Thinking about State Failure (II)

RW Johnson writes on the many forms of ANC plunder in South Africa

The mechanism whereby cultural traits are transmitted down the generations are still to some extent obscure. We know, for example, that Russians, long habituated to Czarism, continued to experience absolute rule by one man under Lenin, Stalin and now Putin and that to some extent this reflects a cultural “fit”.

Similarly, while the 1911 revolution overthrew the Qing dynasty in China, that country has returned to rule by, effectively, Communist emperors – Mao Zedong, Deng Xiaoping and today, Xi Jinping. Similarly, the Chinese Communist Party has evolved back into the old mandarin class who served the emperor – right down to the rigidly meritocratic exams which ensure that only the super-bright can become party bureaucrats.

But how exactly are such traditions transmitted? The answer must lie in the socialization and acculturation of successive generations, a host of different influences and cultural cues passed on by parents to children, by literature and oral tradition as well as by the broader culture of a society. These influences continue through thick and thin so that even if there is a lengthy break in a political tradition – there were no emperors of any kind in China between 1911 and 1949, for example – the ground has nonetheless been prepared for the resumption of that tradition.

An explanation of this kind must lie behind the tendency in Africa for the reversion to pre-colonial patterns of activity even after a lengthy colonial period. One can, for example, see it in the widespread phenomenon of “the African big man”, an autocratic style of authority in which the “big man” accrues personal wealth, acts as the ruthless patron of a following crowd of clients, and utterly dominates the “little people” – for whose welfare the big man has scant concern.

This neo-patrimonialism, as it is called, clearly stems from the tradition of the African chief or warlord and despite the weakening and displacement of chiefly power under colonial rule, this cultural form re-surfaced powerfully and immediately all over Africa in the wake of independence. The fact was that there was no other model of authority in African society and, doubtless, this style of authority was transmitted naturally from father to son in strongly patriarchal societies.

Thus Jacob Zuma, despite having no chiefly background, had no difficulty at all in adopting all the attributes of a Zulu chief – the great kraal at Nkandla, the host of clients, the many wives and multiple children – as if to the manner born. It would seem entirely natural to such a big man that he should then use his position to accrue great personal wealth – indeed, his clients expect it of him and rejoice in his wealth. Trying to explain to such a person that there is something wrong in breaking the law or his oath of office in order to accumulate personal wealth is somewhat akin to trying to convince a Frenchman or an Italian that there is something wrong in having a mistress.

Plundering South Africa

Jacob Zuma found one way to plunder. Essentially he leased out his entire country to the Guptas and drew prodigious rents from that. The genius of the Guptas was to realise that there were rich pickings in South Africa and that ANC politicians and civil servants could be bought very easily and cheaply. Many other crooks made the same discovery. But plundering started long before Zuma took power and it’s still going on.

In African terms Zuma was not special. He had much in common with Mobutu, Mugabe, Dos Santos, the crooks who run Mozambique and a host of others. What makes South Africa special is that in 1994 it was the richest country on the continent and the scope for plunder was unparalleled. The only other state that even comes close is Nigeria where plunder has become so developed and generalised that ordinary Nigerians have trouble convincing foreigners that most Nigerians aren’t thieves.

Plunder is not just stealing, though there is an enormous amount of that under many guises and varieties. It is so banal that men like Ace Magashule and David Mabuza, whose predatory activities are a matter of record, hold high positions, are full of self-righteousness and could even succeed to the presidency.

But plunder is also just the deliberate extraction of more resources from a company or institution than will allow it to survive. Those who work at the SABC have ludicrously high salaries, making it impossible for the company to balance the books. Either salaries or headcount must be reduced or it is bankrupt. The “solution”, of course, as with any other SOE, is to demand another government bailout so that the same small group taxpayers pick up the bill – i.e. are themselves plundered.

