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We survived Zuma, but can we survive the prophets of doom?

We are being disempowered by our own fears.

Over the past couple of weeks it has been impossible to escape dire assessments of the South African economy. I’ve read that it is ‘collapsing’, ‘tanking’, and even ‘dying’.

A number of commentators seem to have made it their goal to imagine a worst-case scenario for South Africa, and then argue for its inevitability. Some have gone as far as equating the country to Venezuela and Zimbabwe.

While no one can be unaware of the serious challenges facing South Africa, I fear that we have become so frantic at every piece of additional bad news that we are losing context.

This graph shows South Africa’s GDP since 1960:

Source: Tradingeconomics.com, Statistics SA

This does not look to me like an economy that is collapsing. On the contrary, it looks like an economy that has been quite resilient given how much has been thrown at it. This is an economy that has survived the mismanagement of the Zuma years to be more or less double the size it was 20 years ago.

Despite all the bad news we have been hearing, I am also unaware of any credible economist predicting that South Africa’s economy will not grow this year. GDP growth will be low, but it will be positive.

South Africa is not Venezuela

Many commentators seem to have equated low growth with decline. They are not the same thing. This is what a declining economy looks like:

Source: Tradingeconomics.com, Central Bank of Venezuela

This shows Venezuela’s quarterly GDP growth figures since the last quarter of 2015 to the latest figures released by the country’s central bank – which were for the third quarter of 2018. Over this period the country experienced 12 straight quarters of negative growth of more than 10%.

It is true that South Africa’s economy shrunk by 3.2% in the first quarter of this year, but despite that, the country’s GDP was still larger than it was at the end of March 2018. On an annual basis, the economy is still moving forwards.

Of course this is not good enough. Just because the country’s GDP is not shrinking is not cause for celebration. It is however reason to be a little more circumspect about how we describe our economic predicament.

As Cannon Asset Managers stated last week in a note to clients:

“In South Africa there is no shortage of talking heads on TV and prophets of doom on social media predicting the imminent implosion of Eskom, the flight of foreign capital and even an IMF bailout. Might these events occur? Yes. But it is pertinent to ask, too, if our fears are driving our willingness to accept certain narratives, and what the ultimate cost of believing those narratives could be: namely, that they become self-fulfilling prophecies.”

Recency bias

We should certainly be aware of the risks that South Africa faces, and nobody should feel any reservations about pointing them out. They should, however, separate short term bad news from the longer term picture.

The most recent analysis from the Economist Intelligence Unit, published late last year, forecasts that real GDP growth in South Africa between 2018 and 2030 will average 3.4% per year. That is the kind of longer term outlook we have not heard at all in the past few weeks.

Unfortunately the commentary we have been receiving suffers from an enormous dose of recency bias – taking the bad news we are currently hearing and extrapolating it into the future. It is a very human mistake to make, but that doesn’t make it any less of a mistake.

The kinds of dire scenarios being painted are, of course, all absolutely possible. South Africa could enter a debt spiral. The country may be unable to attain sustainable growth. The government may end up calling on the IMF for a bailout.

That doesn’t, however, mean that these things are inevitable.

As South African Reserve Bank Governor Lesetja Kganyago pointed out last week: “These things are in our control.”

At the moment, government is probably not doing enough to be certain of avoiding them. That is fair criticism to make. But it doesn’t mean we should assume that nothing can be done. That is falling into the trap of making these predictions self-fulfilling prophecies, because if we resign ourselves to negative outcomes, then we will do nothing to prevent them.

Therein lies the danger of this kind of thinking: it is disempowering.

Perspective

The graph below from the Organisation for Economic Co-operation and Development (OECD) shows its composite leading indicator – or general outlook for economic activity – for South Africa up to the end of June. 

Source: OECD

Again, this is again a long-term picture, and again it does not suggest an economy in decline. While the current level is below its long term average, it is higher than it was 10 years ago, and well above its lows over this period. The indicator also appears to be bottoming, rather than falling further.

The issue this illustrates is, once again, one of perspective. It is easy to be caught up in the current cascade of bad news, but we can only make a genuine assessment of our situation if we view it properly in context.

In just the last month, two of the world’s largest companies have expressed their long term view of South Africa not in words, but in actions. PepsiCo’s offer for Pioneer Foods and Goldman Sachs’s decision to expand its South African business are significant votes of confidence.

