The ANC's dangerous delusions

George Palmer on the five hard realities the Zuma govt is failing to face up to

Those whom the Gods
Wish to destroy
They first make mad

-- Euripides

We have come a long way since 1994.
We have faced many hurdles along the way.
But we remain on course.

-- President Jacob Zuma

On course to what? To ever more policy failures, confidence-sapping uncertainty, and a disastrous disregard for reality as the ANC alliance pursues its goal of ‘transformation' --- including the transfer of assets to ANC insiders and expropriation of property by the state.

Meanwhile economic development slows, job creation lags population growth, public services deteriorate, and living conditions in black townships and rural areas deteriorate.

Reality One: Desperate Poverty Prevails

The World Bank reports that almost 14% of South Africa's 53 million people live on less than $1.25 a day

Reality Two: Health and Welfare Neglected

DA MP Ian Ollis reports that in his Alexandra, Sandton, constituency:

-- Hundreds of bucket-system toilets are filled to over-flowing and are not being cleared or emptied regularly enough by city officials

-- Children play nearby in the sewage spills creating a potential health hazard

-- A cholera or dysentery outbreak would be catastrophic

-- The rat infestation in Alexandra West Bank is a crisis that cannot be ignored

Reality Three: Discontent Is Mounting

Franz Wild and Mike Cohen of Bloomberg News report that discontent is mounting over how a tiny elite with ties to the ruling ANC has "benefited from more than 600 billion rand ($461 billion) in so-called Black Empowerment deals".

Reality Four: The Rich Political Elites Get Richer

According to Mamphela Ramphele, leader of the recently formed Agang Party, Patrice Motsepe,an ANC supporter,is now worth $2.2 billion. "For the last 10 to 15 years we have seen the same people benefiting from a multiplicity of deals. They are the people who are politically-connected". Motsepe's sister Bridgette is married to ANC Justice Minister Jeff Radebe. Another sister is the wife of Deputy President Cyril Rhamaphosa.

Reality Five: South Africa's Mining Industry Under Threat

The mining industry employs over 500,000 people, is the source of 18% of South Africa's GDP, generates 40% of merchandise exports, buys a big slice of manufacturing output and has long been a magnet for foreign investors.

But now a Draft Bill would give the Minister of Mineral Resources, Susan Shabangu, sweeping new powers to intervene in the industry's ownership, management, operations and development.

Among other actions the Minister could:

  • Determine what percentage of a mineral has to be offered for local beneficiation and at what price
  • Require exporters of "designated" minerals to get prior ministerial consent
  • Disregard South Africa's obligations under international treaties to prohibit quantitative restrictions on exports --- despite the NDP's warning that that would deter investment in the new coal mines needed to supply Eskom.
  • Require the Minister's written consent, subject to such conditions as she may determine, before a listed company may transfer "a prospecting or mineral right, irrespective of how limited that interest might be".
  • Awards the state "a free carried interest" in all oil and gas exploration and production, an option to acquire more, and to appoint up to two directors to management boards.

The Draft Bill is completely inconsistent with a thriving mining industry and with the objectives of Trevor Manuel's much-touted National Development Plan. Such interventions, warns Gavin Keeton of Rhodes University, "are likely to prove unworkable and potentially economically destructive".

To sum up:

The rand has already lost almost half its dollar value and inflation is tightening its grip. Employment prospects dim, the suffering of the poor intensifies while public services continue to deteriorate. Now foreign investors are likely to head for the hills when they hear the Minister of Justice call the business community "White monopoly capitalists" and read the small print in the Mineral Resources Bill.

The ANC leadership is in dire need of a huge dose of economic reality. If the "transformation" of South Africa continues on course, as Zuma promises, God help us.

George Palmer is a former editor of the Financial Mail

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