SHOULD South Africa “undo Mandela’s economic deals”? Is Mandela’s economic miracle a chimera? Political economist Patrick Bond certainly thinks so, unfortunately alongside other critics of the Mandela era, he also appears unable to explain exactly what those compromises were and how Mandela himself was involved. There is no evidence that Mandela personally benefited from any alleged “deals with the devil” financial or otherwise, instead Bond provides a policy grab-bag, which he disingenuously calls the “dozen devils”.
His piece could more appropriately be titled, “if I could build a time-machine, this is how I would have run the country”. At the outset, one should state that Mandela was not an economist but rather an attorney by profession.
As a politician and founder of modern South Africa, he was responsible for ushering in an era of democracy and also signing off on the Bill of Rights, no mean feat considering the terrible period which had come before.
His administration and the subsequent Mbeki administration, presided over the longest post-war boom in South African history. A period which came to an end in 2009.
Bond lists the following “dozen biggest devils” that he claims, hobbled Mandela’s economic legacy, to which I attach my own [comments], please feel free to draw your own conclusions.
- “The repayment of the US$25 billion apartheid-era foreign debt. This denied Mandela money to pay for basic needs of apartheid’s victims.” If you were one of the supporters of the Jubilee campaign against apartheid debt, campaigning alongside the late Dennis Brutus for the annulment of the apartheid regime’s accounts, like me, you would have been very disappointed. Mandela’s hands unfortunately were tied by international bankers, since a pre-requisite for accessing capital markets and finance, like any business, was repaying the loans taken out by the previous owner or regime. South Africa was not granted any leeway here, so strike one on a simple point of fact.
- “Giving the South African Reserve Bank formal independence. This resulted in the insulation of the central bank’s officials from democratic accountability. It led to high interest rates and the deregulation of exchange controls.” Bit of a red-herring if you ask me (excuse the pun), there are really three parts to this assertion. Firstly independence does not mean absence of state control, rather, it stems from the idea of a separation of powers, in this case independence from interference by the executive. Do we really want an executive with keys to the treasury printing money whenever it feels so inclined? The latest debacle surrounding the appointment of the finance minister by the president provides a good case as to why the Reserve Bank and Treasury should not be beholden to any particular branch of the state, not least the party. Second, high interest rates are a factor of the currency, not simply policy, as we see today. We currently have the same repo rate as Papua New Guinea. All nations with higher interest rates such as Brazil and Russia are performing badly. Should our interest rates come down, Investec’s Brian Kantor certainly thinks so. Thirdly deregulation of exchange controls was an absolute necessity in order for finance to flow back into the country, luckily it did, and we experienced the longest post-war boom period in South African history, which came to an abrupt end in 2009. Was Mandela involved in any of these policy decisions? More likely it was Thabo Mbeki.
- Borrowing $850 million from the International Monetary Fund in December 1993, with tough conditions persisting for years. These included rapid scrapping of import surcharges that had protected local industries, state spending cuts, lower public sector salaries and a decrease in wages across the board. So far as the IMF loan is concerned, I couldn’t agree more, but then where else would the country have borrowed the money? South Africa’s finances were in a precarious state in 1993, the IMF loan is arguably a factor of the interim administration under FW de Klerk. So far as the big bang opening up of our economy to international competition is concerned, nobody expected the sanctions-era to last forever, and not all surcharges were scrapped, we have only begun eliminating them, as the Agoa trade war confirms. Did the state cut spending? This allegation isn’t backed up with empirical data, on the contrary it would appear spending was ramped up, South Africa under Zuma currently spends 40% of its budget on salaries, so no Mr Bond, you’re demonstrably wrong. Decrease in wages? This one is debatable with the rand depreciation, wage value also decreases.