There is a reality apparent in these decisions to which many commentators seem oblivious. These companies are making long term investments, and they certainly would not do so if they thought the country’s economy was in terminal decline.

I think commentators should take a dose of that reality. Let’s be honest about our problems, but let’s also be honest about putting them into perspective. Most of all, let’s be honest about what needs to be done to fix them, and acknowledge that those solutions are well within our ability to achieve.

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I think sentiment could and would turn on a tickey if the government gave a single sign of anything sensible, but they don’t. So the case for pessimism is

1 the impossible NIH. Potential to do untold damage to the health-care and finances of the country. Will likely cause a flood of health professionals fleeing the country

2 about 15 million new entrants into the job market in the next 10 years. Job creation at zero and unemployment at record highs

3 Eskom is in a death spiral. No if’s but’s or maybe’s. New power stations are not even online and full of so many design flaws they may never come on line to any meaningful degree

4 the wild card of climate change. Potential to unleash havoc in the next 10 years

5 rise of populism. Crazy charters, WMC, BEE and EWC and minimum wage locked and loaded

6 half the government are out and out for looting and are doing a great job of blocking needed reforms. 90% or more are socialists, a failed policy everywhere it’s been tried

7 the global economy seems to be tipping into a recession that could end in a major meltdown

8 record emigration of skills, capital and the tax base

9 more big increases coming in administered prices and income taxes

This list is far from complete. Maybe more comments from readers will add to it.

So what exactly are we all meant to be so happy about?

South Africans seem to be very deflated currently. Bold, strong leadership can take the country out of the morass, but it will mean some dramatic and symbolic actions that show a clean break with the past. It is a problem of mass psychology to a large extent.

A prophet of doom and a realist are two different people. Maybe Mr Cairns has missed the last nail that has been driven into our coffin: the NHI. This will require nationalization of the private medical sector’s assets, put millions out of work and after the the looters and tenderpreneurs have taken their share, nothing will be left for actual medical care. You will die clutching your money, with no place to go and no doctor to consult. Read the Daily Maverick and see that a new round of looting has started at Prasa, while we all are fooled into thinking the Zondo commission will make the corrupt more wary. No, it is impossible to overstate the grave danger we are in.

You forgot the major exponential damage to the economy by the radical labour laws and militant trade unions that continues killing the economy, jobs and most of all foreign fixed investment.
My contacts with short term foreign investors up until retirement 2 years ago always noted labour laws, BBBEE, political uncertainty (especially since EFF) as the biggest stumbling blocks for fixed investments.

Hahah, yes, why the gloom ?

The old doom and gloomers are long dead,

Anybody even remember an old man Jaap Marais?

Are we sure we survived Zuma? Might be a bit premature to consider that battle won.

Yes, that’s it, blame the recipients of the ANC’s greed, corruption and maladministration since they took over. So we should be happy that we aren’t Venezuela? I’d say it’s the author of this article and Cannon AM that are delusional.

Could you redo the first chart to indicate the per capita GDP? I think it would show a far less rosy picture.

Can we also see the chart of the JSE’s returns over the past decade, compared to the rest of the world’s stock markets?

about 10% average per year…the last 4 years were the problem

The returns on foreign stock exchanges over the past 1,3,5 and 7 years were double that of the JSE.

amd adjusted for inflation.

and compensate for population growth compared to the real world.

Also do it in USD not ZAR, currency depreciating at 7% pa over the last 30 years compounded makes quite a difference

Starting beginning 2010: Top40 3608 in USD, Currently 3503 in USD that is a slight negative growth.

Starting beginning 2010: S&P 1125 in USD, Currently 2926. that is a healthy positive growth, about 10% per annum.

Clearly SA is falling behind massively. To invest in SA would be pure craziness, especially if you are watching the thinking currently eg expropriation without compensation, NHI etc.

Just further to my comment, even if our stock market return looked better it would not tell you much about SA, we have a lot of exposure to offshore earnings in our stock exchange. Keep your eye on our GDP/Capita relative to other countries and over time the wealth destruction will become very obvious.

There are certainly things that can be done to fix the economy: fire 1.5 million redundant and useless public servants, Eskom employees and the parasites in other SOEs. Scrap communist lunacy like EWC, the NDR and the NHI. Getting rid of the pernicious AA and BEE practices. Enforce border controls.

