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What Zuma’s scorched earth policy means for all of us

A cold shoulder or a downgrade or two to boot.

“Would the removal of Zuma improve matters? I don’t think we’ll be seeing the back of Zuma very soon. In fact, we might even be witness to his scorched earth economic and political policies in the near future.”

This is how I ended my article Your future in the charts on Moneyweb on November 7 2016.

According to Wikipedia, a scorched earth policy “is a military strategy that targets anything that might be useful to the enemy while advancing or withdrawing from an area. Specifically, all of the assets that are used or can be used by the enemy are targeted such as food sources, transportation, communication, industrial resources and even the people in the area”. 

Unless President Jacob Zuma and his cabal within the ANC can somehow be stopped in the next few months, my gloomy prognostications about the financial health for the overall economy – and the individuals who participate therein – will regrettably turn out to be prescient (sooner rather than later).

The scorched earth policy of Jacob Zuma and his clique at the inner-core of the ANC has now begun in full force. It’s becoming harder for our establishment-aligned economists and analysts to pretend that this is not happening. 

Unlike the full-page advertisements taken out by large financial institutions in the weekend papers, claiming everything is alright and urging their clients “not to panic”, I disagree. Unless the massive groundswell of popular opposition against Zuma manages to lead to impeachment or his removal from office — which I doubt will succeed — we are about to witness a further collapse of investment and consumer confidence, higher unemployment, an international credit downgrade and further declines in the value of almost every investment held and owned by millions of South Africans.

My column of November 7 2016, drew the almost predictable response from a horde of sunshine economists and commentators with one, Dr Rudolph Botha, adjunct faculty member at GIBS, calling it “cynical, ill-informed and lacking in logic”. 

I would love to see his comments in the wake of last week’s events.

What do I make of them?

Firstly, the timing and manner of Pravin Gordhan’s recall from London, on whatever pretext, couldn’t have been worse. Here was a man and his team on a mission to save SA from an international credit downgrade, while at the same time meeting with 50 or more of the world’s most influential fund managers, managing collectively more than $5 trillion, according to some sources. These people, whatever your view on them might be, move billions of dollars with the click of a mouse.

We need their capital. They don’t need us. We are one of about 150 economies from around the world begging for their capital to balance our books, to invest in our country in order to reduce employment by creating jobs.

Jacob Zuma, by recalling Gordhan, gave the investment community a big fat middle finger. In return, we are likely to get a cold shoulder and a downgrade or two to boot.

Second, the timing and manner of the order for Gordhan to return to SA was meant to be the final insult; an act of humiliation; evil and cruel but petty at the same time.

If it was meant to be a dagger in the back of Gordhan, it also dashed faintly-rising hopes that SA would escape or postpone a downgrade by the international credit ratings agencies.

It is my reading of the unfolding affairs last week that Zuma wanted to fire Gordhan the moment he set foot back on SA soil. It was only the unfortunate passing of ANC stalwart and Rivionia-trialist Ahmed Kathrada on Tuesday last week that interrupted Zuma’s plans by a day or three.

Most economic commentators who are not tied to one of our large financial institutions, including Prof Jannie Rossouw from the economics department at Wits, Mike Schussler and Dr Azar Jammine have over the past number of days predicted international downgrades by two if not three of the Big Three –S&P Global, Moody’s and Fitch within a matter of weeks.

The ANC seems to have accepted that a downgrade is now baked in the pie and has this week, no doubt advised by PR-supremo’s Bell Pottinger, started the public narrative that South Africa doesn’t need an international credit rating and that these agencies, by implication, are part of the internationally-funded conspiracy “white monopoly capital” to effect regime change in South Africa.

In a mostly overlooked article published in the City Press on Wednesday last week, communication minister Faith Muthambi, one of Jacob Zuma’s staunchest allies, had the following things to say:

“One would have thought that President Jacob Zuma has done something wrong in summoning the Minister of Finance Pravin Gordhan. Overlooked in this hysteria (the media headlines about Gordhan’s recall back to SA) is the obvious: all ministers serve at the pleasure and behest of the president. This is a constitutional prerogative. And President Zuma’s action in summoning any minister falls within the realm of his constitutional role and powers.” So, according to Muthambi, there is no story, now please move….

Further on she launches an astonishing attack on (a) the banks for their collusive practices and (b) the credit rating agencies, all being described as part of the plot to bring down the regime.

‘’This is exactly the situation that South Africans find themselves in. Their democracy is held at random (sic) by use of the financial markets. Leaders are then told their freedom only goes as far as satisfying the dictates of those who control the economy.”  

Read the column for yourself and weep, dear reader.

I think this is going to be the line Zuma and his inner circle will take in the weeks and months ahead.  Gordhan and his deputy, Mcebisi Jonas, were part of a global financial conspiracy to overthrow the government, therefore they had to go and be replaced by people who will not stand in the way of radical economic transformation.