- “Reappointing apartheid’s finance minister Derek Keys and Reserve Bank governor Chris Stals, who retained neoliberal policies.” Bond may have a point here but these appointments were really short-lived, since the ancien regime was quickly followed by Trevor Manual and Tito Mboweni, two home-grown black politicians. The main allegation could be better stated — Why did Mandela with very little political room, fail to make a clean break from the ancien regime, instead choosing a slow segue into the new era? This undoubtedly was a tough compromise which came out of CODESA. Did all this translate into retaining neoliberal policies? Not if one looks at the dirigiste economy, the many failed command-style, statist policies kept on by the ANC to the country’s detriment, one has only to look at the fate of SAA, Telkom, Eskom and other state (public-private partnership) monopolies, arguably worsened by listing on the market.
- “Joining the World Trade Organisation on adverse terms, as a “transitional”, not developing economy. This led to the destruction of many clothing, textiles, appliances and other labour-intensive firms. ” I can’t argue here, how were the terms adverse and what does Bond mean, would appear to be nothing more than a semantic quibble attached to the same gripe under point 3, since we still get preferential treatment in terms of tariffs and trade via Agoa, as a developing nation. How is Mandela responsible for the World Trade Organisation?
- “Lowering primary corporate taxes from 48% to 29% and maintaining countless white people’s and corporate privileges.” This one is a real chestnut, should the ANC have maintained high corporate taxes which would have further exacerbated capital flight? Lower rates resulted in an influx of corporate business, what would a better rate be, 35%? That the ANC protected the interests of various white persons and their corporate interests is one of life’s minor tragedies, I have only to point to the ongoing problem with Naspers. So plus 1 for Bond.
- “Privatising parts of the state, such as Telkom, the state-owned telecommunications company.” Privatisation without elimination of the underlying monopoly is the real sin. The State via the PIC maintains a major shareholding in these entities, thus the correct phrase would be ‘partial privatisation’. Yes, the sorry tale of Telkom and SBC Malaysia is really an example of what can go horribly wrong when you have ‘too many chiefs and not enough Indians’.
- “Relaxing exchange controls. This led to sustained outflows to rich people’s overseas accounts and a persistent current account deficit even during periods of trade surplus, and raising interest rates to unprecedented levels” South Africa now has more assets abroad in terms of value than inside the country, a result of relaxing exchange controls, the results can be seen in positive dividend inflows from abroad which fund business and contribute to the country, despite the economic climate. As for the deficit, running a deficit has been a policy of the ruling party for over two decades.
- “Adopting the neoliberal macroeconomic policy Gear. This policy not only failed on its own terms, it also caused developmental austerity.” If providing citizens with RDP homes in terms of Gear is a “neoliberal policy” then I am all in favour of neoliberalism, Bond once again demonstrating that he can’t see the wood for the trees. Is Gear responsible for “developmental austerity”? Would appreciate if Bond could expurgate on this point, since it appears to be a contradiction in terms.
- “Giving property rights dominance in the constitution, thereby limiting its usefulness for redress.” If Bond could supply us with a working alternative then by all means, but how does one create a legal system without property law and without removing the necessary distinction in law between those with title deeds and those without, and what about the pickle of stolen goods? There is nobody who seriously thinks the way forward is outright theft, though many would want to see greater redistribution of wealth. How to achieve this, if not via a social wage, rent stabilisation, income equalisation and a generous housing allowance?
- “Approving the “demutualisation” of the two mega-insurers Old Mutual and Sanlam. It was the privatisation of historic mutual wealth for current share owners.” Bond merely demonstrates he doesn’t understand insurance, a mutual fund is for the mutual benefit of its members, when a fund demutualises, members receive a lump sum payout, usually with an option to invest the proceeds in another scheme, this has nothing to do with public money, Bond is thus wrong once again.
- “Permitting most of South Africa’s ten biggest companies to move their headquarters and primary listings abroad in the late 1990s. The results are permanent balance of payments deficits and corporate disloyalty to the society.” Comes down to a question of loyalty, should corporates be allowed to move their headquarters? Does it matter if a stock is primarily listed in rands or in a foreign currency? Stock in foreign currency strangely acts to help our balance of payments, the more so when our currency is devalued because of bad leadership and policy issues. None of the businesses one would assume Bond refers to have actually left the country. Building a Berlin wall isn’t conducive to business, if we can’t keep corporate headquarters here, we need to ask ourselves why, instead of bemoaning the fact that like many East Germans, corporates find life in the West preferable to living under a Marxist dictatorship. Again, all surely a question of corporate governance, and nothing to do with Mandela’s legacy?