None of the above is going to happen, however. Instead, the ANC is doubling down on its communist insanity and accelerating the NHI. They are moving in 180 degrees the wrong direction at increasing speed.

The so-called prophets of doom are much like Churchill. When Churchill was asked how he knew what Hitler was going to do, the answered that the read what Hitler wrote, and believed him. I suggest Mr Cairns reads the ANC’s decades old NDR plans.

Plus we have 9000 species of Fynbos that doesn’t grow anywhere else in the world!! Now beat that!

O course! And here I thought we had nothing to feel positive about. Apologies to Mr Cairns.

We have blue skies, pearly beeches and….the Big Five!

As some Americans are inclined to say, “do the math”. Ireland, a country of 4.7m largely educated and skilled people has a higher gdp than SA. Here in SA we have not even started the turnaround of our educational system and our birthrate continues unabated thanks to government inertia. It takes very little guesswork to figure out where we are headed.

not to forget that the so called clever people of Ireland created a nice financial crisis for themselves not to long ago…I can agree that we have problems (mainly Eskom) but I do remember 2002 and 2003 when all the profits of doom also said it was the end of SA…”the ZAR will go to R20″…16 years later and still waiting for the R20…and our market ourperformed offhsore from 2003…check the stats.

oops…prophets…but maybe profits is what they should be called.

Its not at R20 YET… in 2010 it was at R6.50/R7.00 to the dollar. Today, R15,35.

……there is always one ….you are it

The birthrate is more a function of Zuma, than all of government…

CORRECTION:

According to the graph you provided:

GDP in 2008 – +- 270000000
GDP in 2018/19 – +- 310000000

That is only 14% growth in 10 years or a partly 1.4% per annum (and even less on a compounded basis) actually leaving GDP per capital flat!

One of your main/first points is that GDP has doubled in the last 10 years – the numbers look better than Venezuela but your opening remarks create the wrong picture based on a wrong calc.

I stopped taking the author seriously when I spotted this

I stopped taking the author seriously when he used “challenges” instead of “problems” at the third paragraph.

Newspeak won’t help the discourse.

That was unfortunately a typo. It meant to read 20 years. It has been corrected.

How’s this for twisted logic? We are not doing so bad as Venezuela. So why all the doom and gloom?

But it’s not as twisted as the twisted and contorted statistics and facts used in the article. Use at your peril.

buy when others are afraid?

if you follow the advisors now you will be buying US equities at 15.4 and at the top of a record ten year bull run.

But no worries, they will use your 2% fees wisely

“A pessimist is an optimist with experience”.
The entire Zimbabwean economy was never bigger than the economy of Durban, and socialist policies collapsed it. The Venezuelan GDP was larger than the South African GDP, they have the largest oil reserves in the world, their labour force is better educated than ours, and still, socialist policies drove them into a hyperinflationary collapse. The German economy was the strongest in the world, their workers were highly skilled and they were hard workers, and still, the Weimar government collapsed that economy into a hyperinflationary spiral.

When you leave Johburg and you travel south on the N1 and you go past Beaufort West, Laingsburg and Touwsriver, where are you heading? What is your destination? Cape Town most probably. You are definitely not heading for Beit Bridge. The size of the vehicle you are travelling in does not matter much. If you are heading towards Cape Town, it does not matter whether you are travelling in a bus or a motorbike, you are still moving south. When a socialist government takes control of your economy, the size of the economy won’t save you from the inevitable. Only a change in direction can save the economy, and at the moment we are still heading south. We will be heading south until Eskom is broken up and privatised, all SOE’s are privatised, all municipal services are privatised and the ANC is no longer in government.

The direction we are moving in will only change when the Ramaphosa faction goes into coalition with the DA and FF+ to implement free-market policies.

No economy and Gross Domestic Product can withstand the destruction caused by socialist policies. The fact that we still have an economy left after 25 years of ANC rule merely attest to the strength and resilience of the infrastructure and capacity that was built by individuals who represent the free-market mindset. Those individuals with their skills and their mindset are rejected and ridiculed by the current regime. When you constantly hear the chants “Down with Capitalism Down!” and “Employers must fall!” “Bosses must fall!”, “Down with Colonialism Down!” you know that a loaf of bread will soon cost R100 000.

