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Fiddling and fighting while the economy withers

Raging political battles are taking centre stage at the expense of action in the war against SA’s economic crisis.
The crises of politics and the economy are tumbling around in perpetual Catch-22 chaos, leaving the country in a state of paralysis. Photographer: Waldo Swiegers/Bloomberg

The political drama currently playing out in public on the South African stage would have made the 12 Caesars proud.

We have seen two ANC national executive committee (NEC) members argue about a decision taken with regards to the South African Reserve Bank (Sarb). We have witnessed several senior party leaders disagreeing with each other on social media about a key policy position. We have noted that our president was clearly outvoted by his NEC. And then there’s the cliffhanger of what the party means by ‘quantitative easing’.

Curiously or alarmingly, depending on how you look at it, it would appear that President Cyril Ramaphosa is being outmuscled within his own party – and undecided about his own position on matters despite having won both presidencies.

For how long can the president continue to seek consensus and not use his power? If he continues for much longer he will lose that party power. Worse, it will create the impression that those opposing him are growing stronger, thus emboldening them in their challenge of his authority.

The net effect of all of this points to a deep internal crisis within the ANC, and confirms my argument that South Africa’s real crisis is political.

Read: Will the ANC NEC rally behind Ramaphosa?

As we have discovered, with the news this week of a 3.2% decline in the economy, the most likely scenario is that the country will continue to regress.

Spiralling decline

Together, the internal crisis of the ruling party (ergo the country’s political crisis) and the downward spiral of the economy increase the probability of South Africa being downgraded by the rating agencies – especially when considered against the worsening fiscal deficit, constrained growth and absent job creation. Eskom being identified by the International Monetary Fund on Monday (June 3) as a “major downside risk to growth and the fiscus” reinforces the possibility of a downgrade.

Worse still, the plunging economy with its chronic unemployment not only puts off potential investors, it adds to the already-hostile relationship between business and labour. On the one hand it undermines the bargaining power of unions for better wages; on the other hand it gives no room for employers to improve their offers. In fact, it might force companies to retrench workers. The current platinum sector wage negotiations will be a gauge of how bad things are.

Like you, I am waiting to see what the official unemployment rate will be when the next Quarterly Labour Force Survey is released – and whether Ramaphosa will continue to be shocked.

NEC ‘agrees’ to reduce unemployment

The outcomes of the ANC NEC lekgotla on unemployment held on Tuesday (June 4) leave no room for continued shock from the president because the NEC has “agreed” to reduce unemployment from 27.6% to 14% in the next five years and plans to “achieve massive job creation” on the back of Job Summit initiatives.

How government will translate these goals into policy that improves the conditions of the labour market, and whether whatever moves it makes will complement the policies and programmes of the economic cluster and labour departments, remains to be seen.

Despite the mouthwatering inventory of good things promised during electioneering, summits and presidential speeches, the ANC’s internal crisis, produced by dissonance and cliques, has had the opposite effect on the economy and possibly the future of many South Africans.

It has reduced the country to a state of ‘paralysis by politics’. I’ve argued on this platform many times before that when the ruling party is in a crisis the sitting government gets affected and dwarfed by party politics.

Quantitative … difficulty

The Sarb mandate debacle is a perfect example. Uncertainty will surround the matter until a decisive and plausible statement is issued by the highest power in the land (who is that again?). 

Finance Minister (and NEC member) Tito Mboweni has made his views clear – “There is no quantitative easing thing here,” he tweeted. Sarb Governor Lesetja Kganyago echoed Mboweni’s comments. We know, however, that neither of their views are above those of the collective NEC … and the party has been equally clear in its pronouncement on the matter, with ANC secretary-general Ace Magashule also speaking out. He says the NEC has agreed to broaden the Sarb’s objectives beyond price stability and have it look at quantitative easing.

These exchanges took place on Tuesday (June 4), and we’re at a stalemate for now. Keep in mind though that time and again the ANC reminds us that no individual is above the organisation or immune to its disciplinary processes.

With all of this in mind, it is likely that the economy will continue to underperform, dragged down by the political crisis and a declining secondary sector prone to feeling the effects of the US-China trade war.

Two crises caught up in a Catch-22

The economic crisis can be corrected by radical structural reforms of the factors that hinder its performance.

The political crisis, however, is complicated because it can only be stopped by the very party causing it – or a decisive president not afraid to use the 50+1% power he has instead of waiting for consensus.