FOR A DEPUTY-PRESIDENT who likes to claim responsibility for drafting a Secular Constitution and Bill of Rights that includes Gay Rights and other freedoms associated with the LGBT community, a visit to Iran must present a number of awkward problems. Chief of which is the Iranian Penal Code.
Lesbian, gay, bisexual, and transgender (LGBT) persons in Iran face legal challenges not experienced by non-LGBT residents. Both male and female same-sex sexual activity is illegal. “Homosexuality is a crime punishable by imprisonment, corporal punishment, or by execution. The punishment for lesbianism (mosahegheh) involving persons who are mature, of sound mind, and consenting, is 50 lashes. If the act is repeated three times and punishment is enforced each time, the death sentence will apply on the fourth occasion” — Iranian Penal Code.
On January 23, 2008, Hamzeh Chavi, 18, and Loghman Hamzehpour, 19, were arrested in Sardasht, in Iranian Azerbaijan for homosexuality. An on-line petition for their release began to circulate around the internet. “They apparently confessed to the authorities that they were in a relationship and in love, prompting a court to charge them with Moharebeh (“waging war against God”) and Lavat (sodomy).”
At least 146 cases of executions of individuals charged with a “homosexual act” have been documented since 1979. A leading Iranian actor was forced to apologise earlier this year, after coming under pressure over a tweet he posted in support of an historic US supreme court ruling on gay marriage.
Bahram Radan, who is known as the ‘Iranian Brad Pitt’, created controversy in the country “when his tweet hailed a verdict, which made same-sex marriage a legal right across the entirety of the USA.” Same-sex marriage has been legal in South Africa since the Civil Union Act came into force on 30 November 2006. This year’s US ruling thus arrived nearly a decade late.
Iranian High Council for Human Rights Secretary-General Mohammad Javad Larijani has slammed homosexuality as a disease. Former President Mahmoud Ahmadinejad famously said “there were no homosexuals” in Iran in response to a question from a student.
Ramaphosa’s visit comes as secularism remains under threat in his home country, South Africa. If it isn’t the ANC’s Mathole Motshekga disputing the entire scientific theory of evolution, and implicitly endorsing the “super-natural, “creationist” view of our origins”, then it is Halton Cheadle, attacking Progressive Jews for not conforming to the Orthodox version of the Talmud.
Several tracts issued by alliance partners have put paid to the notion that the ANC is on a secular path. The party recently hosted Hamas leader Khalid Misha’al — the leader of an organisation that is involved in an armed struggle to reclaim Jerusalem and the Levant on behalf of an Islamic State.
On June 6 1995, South Africa abolished the death penalty. Capital punishment was rejected by the late Nelson Mandela’s government, as a “cruel and unusual form of punishment”. The twenty-year anniversary of the first constituent assembly which drafted the Bill of Rights, guaranteeing freedom of sexual orientation, will be next year.
The party has no plans to celebrate. The Zuma administration considers the Bill of Rights, an embarrassment, since the foundation document accords artists freedom of expression. Ramaphosa’s visit could therefore signal the return of apartheid-era prohibitions. The end of the ruling party’s experiment in personal freedom. A number of left-wing parties, including the EFF are campaigning for the end of individual rights in South Africa.
[Published in Cape Times, Op-ed 10 November 2015]
EXACTLY how is the country to going pay for free education? This is the question foremost on people’s minds, as the country sobers up to the events of the past weeks, which saw the unprecedented storming of parliament and storming of the Union Buildings.
Surprisingly, South Africa, ( as previously alluded to in part 2), already has a ‘sovereign wealth fund’ with a massive R1.5 trillion rand invested, and certainly the youth need to be tackling finance minister Nhlanhla Nene and education minister, Blade Nzimande on why they are suffering in the face of so much wealth.