The Cape party manifesto is becoming more attractive.

No, the Dagga party!

As long as people not born there leave too.. 😉

Would love to return to my home city

Looking at the graph of South African GDP growth in terms of the Rand, the Venezuelan GDP is shooting the lights out in terms of the Bolivar and the Zim GDP did the same in terms of the Zim Dollar.

For clarity, we have to look at GDP growth in terms of the US Dollar. Then a different picture emerges. The South African GDP was $417 billion in 2010 and it stands at $390 billion currently. That is a 6.5% decline in a decade.

A shrinking GDP combined with rising debt levels, rising government guarantees, rising wage demands, rising demands for social benefits, rising service delivery protests, rising income and municipal taxes, rising administered costs and rising populism is about as certain a recipe for disaster as you can imagine. Now I am scaring myself…

You left out the rising population and rising unemployment.

There remains an underbelly of corrupt state capture media which uses negative press to undermine the new government in order to further its survival. South Africa is a country of extraordinary mineral wealth and its not a bad place to live either. Its obvious that in the greater scheme it should prosper but unfortunately will take time to root out the rotten self serving underbelly, fix SOE’s and let some sun shine back in.
Those who don’t pack their bags yet will reap benefits so don’t sell at the bottom.

Reality check: communist lunacy such as EWC and the NHI was spoken about but not implemented by Zuma and his cronies. Ramaphosa is hell-bent on implementing these suicidal policies. There is no intention from Ramaphosa to fix the SOEs or to fire a million redundant wêkkas. Perhaps Ramaphosa is even worse than Zuma….

It’s the media that tells you this, stupid.

@AngeloJoe – Bwahahaha! So the media is lying about EWC and the NHI, eh?

Well then, that’s really good news! Let me immediately invest all my savings in Discovery Health (and a little bit of my savings in Virgin Active too, given that they’re not going to suffer when millions of Vitality memberships disappear because of the NHI…..)

NHI and EWS are damp squibs designed to evoke anxiety.
Media influenced by Motsepe et al open the taps when ZAR gets too strong. Its a game of cat and mouse, are you the mouse?

You seem to miss the point that the present government is not “rooting out the self-serving underbelly”. They are making new policies to enable it and steal the last few pennies left. There is only one difference between a refugee and an emigrant. Timing. With vastly different outcomes.

Sorry Mr. Cairns I cannot help you here.

Regards
Mr. Doom (not in the prophetic sense)

Aside from youre abysmal first paragraph there are a few good points.

Yes we are not Venezuela, we can still buy food at the shops, we still go to work like normal every day and a lot of us get our paychecks and for the most part live our lives in relative stability.

The issue though is not about what life is like today or this month or even year, its about what it is like 10 years from now. What are the trends that we see and what are we doing as a nation to fix our current set of problems so that the future is better. After all a country is like an oil tanker, you dont turn on a dime you turn over 20 kilometers, so it requires forethought, consistency and planning.

The answer to the above is that we have had disturbing trends for a long time and instead of tackling them in earnest we lay the blame at the past. Now I dont think there is a single person in this country that would disagree that Apartheid created many problems, however I dont blame Apartheid for a teacher not coming to class or knowing the subject matter, I blame the teacher. I dont blame insufficient schools or educational resources on Apartheid, the people today in government are to blame.

Education in SA has failed for a long time and is the ticking time bomb that is driving all this. A failed generation is not something you fix overnight or ever actually, this generation has been taught entitlement and violence as a resolution mechanism, two toxic mixes for blue collar labour. Throw in Unions, rigid labour policy and a government that always defends labour and Unions and you have a structural problem that is cannot be solved without force. With no political will, this force will be the market and will be like a train rushing off a cliff.

Its not a matter of surviving Zuma, it is a matter of cutting off the head of the snake called Zuma. He is still running things. Until we are rid of him and his faction we are going no where.

I agree. The only reason for despair is that the ANC is composed of such clumsy, simpleton criminals.

But who voted for the anc? Thats right, most south africans. Thats why I despair.

We deserve a much better class of criminal than the ANC can offer.

Insightful, but now for a valid comparison also do the graphs for Venezuela and Zimbabwe from 1969. I am sure that before those collapses, there was a similar steady upwards march right up before the point of total collapse where it all “tanked”.