However, we know politicians are not driven by pragmatism or love of country, but by what keeps their political careers alive.

I have tried to look for the light at the end of the tunnel, but presently I can’t see anything. It seems South Africa is not winning its political battles or the war against its economic realities.

As these two phenomena hang ominously over the country’s future one wonders, as with so much else, how we are going to get out of this situation.

 

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The whole industrial world is in a state of collapse. It’s a bit in slow motion so far, but it’s also a state without any recovery and this makes it totally different to anything we’ve seen up to 2009. 2009 to now is just the prelude to much worse to follow.

South Africa? We’re in the front row seats.

So how do you manage the impossible? Some try to stave it off with trade wars and make us great again. Others brexit in the hope of gaining some kind of slim advantage. China builds hundreds of coal fired power stations to wring the last gasp of energy before the climate destroys the very eco systems our lives depend on.

They’re all forms of denial.

What do we do? The Zuma government barely pretended to govern,just loot. Enter Cyril whose trying to give honesty a shot. But he can’t turn the ship around; it’s simply impossible.

So the looters will bay for his head; cries of I told you so, your policies have failed and now it’s our turn, you know the line.

The danger is huge that they will get their turn, because if they do we will collapse in a flash.

Cyril’s job will be to hold the line against lunacy off a precarious power base and a tanking economy.

Will he be up to it? He will need all the help he can get. Doesn’t look too promising so far.

He’s not up to it. Get out if you can.

It’s very clear Cyril is told what to say and do. Yesterday’s love letter came across as a “Dear Moody’s” letter. Well good luck in conning them but I must add it seems surprisingly easy.

I have asked myself what the odd’s are for this lot to do the right thing? 50:50, 70:30 or 1:100. I now strongly believe chanced are 1 in 100 that they will do the right thing. Maybe even worse. At 70:30 I would have considered 70% offshore and 30% SA Inc.

I will have peace of mind going forward that the more own goals SA scores the better I will do. I am not going to get worked up about it anymore. If the performance of foreign ETF’s (local) over the past few day’s is anything to go by it’s a thumbs up.

No more getting worked up over brainless stupidity.

The ANC is killing the economy, not softly, but quickly.

The economy is in decline, so taxes dry up. Now government is scavenging to fund our ballooning grants. Civil servants; be warned that they coming after the billions in your pension funds.

Wonder when last anybody checked if all these billions are still there. Who runs this? And the thinking is the pension fund is sort of the only institution where there is no theft?

Watch this space.

On the face of it “civil servants” (is there such a thing in SA?) don’t really care. Their funds are defined benefit so the taxpayer must subsidise losses. But I suspect the whammy will be when the ZAR devalues, Zim style. Then they will wail, as they do in Zim, but keep voting ZANU PF or ANC. Way to go Afrika!

Killing the economy as expected. Pity on those who thought otherwise.

Lets put this out there clearly in simple language we all understand.

Some peoples tail feathers are burning, hence the non return to parliament for a number of reasons, health, family etc

Cleaning an ATM (SAA, Eskom, SABC etc)is impossible. The Zupta fungus is embedded to the core. Hence a few resignations with more to come.

The most toxic of all are the undercover agents in the NEC. Ace, Mabuza etc. Zuma and co are pulling ropes not strings, they have not stolen enough, the ATM’s need to be filled. So the easy way is to introduce quantitative easing, another way of saying: print money, bail the SOE’s out, (fill with cash) and you have another 5 years to loot.

To do this they need to swallow the Reserve Bank, but Ace was speaking his thoughts, a little over zealous. He will be quiet for a while and attack from a different angle. CR, TM and LK watch your backs, they are coming for you.

The cynic in me suspects that there is no disunity in the ANC NEC. What if it’s just a stage-managed series of inflammatory and pacifying statements designed to direct currency movements? Who benefits? Anyone anywhere aligned to the ANC? Bottom line, I don’t buy this good-ANC bad-ANC dichotomy.

…quite interesting!

One realise the power of MONEY is what drives humanity (and its ills). Perhaps almost the same tactic that Donald Trump is doing, i.e. by moving markets with every Tweet (one wonders whom of DT’s inside circle knows his next tweet, just to be ahead of markets the day before it reacts?)

I am also suspicious of this, even the most mentally challenged individuals do not behave like this and it seems choreographed to fit nicely in with a story that is believable

absolutely agree, some kind of smoke screen?. If you read some of my previous comments: these cadres all fought the same struggle. They might have minor disagreements but still have one common enemy….white monopoly capital.