Instead of a Public Investment Corporation (PIC), benefiting one privileged generation who just happened to be in power during the 90s, let’s make the public investment more inclusive of all citizens, and all generations, and let’s call the PIC what it deserves, by the term Publica, since the ruling party appears to have lost the distinction between what is public and what is private — funding Nkandla, and government pensions for party insiders. Publica should rather be redirected to funding a social wage for all citizens, one which includes education, health insurance and childcare grants. Instead of a party wage, we could have a social wage reducing the worst affects of poverty and mitigating the coercion inherent to the job market, even one that is Internet-enabled, while providing free education.
Publica, unfortunately, like so many self-aggrandising programmes run by the ANC, appears to have evolved and deformed into a strange facet resembling one of the pillars of the previous regime, the apartheid equivalent of cadre deployment.
The Independent Development Corporation (IDC), cooked up by apartheid cronies Anton Rupert, Chris Stals, Nico Diederichs and Owen Horward, was really nothing more than an efficient scheme to create bantustans. Escaping international sanctions by moving state capital into Swiss offshore bank accounts for the exclusive benefit of the politically-connected. In reality, a state-within-a-state, a fund that was part-and-parcel of the covert government which created apartheid and the oligarchs, technocrats and apparatchiks, that existed, hand-in-glove with the state’s volkscapitalisme.
The missing apartheid millions are all documented by news journalist Sylvia Vollenhoven, but her documentary ‘The Spear’ was banned by the SABC, as no doubt any similar investigation of the fiscus under Zuma would also be.
An investigation of the corporation we may now call Publica, i.e the massive state corporation created out of public funds drawn from the public purse over the past two decades, would undoubtedly uncover a lot more than the Nkandla millions. These funds need to be returned to the people.
The youth of today, deserve free education, and they deserve connectivity, to be online. But in saying this, we want a youth who are able to grasp the many opportunities that exist, at the same time as they are cushioned from the worst forms of economic exploitation, inequality and poverty. This can only come about through a social wage that includes free education.
IN 1994, the ruling party charted an economic course born out of the Interim Constitution and the Codesa negotiation process. Essentially, it involved embracing a ‘mixed economy’ approach, in which a market economy would exist side-by-side with a “dirigiste” economy, that had, as its antecedent, the ‘volkscapitalisme’ of the former National Party.
Thus the country’s industrial base was given new life, with local conglomerates such as South African Breweries emerging into global entities. The once fiercely nationalistic beer cartel, is now a thriving international business called SAB-Miller, which, as it turns out, is in the process of merging with another beer giant, AB inBev. A testimony to South African can-do attitude and the country’s ability to embrace internationalism.*
State industries such as SASOL and ISCOR were privatised, while others like Telkom, Eskom, and Transnet remained in government hands.
SASOL went on to repeat the success of SAB, while ISCOR under Mittel, faired a lot differently.
The ruling party thus presided over a long boom, which lasted approximately 15 years, coming to an abrupt end in 2009. The economy has been running in fits and starts ever since, and it is not simply because the global party of low-interest rates and easy finance has come to an end.
Arguably, more South Africans were pulled out of poverty under the administrations of Mandela and Mbeki, than under several decades of National Party rule, but under Jacob Zuma, the economy has been on the skids.
Now with talk about another credit ratings downgrade, jitters over the Rand, and looming threat of junk status for the nation’s debt, the question needs to be asked: What exactly went wrong?
For starters, the “dirigiste” economy took on a tragic life of its own.
Not only did we witness a massive expansion in state enterprises, but with the exception of Transnet, state enterprises today, operate under the illusion that annual bail-outs from central government are sustainable, that a de facto command economy, is the norm.
The effect on the nation’s fiscus has been dramatic. The public service wage bill under Zuma, (R61Bn and counting), has swelled by 80% and shows no signs of abating. Coupled with a massive bureaucracy that has produced the largest cabinet and government ministry in the world (64 ministers and 64 deputy ministers), the country has began looking a lot like its former self, under the National Party.