No one said we are currently a Venezuela or Zimbabwe. But we are certainly heading there. The entire SA and sub-sahara Africa should be very worried, including the author. Our GDP per capita declined the past 4 years and new risks such as NHI, Eskom and EWC is not going to turn us around.

the biggest problem is and will always be the total inequality in all spheres in SA… I don’t think ( actually we all know ) that this can not ever be fixed…..thus the future will always be uncertain and unstable.

Thanks for perspective and comparisons.
It’s the political discourse and rise of populism coupled with sheer ignorance of economics by ministers, that contributes to the mood.
And a forecast of 3,4% GDP growth going forward is only a forecast – it won’t happen under the tripartite alliance.

Titanic set sail with on the bridge a cream of the best trained officers. With one fault line. Tying them to wealthy wishes which interfered with common, new, for that time, wisdom. Stopping the ship at minimal visibility.
South Africa today can be compared with that ship from setting sail to moment X. With one major difference. No officers on the bridge able to stop. They mingle with rich passengers, having a good time.
The ship in thew mean time is running full speed to his destination.

Watching the global markets this morning…for the first time I felt a glimmer of hope for good old SA. The world is in turmoil, enough to make what we are going through look tame.
And to be perfectly honest, can any one person on this forum name a better man for President of our country at this time??? I thought not!
Good article Patrick – we sometimes need a reminder that whilst things are bad…they’re a hellova lot worse elsewhere.
If you have no choice but to stay ( like me) we need to stop complaining and make the best of it.

Does not mean my money has to stay here, too. Taking every possible cent out. Now.

“stop complaining and make the best of it” Speak only for yourself! Maybe you don’t pay tax!

NO Patrick…we DID NOT “survive Zuma”.

In fact, the country’s economy is SMALLER since 2008 (and lagging growth of other 3rd world countries) Hence, part of the SA economy has DIED…..how can you call it ” we survived” as if you imply we’re still sort of “intact” ?

“Prophets of doom” among MoneyWeb readers do not exist…it’s a myth. MW-commentators are realists. While looking at various global socio-economic rankings, and noticing how SA continue to slip down the rankings, then we draw our own (valid) conclusions.
No doomsday prophets are necessary…the evidence is right in front of our eyes.

Patrick, Thank you for your perspective! I think the comments of most of the respondents neatly underlines your point. I have been reading Moneyweb articles and the resultant comments for many years now and it is as clear as day light that most of the people responding to articles will complain bitterly about anything.The interesting thing is that the same moaners in most cases cannot get themselves to the point where they will actually compliment anything positive. That gives some insight into the mindset of the regulars (moaners and their followers). There is nothing wrong with readers airing their view point but surely a balanced perspective will carry more weight in arguing your case. On a positive note…I still learn a lot from the inputs of some of the readers and I think a lot of us (not so financially savvy people) appreciate these insights, but sadly I do not learn anything from repetitive negativity.

Nailed it there, Syd: “(not so financially savvy people)”. Calling people who comment because they not only see how disastrous the government’s economic policies are, but also have insight in the bankrupt philosophies underpinning it, “moaners and their followers”, is immature to say the least. If years of reading Moneyweb and the comments have taught you nothing, well then, I suppose ” ignorance is bliss”.

A welcome (if lonely) voice of optimism! I fear however, that you have not factored in the one spanner that never fails to mess up the works … and that is the ANC government. The ANC in 25 years has never once managed to do the right thing for this economy. They have ALWAYS ignored common sense and practicality and attempted the idiotic and the impossible. Even the most robust economy cannot survive this kind of sustained self-sabotage. Just imagine where we would be if we had enjoyed 25 years of practical, business-friendly (and, heaven forbid, honest) government instead of the opposite… the mind boggles.

As an addendum, I have just seen that the Mayor of Durban, Zandile Gumede (ANC) has been fired for corruption. So, a ray of hope in an otherwise gloomy picture.

Far too soon to celebrate; 1. who is replacing her 2. where is she being redeployed to?

I quite enjoy reading JP Landman and his political comments. The below was published on 12/08 and highlights some of the actions us South Africans desperately need more of from Government.