Well, the rand is in freefall… R14,90 yesterday evening, this morning R15,10… I hope all the idiots like Peter Bruce who pimped for Ramaphosa the ANC are happy now.

I think we all had “optimistic hope” for a new beginning but like Enoch Godongwana tweeted ” all this makes a nation scared as hell ” The voters had their chance. If anything more foolish happens this weekend I see the rand R16 + to the dollar on Monday.

For all its faults the DA’s prediction of an ANC split might well be the only hope.

The centrists to align with the DA and the leftists with the EFF.

The last mentioned has already happened. Julius and Ace are “kop in een mus”.

The fight is for who will keep the ANC brand.

Endless articles have been (and still will be) written about SA’s long-term economic slide, and many writers ask themselves the perpetual question “how did we arrive at this point?, or How do we get out of this situation?”

The answer is “we don’t”.

If one stand aside for a moment, to take in a strategic/holistic/ long-term / historic perspective (as we get lost in daily media articles’ “noise”) it is CLEAR that SA is slowly losing it’s significance (economically, socially, etc) on the world stage after the end of colonisation. SA merely the “last domino” to fall after circa 1992/4, and still falling. SA reverting back to the “mean average” of what essentially is the African way of life (not meant in a derogative way…as one accepts the African way is just different, with more difficulties to naturally come). It has to. Plain demographics at play.
The more skilled ‘colonialists’ leave SA, and the more indigenous people’s numbers rise, the more African the country will “look and feel” and the less Eurocentric. It’s a natural development. At least it happens slowly.

The African “look and feel” manifests itself in every bump/pothole/waterleak that you drive through. The number of road-side beggars increasing. More load-shedding & also water-rotation still to come. I’m not degrading the African way…those that does not like it / cannot live with it (add me in), will eventually relocate to another country. Those that accept it, will remain here….nothing wrong with it and continue to live with the challenges, and will help with the often-mentioned calling “to save” SA (in vain).

Maybe it’s unfair to describe SA as a sinking ship. During the colonialism-phase 300 yrs ago, the country was (unfairly) developed way beyond the rest of the continent, including a gold rush….now SA is merging slowly back to where it supposed to be, more or less in line with other African countries’ economies & prospects.

And then people “cannot understand” why and where SA is heading??

(My comment is not negative….I see it as positive, as it points/leads the way forward, to allow you a clear perspective where you stand in the natural process SA finds itself in.)

Good points Michael,

Reversion certainly is underway. The reason for that reversion is failed policy and management imo. I’m not sure if Joe Average (esp the emerging middle class) yearns for the African mean.

It’s just that Joe Average has been seeped in socialist propaganda so no matter how badly government policy fails him, he can’t give into capitalism.

Unfortunately, taxpayers will have to pay for many years of mismanagement before any possible turnaround.

Mr President,
You were voted for by a large number of people and not the ANC although that **** Ace does not agree. Our country is declining and we are still in The New Yawn. The people have spoken. You need to put your foot down and start delivering the New Dawn as promised a year ago.

Wally Stowe

That is not really correct.
The ANC was voted in by a large number of voters. Those cadred to parliament was voted in by the top 80.
Parliament was then instructed to vote CR in as president.
CR was actually installed as president by the NEC, not the voters.
If that is not effectively a coup, I need a new definition.

If the DA had to win the election there would large scale terrorism from all opposition parties on a majestic scale. Lose-Lose situation.

The problems of South Africa are unique to South Africa…. We will not solve them by looking at them in a polarized approach nor will we solve them by importing western or European solutions that are a headache for them in themselves.

We need all hands on deck, to fix South Africa. We need a developmental plan that excludes no one. We need leadership that will foster a solution driven atmosphere with all peoples of this country working together.

Truth be told, the apartheid regime failed because there was no buy-in from the majority of the citizens. So will the democratic regime fail because we exclude the minorities. We need the boer/farmer for food sustainability, we need the less educated to do the manual labour to do maintenance and all repetitive work. We need the semi-skilled provide support services, we need professionals to give credence to institutional activities we need entrepreneurs to take the risks with innovations and business, above all we need a government that has the will and commitment to support all South Africans in that journey, irrespective of race, colour social standing nor political affinity. South Africa needs to come true to its promise of belonging to all who live in it.

LEST WE BE DOOMED….

End of comments.

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