As the slowing down of GDP and growth to 1.4% (2015)**, has shown, growth in the private sector is not enough to accommodate a bulging public sector. Areas of the economy which could have provided benefits, face massive obstacles from central government.
Red-tape and statute inflation (too many laws) has dramatically affected tourism, impacting small-and-medium businesses. The recent opening of the economy to Independent Power Producers, and likewise, the entry of wireless companies into the home fibre and cable market, has come a decade too late, for meaningful economic growth to benefit the class of 2015.
- * The SAB part of the equation however, is ironically on the decline, a result of the much diminished Rand.
- ** With a bit of luck could increase to 2.4% in 2016, projected by Deloitte.
LAST year was the 25th anniversary of the murders of Dulcie September and Chris Hani. The publication of an in-depth investigation, revealing arms trade links and nuclear secrets, appears to have been under the radar, perhaps because of language issues and the fact the article was only published widely in the Netherlands.
With ongoing public interest because of the parole application of Clive Derby-Lewis and the renewed importance of Dulcie September as a struggle icon, Medialternatives publishes extracts of the article on Youth day, June 16, 2014.
Evelyn Groenink, the investigative journalist responsible for the latest round of speculation on the murders says:
“ANC representative Dulcie September was killed in Paris in 1988, when talks about future arms contracts between France and the ANC were on the agenda; SWAPO- man Anton Lubowski, ditto, in front of his Windhoek home in 1989, shortly after befriending an arms- and diamonds dealer; and the ANC’s beloved Chris Hani was murdered in 1993(one year before the first democratic elections in South Africa), in the midst of massive bribe-offering by arms dealers to key people in the ANC military.”
“In all three cases, I was told by people close to the victims that they had been ‘obstacles’. Dulcie September had been “fighting with important people.” Lubowski “had not wanted to do what [certain businessmen] wanted.” Hani “would not allow the corruption of the ANC’s guerrilla army,MK” In the late eighties and early nineties, when South Africa and neighbouring Namibia transitioned from apartheid rule to democracy and sanctions were lifted, dozens of international businessmen had flocked to the impending new ANC and SWAPO governments to buy up resources and sell arms.”
THERE has been quite a bit of commentary online about the kiss which went too far, namely the failed merger between Agang and the DA. With Cape Times columnist Max du Preez uncharacteristically calling it the “kiss of death” — the criticism, mostly from men, of the moment when it looked as if South Africa’s opposition was about to be lead by a women’s coalition comprising Helen Zille, Mamphela Ramphele, Lindwe Mazibuko and Patricia de Lille — has been rather irksome.
Even more tiring is the predictable riposte from Zille, reminiscent of Margaret Thatcher’s response to Labour complaining about the fact that the gap between the rich and the poor had grown under Tory rule. Thatcher famously retaliated that Labour wanted nothing less than policies that would make the poor, poorer, “provided the rich were less rich.”
South Africa’s own iron lady, Helen Zille has thus reduced the Agang proposal for a merger, to an inappropriate request to decrease the gap between the rich and the poor. Yes, the entire party funding circus, in which the DA shifted blame for its own ineptitude on Agang, only to be caught by a rejoinder from the ANC, is really a bit like kissing a bride, and then making out with the best man, who happens to be the Austrian economist Friedrich Hayek.
Hayek who has some interesting ideas about what motivates the market, may have gotten some elements of economic theory right, but he sure as hell never understood the ‘animal spirits’ and love affairs of John Maynard Keynes.
It may well be that funders pressed the two parties into a premature election arrangement, and it might also be the case that such funding would be more efficient for two pro-market parties — if they both shared resources — but this leaves out an important difference and point of departure while deflecting attention from the issue of foreign donors.
Agang, unlike the DA, favours an inclusive citizenship, in other words, a social welfare state backed up by a market economy. Agang thus would have brought an important addition to the DA rhetoric of service delivery. The DA under Zille’s leadership however, wanted nothing to do with such “socialistic” tendencies, choosing instead to back unbridled capitalism and unhindered market forces.