ACT 1: RECLAIM THE STATE 12 AUGUST 2019
‘Just do something’ is the cry now rising from all over South Africa, a plea to the president and government in general to take some action to break the logjam in which the country finds itself. Confidence is low, growth sluggish, and emigration high. It is useful to replay what has been done.
The Ramaphosa administration has set itself two tasks: to rebuild the ethical foundations of the state and to revitalise the economy. The two topics are too much to cover in one note, so I will discuss ethical renewal in this note (Act 1) and assess economic renewal in the next one (Act 2).
Cleaning up and rebuilding ethics
The country first and foremost had to be reclaimed from the forces of state capture. Ramaphosa appointed four commissions of enquiry to help with the clean-up offensive. Two are still in session (the ubiquitous Zondo Commission and the Mpati Commission into the Public Investment Corporation or PIC) and two have finished their work. Between these commissions, the four have sparked considerable action – a lot of which we have already forgotten.
Freeing critical institutions
It is useful to remember that both the erstwhile number one and number two in SARS, Tom Moyane and Jonas Makwakwa, are gone. So is the embarrassing former head of IT at SARS, Mmamathe Makhekhe-Mokhuane, who made such a spectacle of herself on national television that she publicly apologised for it. That is not all. In the last week of July three SARS executives were suspended. The clean-up continues. The EFF and the Public Protector are fighting a rear-guard action against SARS renewal with old allegations of rogue units and attacks on new SARS Commissioner Edward Kieswetter. He is forging ahead unperturbed and can leave the Public Protector to the courts.
At the National Prosecuting Authority (NPA), the erstwhile top three have also departed. One is fighting her dismissal in court and two have appealed to Parliament not to be fired, which will be an interesting test case for who is in charge in Parliament. The departure of the three has freed the NPA from its era of Zuma capture and it is being rebuilt. The new director, Shamila Batohi, who has experience at the International Criminal Court in The Hague, has returned to South Africa to take up the baton.
Batohi took office in February. In March, a special investigative unit focusing on cases arising from state capture revelations was formed. In May, Batohi brought in well-known corruption buster Hermione Cronjé, who returned to South Africa with valuable international experience to lead the new unit. A senior advocate from the Cape Town Bar, Geoff Budlender, has been appointed as strategic advisor to this unit. Batohi also reappointed Willie Hofmeyr as head of the asset forfeiture unit after he was side-lined three years ago by the Zuma squad. I wrote in this newsletter in April that 2020 will be the year of prosecutions and I explained why at the time. I maintain this view.
Over at the Hawks both the former head and acting head have been fired and replaced by the soft-spoken and highly regarded general Godfrey Lebeya. His influence is showing: two captains and a warrant officer from the Hawks were arrested for bribes. In Durban both the mayor and a councillor have been arrested by the Hawks and have appeared in court (with the usual tweet from Zuma supporting the mayor and her supporters protesting outside the courthouse). Two senior officials from the Durban Metro were also arrested. A mayor of Newcastle was arrested for an alleged political murder; as was a former mayor of Endumeni for alleged conspiracy to murder. Not bad for an erstwhile Zuma (and current ANC) stronghold. In the Free State nine civil servants and a director of a company were arrested and charged – one for interfering with the work of the Hawks. In Mpumalanga a former local ANC chief whip was arrested for corruption and fraud. The Hawks are clearly at work.
In Limpopo the VBS report claimed the scalps of five mayors who resigned; a further four were fired and another three were suspended. In the North West three mayors resigned, one was suspended, and three have taken legal advice to try and avoid dismissal. Public opinion counts – especially in the run-up to an election.
NEDBANK PRIVATE WEALTH INVESTMENT RESEARCH AND FUND MANAGEMENT PAGE 2 OF 3
At the SAPS a deputy-commissioner has been fired and six officers of general or brigadier rank have been charged.
As recently as last week seven junior officers were arrested for selling confiscated goods back to hawkers. In a
significant ruling in July, one of the ‘untouchables’, former Head of Crime Intelligence Richard Mdluli, was convicted of