First it will be the National Treasury to be overrun and overhauled, then the SA Reserve Bank, only to be followed by the government pension fund and ultimately the country’s retirement funding industry. These all represent pots of gold to be plundered in the name of the radical economic transformation.

Oh, and did I forget to mention the other flank of this attack, the attack on land ownership? The first salvo has already been fired with government wanting to ban foreigners from owning farm land in SA. Once that happens, will SA farmers be told that all farmland belongs to the people, to be leased in perpetuity from the government?

Power of independent thinking

Unlike our mainstream economists and commentators, I am fortunately not linked to any large corporate financial institution, nor do I do business with government. Therefore I cannot be fired or redeployed for a badly constructed tweet, such as what happened to Chris Hart from Standard Bank and possibly to Helen Zille, DA-leader of the Western Cape, for instance.

We live in a country where, increasingly, people are fearful of speaking their mind on certain issues considered to be sensitive. The way the liberal media descended on Helen Zille reminded me of a pack of rabid dogs descending on a little rabbit which accidentally strayed into their path. It was nauseating to read the drivel and white-hate espoused by these so-called commentators.

I too visited Singapore more than a year ago, returning with very similar views than Hellen Zille. Singapore, former British colony, is today one of the most modern and forward-looking city-states in the world. All over the city will you find statues, buildings and street names still linking it to its former British rulers. The Singaporeans seemingly have made peace with what happened to them under British rule and moved on. That doesn’t mean it has forgotten or forgiven, but it does not try to airbrush the positive legacy of colonialism in that part of the world out of the history books.

That’s the nice thing about being independent. I can make up my own mind and convey this to anyone out there. What they do with that information is their business. Even though I get the usual barrage of negative comments on Moneyweb and e-mails directly, I can assure readers of this column that never, not once, has the editor of Moneyweb censored or asked me to tone down my articles, even though there often is disagreement on many issues.

Magnus Heystek is investment strategist at Brenthurst Wealth. He can be reached at



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“First it will be the National Treasury to be overrun and overhauled,…..” Are there some brave senior Treasury officials who will stand their ground I wonder? “Res ad triarios venit” – it comes down to the triarii. Will they fight to the bitter end?

“… all ministers serve at the pleasure and behest of the president. This is a constitutional prerogative …”

This is under the assumption that the president is a sane and rational person with morals.

Not really. You’re assuming reasonableness.

Even if the president is insane and irrational, the constitution allows him to choose who he wants.

In the compilation of the constitution it was not ever envisaged that the president would be anything but sane and rational. But now…

firstly – remember Singapore did not have legal racial discrimination ie apartheid – that’s the difference and why they tolerate colonial statues. I, like MH have had to cop a fair amount of excrement thrown at me over the past 2 years. BUT I have constantly said – like MH – GET YOUR MONEY OUT WHILE YOU CAN. that was the message I was providing. I am expecting strict capital controls to be reinstated very soon, all those off-shore REIT’s to be stopped (about time too), attack on individuals who own multiple properties (I know of a person in cape town who owns 100), expropriation of properties to get going in a big way and then TAXES. yes the last refuge of an evil govt. I take no delight in this. I tried to pass on my concerns – but apart from ONE instance – was totally ignored

It may not have been legislated discrimination but it was still there.

I personally think Helen Zille should be more sensitive to these matters, we are not Singapore and the bulk of ANC tactics still consist of race politics. We have therefore clearly not moved on and trying to shed a positive light on coloniasm seems a bad move from Zille. She has provided the ANC with some ammunition which they can use to deflect from the much bigger crimes the president is committing.

I do find it ridiculous that anyone can compare a tweet on colonialism to what the ANC has been doing over the past 10 years.

Annoying as I had often thought you to be, I listened to you (and others) and made the move. Only, we moved lock, stock and barrel. Life is not easy over here but there is respect for life and property. Some years after the fact I’m still addicted to SA politics etc since the local equivalent is positively dull and lifeless by comparison. I’m afraid it may be too late for others to start discussing a POA…hasn’t that horse bolted by now?

AGREE – – politics in Britain is booooring

Brexit provides some relief, but overall its just so dull.

Things will be ok – you’ll see!!! articles like this just creates more panic and hysteria!!!

south africa is pushing back – HARD!!! that is the difference!!!!

Quite frankly – Corporate SA CAN and SHOULD DO A LOT MORE FOR SA!!! They think that they can hold SA to RANSOM!!!

“alles sal regkom” – how many times have I heard that. all I can say is that this is EXACTLY what the jews in Germany said in the years leading up to ww2. bad comparison – ok, but the bodies of 6 million jews are scattered over Europe who believed that “alles sal regkom”!

Hmmm … has “alles regegekom” in Zimbabwe?

Well tax corportae sa more then and do it yourself.

What is holding cancer up?

Please explain the “ransom” bit.

You’re contradicting yourself.

Reread what you posted.

Ie, in case you cant see:

1. “Everything will be Ok”…
2. “But corporate SA [ ie, the last line between Govt and us, the ppl] are holding SA to ransom”


Which is it ?