The party thus jettisoned any hope of the necessary corrective that Mamphela Ramphele’s social welfare “builders democracy” would bring, while reducing the Zille-Ramphela kiss to a kneejerk kick in the crotch. All really a childhood misdemeanor with serious consequences for the electorate?
The DA has increasingly seen itself at odds with the centrist-left ANC over issues such as National Health Insurance. Most recently the problem of Patient and Patent Rights with regard to generic medication has raised eyebrows. At one point, back in noughties, (what ever do we call the past decade?) the DA actually supported a liberal proposal for a Basic Income Grant.
With progressives at its centre, the party was even hammering the ANC and its red faction on its slow roll-out of ARVs, but these progressive policies now appear to have been abandoned, or at least they are now firmly on the back-burner, as conservatives within the party appear to have gained the upper hand to the detriment of social welfare.
If another centre-left opposition coalition attempt fails, the DA may yet enter the evangelical Christian right-wing collective. In order to do so, it would have to first abandon woman’s rights such as Choice in Termination of Pregnancy and other traditional progressive policies such as the teaching of Evolution in Schools.
IT WAS bound to happen. With the collapse of the DA/Agang coalition, a new opposition coalition has stepped into the breach. This time it looks decidedly misogynistic and woman unfriendly. The Collective for Democracy (CFD) which formed in December last year has been under the radar until now. With the breakup of the much feted Zille/Ramphele relationship, a new political swing formation has been quick to capitalise on dissent.
CFD may have all the allure of a progressive movement but in reality it is nothing more than an evangelical Christian Coalition comprising the African Christian Democratic Party (ACDP), Congress of the People (COPE), the Freedom Front Plus (FF Plus), the Inkatha Freedom Party (IFP) and the United Christian Democratic Party.
CFD policies on the table include a hodge-podge amalgam of anti-abortion rhetoric, the end of abortion on demand, the teaching of creationism in schools, protection of white and black ethnic identity and if the EFF has its way, land redistribution and nationalisation.
Economic Freedom Fighters (EFF) and its firebrand leader Julius Malema could enter the coalition if the party gains seats in Parliament. The unproven red fascist party has entered a no-contest pact and partnership with the IFP.
IFP have attempted to distance themselves from CFD, but the rumours of an all out alliance if the ANC loses its majority in the election, persist.
Whether or not CFD, with so varied a political platform, will ever find the means to implement any of its policies, or broker the necessary political will and electoral expediency to get both the IFP and EFF on board, remains to be seen.
For starters, there are major contradictions within the collective and its partners.
For example, the COPE party manifesto promises the end of gender discrimination, but the party is governed by men such as Mosiuoa “Terror” Lekota, Lakota is a Roman Catholic, and while he may no longer be against the use of condoms for the prevention of HIV transmission, he most certainly is not in favour of abortion on demand.
The IFP on the other hand has tended to support those who oppose discrimination on the basis of religion, although the party favours Zulu traditionalism, it is not averse to siding with the evangelical agenda.
The EFF’s Julius Malema recently went on a pilgrimage to visit Nigeria’s foremost charismatic preacher, TB Joshua where he received blessings and elecution tips on how to approach the situation at Marikana. His oratory has much improved and he now claims to have found God.
EFF has been punting an essentially black supremacist outlook, but recently have taken to the same tactics as the DA in the quest for electoral power. The “rent-a-white” publicity stunts involving Wiekus Kotze have been all over social media. That a right-wing Afrikaner party such as the Freedom Front Plus could end up in a coalition with the EFF goes to show just how strange and fluid South African politics has become.
Arguably, EFF are the black version of the Freedom Front, and both party’s extreme quasi-socialist policies are really no different from each other. FF+ however, come from a tradition in which national socialism in the form of job reservation for whites, was in the exclusive domain of the Afrikaner minority.
Or will we see women’s rights disappear after the election, the repeal of the Choice on Termination of Pregnancy Act of 1996 along with abolition of pink rights such as the right to sexual orientation, contained in our constitution ?
Will we see a return to theocracy and the end of the separation of Church and State? Only a reasonable turnout at the ballot box will solve this one.