several charges for offences committed 20 years ago in 1999. The wheels of justice turn slowly, but they turn. (This is
what John Block, the former ANC strongman in the Northern Cape and a Zuma acolyte, also discovered – after many
legal manoeuvres he is now serving a 15-year jail sentence.)
The ubiquitous SOEs
The SOEs are still burning cash and their balance sheets are shocking, but on the ethical front a lot has happened.
At Eskom, former big bosses Brian Molefe, Anoj Singh and Matshela Koko are gone. Molefe has also been pursued
by Solidarity and must now repay R10 million to the Eskom Pension Fund. Lifestyle audits were conducted on 365
Eskom managers, resulting in 44 cases being referred to the Special Investigating Unit. More than 1 000 disciplinary
cases were instituted, and 116 employees decided to resign, including 14 senior executives. Of 25 employees who
had ‘business interest in suppliers dealing with Eskom’, seven resigned and the rest terminated their interests. Eskom
has experienced a serious clean-up.
A year after the notorious Hlaudi Motsoeneng was dismissed from the SABC, three of his erstwhile henchmen are
gone too. (The verbose Hlaudi failed with court challenges to regain his job and then went on to fail again in his
election efforts to get into Parliament.) In an important self-initiated report published last week, compiled by veteran
journalist Joe Thloloe, the broadcaster laid bare political interference in its editorial policy. Former minister Faith
Muthambi complained she was ‘rubbished’ in the report – this could not have happened to a nicer person. Expect
further fallout from the Thloloe report. A Zuma-appointed chairman is still in place at the SABC and the corporation
wants a mere R3 billion to stay afloat, but a clean-up has certainly taken place.
The PIC saga is still ongoing before the Mpati Commission, but a new board is already in place, the CEO and two
senior executives are gone, and several have been suspended. In an important break with the past, cabinet reversed
the practice of a politician chairing the board. Under new chair Reuel Khoza’s experienced leadership and rock-solid
integrity, the PIC will, with a little help from the Mpati Commission, be cleaned up properly and will head in a new
direction.
In his second stint as Minister of Finance, Pravin Gordhan, desperately tried to get rid of the former Zuma acolyte,
Dudu Myeni from SAA. She is now gone, as are several former senior executives. Everybody can see how the oncemighty
have fallen. For SAA, there is only the small matter of staying afloat.
At Transnet, five executives departed, including the CEO, and eight more have been suspended.
At Denel, the CEO, finance chief and chair are all gone. Both Denel and SAA have new boards. It may not be enough
to save them financially, especially Denel, but action has been taken against weak ethics.
Cabinet
Perhaps the biggest clean-up took place in cabinet.
Ramaphosa inherited a cabinet of 36 ministers. There are now 28. At most, five of these can be described as Zumaor
Magashule-supporting and some of them will even deny this. The number of government departments has been
reduced from 40 to 35.
For all the publicity that was given to erstwhile Zuma ministers who were appointed chairs of parliamentary
committees, the numbers speak for themselves. There are 36 committees in Parliament. Traditionally the Select
Committee on Public Finance (Scopa) has an opposition party member as chair. That is the case again in this
Parliament. Of the remaining 35 committee chairs, 11 may be regarded as Zuma or Magashule supporters. Most of
these are ministers who were kicked out of cabinet. From a minister to a chair of a parliamentary committee where
every move is watched by opposition parties… and now we are asked to believe that they are paralysing
government?
So what?
• Part of Ramaphoria was the belief that the bad guys would lose. That is certainly happening.
• People who were once untouchable have fallen from grace for all to see. Some have even been convicted
already. The impunity of the Zuma years is slowly being reversed.
• The process is not over, with the Zondo Commission still in session and almost weekly revelations of appalling
behaviour.
NEDBANK PRIVATE WEALTH INVESTMENT RESEARCH AND FUND MANAGEMENT PAGE 3 OF 3
• Getting convictions in court is very different from revealing things at a commission. Despite this, many people
have already fallen on their swords.
• Civil society organisations have helped in this clean-up and this speaks volumes for South Africa’s democratic
activism.
• In the next edition we will focus on the second priority of the Ramaphosa government – economic renewal (Act 2).
JP Landman
Political Analyst

