is imminent.

As is the tradition, an array of ANC MPs and ministers then took turns to lavish praise on Ramaphosa. ___STEADY_PAYWALL___

We are blessed, gushed ANC chief whip Pemmy Majodina, to have such a strong leader “who [doesn’t] go to ground when there are challenges”. Minister in the Presidency Khumbudzo Ntshavheni revealed that the business community was awash with confidence in the president, aside from a few pesky “outliers”.

That may indeed be so. Corporate executives have a vested interest in being accommodating towards a government that has both the power and inclination to retaliate vengefully against its critics. 

But it’s not only about big business. It’s arguably better to seek the country’s pulse beat of confidence among ordinary people. These folk are the ones taking the most soberly assessed decisions of all because they’re risking their own wealth and futures and not those of anonymous shareholders.

Coincidentally, I interacted with two such investors this week. Both have a deep love of South Africa, know it intimately, and desperately want it to succeed. Unfortunately, it was clear from their opinions that neither had sufficiently internalised the local media’s pop psychology lessons in optimism.

The first, a European-based Brit, said that even in the relatively economically resilient and well-governed Western Cape, a deep pessimism was prevalent. The other, a hard-headed South African who had built from scratch a successful technology business, is on the verge of giving up.

“I like this place and would miss the colour, the heat, the warmth, the wildlife, the dust, the diversity and the history most terribly, but a move is becoming inevitable. There just seems to be no realistic hope on the horizon,” he said.

“We now have no family left in SA and few friends, so the urge to get out becomes ever stronger. Leaving Africa is really, really hard though, particularly when none of the alternatives — Canada, UK and New Zealand — are very attractive.”

For him, it was a simple administrative change in his business that suddenly brought home the extent of the decline in the business environment. “Six weeks ago we decided to henceforward issue all our invoices in US$ instead of ZAR. It only occurred to me a few nights ago what a sad commentary that is. Maybe the final manifestation of a failed state.” 

The conversations made deep impressions on me. So much of the discussion on South Africa revolves around grand plans: imbizoslekgotlas, war-rooms and moonshots.

These are all necessary. But it is at much at the granular level, in the cumulative actions of individuals, that our South African future is shaped.

The power of small actions was also the theme of an analysis by the respected but unconventional economist, Claude de Baissac, CEO of Eunomix. In a Financial Mail article at the beginning of the year, he painted a dismal picture of a country that he concluded had no more than 15 months to switch from its fatal course.

“Society in its entirety is buckling under the fast-accruing weight of economic hollowing out, infrastructure collapse, basic services failure, ecosystem degradation and political division,” wrote De Baissac. His firm’s analysis showed that South Africa’s economy featured among the world’s worst performers.

Gross Domestic Product growth plunged from an average of 4.9% in 2005-2008 to a paltry 0.8% in 2015-2019, while Treasury forecasts — the figures upon which government planning is based — have perversely become ever more optimistic, overestimating growth in 15 years out of the past 21. With population growth outpacing economic growth since 2015, GDP per capita is now back where it was in 2005.

Deindustrialisation has pushed manufacturing below OECD and sub-Saharan Africa levels. Mining is the smallest it has ever been. Agriculture is “deeply impacted” by policy uncertainty. Tourism has stagnated. The consumer-driven bubbles in construction, real estate and retail have burst. 

“Against this abject situation, a politically endangered ANC persists in pursuing a state-led model that it can under no circumstances deliver. Today’s ANC is but an assemblage of factions fighting for control of state resources, unable to muster the discipline required to save itself from itself. 

“Its policies are an indigestible purée of the ideological and the contingent. In charge are men and women of a bygone era, tenuously lording over a state captured: cadres deployed for loyalty over competence and public duty; corrupt businesses colluding with SOEs to channel lucrative contracts; labour unions indifferent to parlous government finances and failing public service; organised crime holding parts of activity at ransom, sometimes aided and abated by the police itself.”

Among countries not at war, wrote De Baissac, South Africa had experienced the longest and most pronounced rise in fragility, dropping from the 25th to the 50th percentile rank in the Fragile States Index between 2006 and 2021. At the current pace of decline, it would be a failed state circa 2030.

On the positive side, however, there was an “improbable window of opportunity”. Disaster might be averted if President Cyril Ramaphosa — significantly strengthened within the ANC after routing his populist foes at the December leadership conference — were to act fast and decisively, taking a series of small steps which, collectively, would equate to a giant leap to safety.

Unlike many academics, who revel in unveiling detailed plans that are all but impossible for politically constrained governments to implement, De Baissac wasn’t even particularly prescriptive about what should be done. Instead of a daunting to-do list, all that was required was a fundamental change in attitude.

Drawing analogies with the early phases of the Second World War and Ukraine’s unexpected successes in keeping the Russian invader at bay to date, De Baissac wrote that the primary task was “to take commanding control of the battle space”. In other words, Ramaphosa should do what the commander-in-chief is supposed to do. Lead. Plan. Execute. 

The plan was simple and open-ended. Sit down with key ministers and outside stakeholders and identify key interventions, advised De Baissac. A crisis Cabinet, working in small teams to tight deadlines, would have as its sole mission “to enact small, decisive policies currently in place but hobbled, and new policies that deliver fast”.

That was six months ago. There are just nine gestatory months left. So far, Ramaphosa has done nothing.

But, encouragingly, in this week’s budget vote, Ramaphosa mentioned that he and Deputy President Paul Mashatile had, over the past few weeks, met ministers to identify specific tasks that required focus. Among these were the impact of load shedding, unemployment and poverty.

Is a change in pace on the cards? Taking our cue from the professional optimists, hope springs eternal. 

However, hope, no matter how desirable, should be tempered with realism. Our troubled entrepreneur contemplating bailing out deserves the last word.

“My impression is that South Africa’s downward trend is exponential rather than linear. A lot of factors are now coming together very quickly and I would not be surprised if things come to a head much sooner than anyone expected. What lies on the other side remains to be seen.”

Follow WSM on Twitter @TheJaundicedEye