More and more municipalities are in the same position where almost all their revenue goes to pay for the salaries and perks of the mayor, councillors and officials. Leaking pipes and potholes go unmended and, of course, not even the municipal debts to Eskom and the water boards get paid. They too would like to be bailed out. But mostly they’re dying, killed by plunder.

BEE is also plunder-driven. In effect many BEE deals depend on profitable companies more or less giving away large chunks of their equity at the expense of their shareholders. The beneficiaries then wait for the shares to rise and then sell, cashing in without having added any value. Then the clamour goes up that the same company must repeat the deal to stay “empowered”, a delicious word to use since, if the company follows that route it will soon be both empowered and bankrupt.

Similarly, investment in mining has fallen steeply and new mines are not being sunk – because of a Mining Charter trying to compel mining companies to make BEE deals that would ruin them. Hundreds of thousands of jobs have been lost and much human misery has been created by this stand-off but the government continues to insist on the Charter and insist the companies must give way. This is, in effect, a demand that the companies must allow themselves to be plundered. Unsurprisingly, most of the big mining companies have left the country.

Even affirmative action can mean plundering. It often results in the appointment of unsuitable and unskilled candidates in key (and well paid) jobs. Such people are in no position to add value and are, at best, a dead weight. Some actively damage the employing institution. If you put a Dudu Myeni or a Lucky Montana in charge of the national airline or railways, you end up with no airline and no railway.

In the 1960s a famous article asked” “What is the problem about corruption?” The key argument was that corruption merely recycled public money into private hands. Often the private sector invested better than the public sector which wasted money on prestige projects and white elephants. Fair enough in theory. But not really in South Africa. Our new elite is much given to conspicuous expenditure – showy cars and houses, expensive weddings and parties and fashion show clothes. Everything is for display. There are few, if any, factories or hospitals built by such folk.

This situation is exacerbated, however, by a failure of policy and leadership.

The failure of the developmental state

As may be seen, the predominance of plunder implies the failure of development. This is quite apparent not only in the rising unemployment, the steadily falling per capita incomes and the low rates of growth but the fact that the ANC elite accepts these things, if not with insouciance, at least calmly enough to reject all arguments for structural reform to spur growth.

A number of African states genuinely prioritize development – Ethiopia, Rwanda, Botswana, Mauritius etc. The ANC has claimed to do the same but the claim is hollow. The corrupt and bankrupt SOEs are a major drag on development and public investment has been falling for years. The devotion of budgets to paying unsustainably high wages to often swollen and feather-bedded workforces has left less and less money available to pay for maintenance, let alone new capital investment.

The result is a spreading crisis of the entire South African infrastructure. In 1994 the impressive infrastructure bequeathed by the ancien regime was thought to be one of the country’s main advantages but this is being progressively destroyed. Eskom’s unreliability and huge debt have become a major constraint on the whole economy. The railways have largely ceased to function. This has increased the number of heavy trucks on the highways, which is bound to cause them to deteriorate. Already many city and secondary roads are badly potholed.

The ports are expensive, clogged and inefficient. There are increasing problems with the water industry around the whole country. The post office is on the point of collapse, as are the Land Bank and the SABC. The large infrastructure spending on the 2010 World Cup did see major improvements to airports but much of the money was wasted on white elephant stadiums.

South Africa’s infrastructure was built by the state. Ramaphosa has effectively signalled the state’s inability to continue to play that role. His new infrastructure programme depends entirely on private investment and the attempt to save the railways depends on their inviting in private operators. Meanwhile the functions once performed by the state airlines, SAA and SA Express, are being entirely taken over by private or foreign airlines.

Despite this the ANC has announced a whole series of new state initiatives – NHI, a state bank, a state pharmaceutical company and so on. This merely illustrates that the party has not understood that the state is set to shrink radically. There is no money for any of these initiatives, nor even money to save the many collapsing municipalities.

The failure of leadership

The ANC has entirely failed to create a new ruling class with a united vision. The party was founded in order to overcome divisions within the black community but today it is utterly split by factionalism and even its senior leaders refuse publicly to accept party decisions.