@Charles, the summary by JP Landman is impressive. Quite an achievement for the new administration.

“Getting convictions in court is very different from revealing things at a commission. Despite this, many people have already fallen on their swords.”

Lets watch closely if 2020 is the year that some big names enter the prison system.

Landman is good at puffery. I went off him as he cost me a great deal in 2007 odd, punting the brilliance of Mbeki and Manuel; singing for his spot on the advisory council.

But what Patrick and Landman seem to gloss over is how the Eskom R450bn odd debt (and growing all the time) is going to be dealt with. Are there any signs of the growing debt being reined in? Nope. Any signs of costs being curtailed? Nope. Any signs that Eskom can actually service this debt? Nope. Can SA service the Eskom debt and its sovereign debt (noting this will be well over 60% of GDP)? Hmmmm; no answer.

That is just one issue. Now add NHI, EWC, unemployment, other SOE’s still running up debt then poor policing, education and healthcare plus an uncontrolled influx of migrants and; Houston, we have a problem, methinks.

Try look at the whole set of accounts, not just the part written by Markus Jooste.

Thanks for that breath of fresh air, Patrick. Let’s all pull together and deal with the problems. Every cloud has a silver lining.

Haha-apparently, and according to the news, our cheeky architect of the doom, Zuma, has also now become a prophet of doom!! The gall of the man(way too much credit given I know)!!??

But therein lies the problem, the vast majority of the population are on the same level as him in so many ways that it’s too inhibiting to SA’s progress!

Who cares about GDP when we have 45-50 murders a WEEKEND in Cape Town. That’s not crime, that’s civil war!

When there are many comments I, and presumably many others, find it difficult to see who a specific commentator is responding to.

To solve this problem (challenge?) I recommend that a responding commentator starts his comment with the name of the commentator being responded to in capitals followed by a colon. For instance SENSEI: NAVIGATOR: or PATRICK:

Many thanks.

I do not even know where to begin. I really think Cairns needs a basic economy course and also maybe a philosphy course in how to structure an argument.

Using Venuzuala as a straw man to distract everybody from the real argument is the sort of rhetorical technique my 8 year old nephew uses when his mother scolds him for not tidying his room by pointing out that his friend from down the road room is even more untidy than his. That my well be the case, but it does not change one iota of the fact that his room his untidy. Our economy is in dire straits, while I do feel for the plight of the poor people of Venuzuela I really could not give two hoots for the fact that our economy is outperforming that of Venuzuela.

To add insult to injury Cairn then stoops to the very disingenous use of statistics by providing a chart contrasting the ABSOLUTE ZAR value of SA’s GDP over a 50+ year period to the year-on-year % change in the Venuzuelan economy. He did not even need to do this – we all agree SA is better than than Venuzuela – whoopdee!

For future reference Patrick if you want to be taken seriously and want to contrast the economic performance of two countries, firstly you need to do it in a common currency – comparing rand GDP with Peso GDP makes no sense, think even my 8 year old nephew grasps the concept that 1 kg of gold does not have the same value as 1kg of sugar, that is essentially what you are doing. Also use a similar time frame and lastly compare percentages with percentages and absolute values with absolute values.

The rather naive view that if we pull together we can somehow make it all work probaly stems from the 1994 “miracle” – where we all somehow made it work. Rubbish. Post PW’s 1985 Rubicon speech the country was rapidly heading for bankruptcy. Having waited far too long to start negotiating the National Party hads virtually no cards left to play and the ANC pretty much got what it wanted, with big business forcing it to adopt some market friendly policies: homouring SA debt, prudent fiscal and monetary policy, property rights etc.

In case you did not notice Patrick, nearly all of these prudent policies is now under attack.

With regards to the economist forecast of 3.4% growth. This is an extract of its reasoning: “Technological advances, such as cloud computing and 3D printing will also drive growth and boost productivity. Growth will quicken to 4.1% a year in 2031‑50, as the ICT revolution gathers momentum, and African integration deepens. ” Come on Patrick give me a break. I normally have a lot of respect for the Economist but this is hogwash. We have the worst STEM education in the world, most of our pupils do not even have basic numerical skills and you pin your hat to a forecast driven by technological wonders like 3D printing? Our own treasury projects sub 1.5% growth over the next 3 years and the IMF does not believce we will exceed 1.8% over the next 6 years, with an average growth rate of 1.5%.

You accuse people of a recency bias, well lets look back since 1991 the SA economy has registered 2.3% growth, now please explain to me what has changed between the and now that will see us magically add another 1% to our growth rate? We are in a worse position now with mining that used to drive our economy a shadow of what it used to be.

The mind honestly boggles how somebody that gives themselves out to be a financial journalist can publish such pollyannish hogwash. We all love our country and only want the best for it, but there is a vast chasm between hope and reality…

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