Back in May, I worked for a now-defunct Taxpayers’ Union organisation for two weeks. I wrote several articles for them which were never published. I feel they are still relevant today, and hope you find them interesting.
In South Africa, with our difficult business environment, choked with regulations, weighed down by BEE free rides and bled by high taxes, we rely on international investment in order to keep our economy afloat. But even before the global lockdown and the subsequent market crash, South Africa’s investment climate was dismal – the JSE lost over 250 companies since 2000, falling to the same level as under the economic embargo under the previous regime. But Ramaphosa has recently issued press statements tosay that South Africa is open for business, and promises that this time, the new Operation Vulindlela (“pathbreaker”) will deliver miracles.
But as the official report for the operation itself informs us, it is nothing new, only a new policy tracking vehicle for bureaucrats to monitor the progress of three existing development plans: the National Development Plan of 2012, the “Towards a Growth Strategy” document published by the National Treasury, and more recently the ERRP of 2020. In other words, another bureaucratic layer on existing bureaucratic layers, changing nothing underneath except for putting more people on the payroll. And yet the authors have the gall to call this program “structural reform”, simply because they know it’s what the investors want to hear.
This wouldn’t be the first time that a South African president has promised the moon and failed to deliver. In fact it isn’t even the first time Ramaphosa has made empty promises. As anyone who remembers his remarks on farm murders will know, he is quite comfortable lying to foreign press and diplomats. Much like the pseudo-privatisation of South African Airways, his promises to deliver on corruption were also swallowed hook, line and sinker by the Western liberal establishment.
Anybody who is old enough to remember the Charlie Brown cartoons knows the running gag in which Lucy holds the football for Charlie Brown only to rip it away when he runs to kick it, leaving him sprawled on his back. White Zimbabweans will know this feeling – several times since the great dispossession campaign of the early 2000s, the Zimbabwean government has welcomed farmers back to their old abandoned farms, only for ZANU-PF affiliated thugs to seize them once again once they become economically viable.
In South Africa we are still some distance from this kind of purgatory, but the global investment class is not. Economics reporter Richard Quest famously exploded in a technicolour rant at Davos about the smug disaster that is Ramaphosa’s government ("Your entire economy was hijacked! How many people are in prison?"). Despite South Africa being world famous for corruption, Ramaphosa has done nothing to combat the problem, seeing naïve international investors burned for another political cycle, and another cohort of capital lose faith in our rainbow nation.
He was even promoted by The Economist, who tried to convince the upper classes and the shadowy donor class that the ANC should be voted for over the DA, to give Ramaphosa a stronger mandate for fighting corruption. But as we know now, the loosening of checks and balances on public procurement under covid emergency regulations has resulted in the greatest wave of corruption the nation has seen. Nor is this the first time. International investors immediately swallowed the promises of Jacob Zuma when he began an international campaign for political and economic support in 2007. From the New York Times of the day:
Zuma's response was to woo investors at companies including Citigroup and Merrill Lynch, assuring them that he would not buckle to union demands.
He has pledged to continue attracting foreign investment, which has helped push growth in South Africa to its fastest rate in 25 years and has helped the stock market value triple since 2002.
"As we saw with Mbeki, it's talk left and walk right, and we will probably see the same thing with Zuma," said Fritz Kaegi, an analyst at Columbia Wanger Asset Management in Chicago. "The political situation doesn't change our outlook for South Africa."
But the grand strategy for managing relations with the unions has not changed at all. The old corrupt triangle between the larger corporations, the ruling party and the workers unions remains the same, shutting out all competition and feeding the same circle of crocodiles as were in place in the 2000s. Whatever keeps investors believing in each round of promises despite all evidence showing this to be unwise, can only be speculated upon.