Thus far the party has provided four presidents, starting with a dear old man who had little grasp of governance and did not even sit through cabinet meetings to their end. He was succeeded by a man of paranoid grandiosity who was responsible for some 365,000 unnecessary Aids deaths – a genocide. He in turn was followed by a semi-literate crook and then by an ineffectual political lightweight. The ANC has yet to provide the country with a decent chief executive.

Moreover, the ANC has failed to renew its leadership. Of its present leading figures Cyril Ramaphosa, Jacob Zuma, Tito Mboweni and Jeff Radebe were all in the leadership in 1994 – and Pravin Gordhan only just outside it.

Of those currently offering themselves as leaders Zuma, Julius Malema, David Mabuza and Ace Magashule are all plunderers, as are such supporters as Supra Mahumapelo. Otherwise there are only lightweights like Paul Mashatile or a spoilt movement princess, Lindiwe Sisulu.

Thus there is effectively no possibility of the ANC providing the country with the sort of leadership necessary to overcome the many crises produced by a generation of ANC rule.

Prospects (I)

Frans Cronje of the SA Institute of Race Relations has delineated a tripartite scenario for a future South Africa. The middle classes and most of the business of the country will live within a sort of suburban bubble in which life will remain tolerable thanks mainly to the heavy presence of private security, some policing, neighbourhood watch and other resident-based protection. This bubble will exist, though, under continuous pressure from criminal elements attempting to penetrate it.

Most of the rest of the urban areas will be under the control of gangsters, sometimes in opportunistic alliances with politicians.

The rural areas will include similarly fortified commercial farms existing under permanent threat of attack but in the remainder of the countryside power will be exercised by authoritarian and oppressive chiefs and their enforcers, backed up the ANC for whom they act as principal rural agents. The drive by the Zulu king to exact rents from the residents of the vast Ingonyama Trust – who have always hitherto lived rent free as communal residents – illustrates just such a tendency. To a considerable extent such a development represents a natural extension of the old Bantustan model.

As may be seen, this dystopian vision is already partly with us.

Prospects (II)

In 2015 I predicted that South Africa would be down-rated to junk status and would ultimately not avoid an IMF bailout. This would have dramatic effects – a split in the ANC, a reordering of the economy in a more market-driven direction, the weakening or even annihilation of the SACP and Cosatu, and the collapse of the ANC vision of a National Democratic Revolution.

The first part of this prediction has already been fulfilled and the prospect of an IMF bailout is appreciably closer. When I first made this prediction I was universally told that the fact that South Africa’s debt was largely Rand-denominated would prevent such a crisis. As the national debt nears 100% of GDP - and debt interest payments approach 25% of tax revenue - this objection is no longer made. I see no need to alter my prediction.

The end of an era

An IMF bail-out would be a complete denouement for the ANC, a huge and obvious public defeat, the formal ending of its “revolution” and the scrapping of many of its policies. Inevitably, it will try as hard as it can to avoid it.

But it has probably already checkmated itself.

If the ANC sticks to its present policies the economy will grow very slowly, per capita incomes will stagnate at best and unemployment will stay stubbornly high. Yet at the same time the government will have to cut spending year after year in order to pay down the debt. This will mean jettisoning many favourite government programmes and offending many of the most powerful interests in the Congress alliance. This would imply a long series of defeats for the government – which would then almost certainly abandon these austerity policies before its fiscal objectives had been achieved.

The only way out of that would be to adopt policies which would produce a spurt of much faster economic growth, but that would mean fundamentally changing course in a way which persuaded local and international business to invest heavily. This too could not be done without the government abandoning many of its key policies and fundamentally altering the political balance in favour of capital.

In other words, whichever way it turns the ANC now faces defeat. We are nearing the end of an era. The final question which arises is, if the ANC state now seems likely to founder, what are the forces likely to move into the space thus vacated? I will consider that question in the final part of this survey.

R.W. Johnson