OUT TO LUNCH
In a perverse way South Africa has a distinct advantage over most of our global trading partners. As harsh as the after effects of COVID-19 will prove to be on all the world’s economies, South Africa was well on it’s way to economic collapse long before the Wuhan bat soup (or whatever it was that kick-started this dystopian nightmare) was even a blip on the Apocalyptic Early Warning radar.
Our down grading to junk was a given after we finally gave the middle finger to those suggesting that this unusually benevolent ratings agency was giving a three year period of grace for us to get our act together. But we stumbled along, buffoons that we are, pumping money into loss making state owned money-holes, plundering the fiscus and paying an over-bloated civil service salaries that were way ahead of anything they could hope to earn in the private sector.
It wouldn’t have been so bad if those fat salaries had attracted the top brains in the country but they didn’t. All they did was attract entitled ANC cadres who quickly realized that they could get a fancy title, get a fancy car, get a fancy office and do as little work as they felt liked doing but still get paid the same.
Plus there would be perks like overseeing tenders to build roads and schools and then making sure that someone in your close family who had never built a road or a school could scramble around to form a Pty company and submit the winning tender.
Now the air is filled with the sound of frightened chickens coming home to roost and South Africans of all races, rich and poor, are wondering what the hell will happen now.
As I mentioned earlier, living in a country that has become an economic joke over the past decade is something we have all had to get used to. Clearly the thieving from the ANC wasn’t going to stop and we all had to live our lives as best we could while adjusting to the fact that we were living in a failed state. Suddenly we didn’t need scenario planners to tell us about the green flags and the red flags because the evidence was overwhelming; we were well and truly stuffed!
Apart from sabotaging the economy the ANC then came up with ingenious new methods of dissuading anyone mad enough to invest in South Africa from doing so. They were going to decide whether the land you had bought with a huge bond from the bank was really yours and if it wasn’t they were going to take it from you without compensation (although you would still be able to pay the bond). Not surprisingly this didn’t go down terribly well with potential investors.
They were also going to extend the advice offered by government as to who you should employ, what you should pay them and how much of your business you should hand over to one of their loyal cadres for doing absolutely sod all apart from turning up to the odd board meeting having failed to read any of the board papers. Nice work if you can get it.
Well that has all come to a grinding halt thanks to COVID-19 which, in rugby parlance, had the effect of converting the try of economic collapse into a goal. The question now is, where to from here?
While many European countries have strong, albeit very worried leadership, we in South Africa have perhaps a handful of credible leaders and an awful lot of clowns. Look, for example, at the reaction to the suggestion that we may need to get into the queue for an IMF loan. Cue shrieks from the left saying that this would impugn our sovereignty and make us a vassal of the white colonialists who run places like the World Bank and the IMF.
What people like Ace Magashule and his equally dodgy buddies really mean though is that any prying eyes from the IMF may slow down any attempts to steal whatever is left in the honey jar. It is just one of the great tragedies of this once oh-so-promising new democracy that people like Magashule wield any power at all when they should clearly be wearing orange overalls.
But that’s where we find ourselves and quite where the ANC hierarchy think the bail-out money is going to come from heaven knows. I read an article last week by Philip de Wet on Business Insider saying half a trillion rand had been “freed up” by the Reserve Bank as COVID-19 relief loans. This is clearly a bit like removing the cushions on the sofa and finding all that loose change that has slipped down the back while you were binge watching Ozark. Is it possible? Half a trillion “freed up”?
Where had it been imprisoned and why didn’t they free it up when Eskom ran into financial difficulties? The answer is very simple. That half a trillion in used notes doesn’t actually exist and if it did it would have been stolen long ago. It represents, at best, a change in bank liquidity ratios and banks tend not to lend to people if they don’t think the money with interest will come back to them. After all, they also have depositors which is what makes the banking system tick and if depositors get nervous then you don’t have a banking system any more.
Every country will experience economic hardship, job losses, bad debts, reduced public services, failed businesses and political upheaval as a result of COVID-19. No country is smiling at the moment because it has been spared this horror. Those countries that survive will do so because the have a strong leadership which can adapt to the new world of commerce and rebuild their economies. This is definitely not a time for clowns to be in charge and I include the US in that embracing definition.