Corporate SA will do diddly squat, as usual, lest they be called…Oh the horror, RACIST.
This country has fallen into a Zim/Venezuela socialista dictatorship with Zuma and his ANC inner circle of lunatics doing just as they damned well like. See: Court orders being scorned and ignored at will.
Of course the older generation of us in this country foresaw the consequences of allowing an Afro so-called liberation movement taking power and treating the minority race groups as doormats or worse way back in the 1960’s.
I only wish we were wrong but nope, sadly, it’s all staying the course of the same old predictable ‘Freedom/Transformation’ script.
Oh,just for giggles, how are those Living Annuities looking now? You know, those perpetual motion growth investments that your clever clogs financial planner wrote up for you 5 or 10 years back.
My friend you and those LA’s aint seen nothin’ yet!

Agreed Davebee !!!!

Corporate SA, those spineless fat cats who feed off the same trough as govt:

Us !

Have to agree with Magnus. The dystopian Faith Muthambi article was also published on Daily Maverick, should anybody wish to be awed by her monumental intellect and incisive views.
Do not be surprised if, in due course, a crisis is manufactured and the working of the Constitution “temporarily” suspended.
This wrecking ball is not going to be stopped.


Remember though, the USA has done the same under the guise of ‘anti-terrorism’

Whilst ‘I told you so’ articles such as this together with the usual commentator suspects are pretty much spot on in their analyses, they serve little to offer solutions. Much of it is already known to most people who dont live under rocks. MH you don’t need to scare us – we’re already scared, and angry. What the average Joe wants to know what’s the POA? What can and must be done to arrest the lunacy that surrounds us? Dialogue, marches to the Union Buildings and Treasury waving flags, emigration, shipping funds offshore and writing columns are all toothless dogs. I hear very few commentators offering practical solutions, plans, tactics, strategies that will actually save this country. What can you and I do that will collectively bite the ruling party where it hurts and force a positive change? What’s the POA?

Solution – Short the Horse,Long on the Donkey!!!

Paolo what about the USA which was also a colony.

Don’t like that?

Canada, Australia New Zealand also all colonies in the past.

Spot the difference between these huge successes and the others.

See now?

I agree with “horsetrader” – Mr Heystek brings nothing new to the party – Magnus, why don’t you write an open letter to Mr Zuma? Most people that read moneyweb are financially literate and are already aware of all the issues – These are trying times – We should be uniting and thinking of possible solutions…

Using Singapore as an example is nonsensical – 5,6mill(population), +- 39% of which are permanent residents!!! Go and look at the history of Singapore – is it a Democracy???? Peoples Rights???? etc

What do we see here, what do we learn? We see that Singapore works (I have been there, studied it and seen how well it works. And the Singaporeans love their economy); we also see that although democracy sounds lovely and comforting, it doesn’t work so well, it is corrupted so easily. Examples: Many all over the World (not just in Africa)

Great article. big business should be shouting louder at government instead of worrying too much about falling out of favour.
Afriforum and Solidarity are doing a good job bringing the BBEEE type of discrimination to the attention of the Hague and international financial institutions.
it does not help much telling people in SA because we are the converted.
use the cabal’s tactics as they did to bring down apartheid.
they talk about the struggle ,but most of this violence was directed against their own poor in the townships via Stompie type intimidation.
they never won any military victories on the battlefield as they like to pretend
In Switzerland the annual murder rate is 45 people, in SA it is 50 per day which equates to 18,250 PER ANNUM
How can one call this a civilised state ?

You said it Magnus, just like it is, without the PC mumbo jumbo. But there is something uglier going on here. When you emigrate, you will have a deemed disposal of all your assets (see S 9H). For an individual you will pay 18% capital gains tax and for a trust 36%. Therefore do the calc before you emigrate and see what you can do with your 82% once you have sold your house and everything, especially if the Rand deteriorates. Emigrating may prove to be too expensive, so you may decide to stay here to preserve your wealth in Rands. But then be prepared to be taxed to death at 45% and rising. So damned if you do and damned if you don’t – prisoners in our own country.

I would rather pay taxes than pay with my life.

The inevitable problem with a downgrade and succession that follows it, will be a recession. And if people don’t have jobs, you can be sure of it that crime will increase tenfold.

When industries collapse, savings run out, credit cards maxed and pensions have been looted, I fear that SA will become the wild west; a free-for-all, total state of anarchy.. it’s already happening (have a look at the daily cash in transit heists we’ve seen the past 3 days alone).

We have a group of politicians that are only in power to enrich themselves, lead by looter numero uno, General Jacob Gedleyihlekisa Zuma.

Censorship, state capture, and populist undertones will set the theme for the country to become a tidy Dictatorship, and for South Africa to take it’s true place in Africa; a continent beleaguered by centuries of chaos and destruction (in the most figurative and literal sense possible).

South Africa has run out of options. The people have been defeated. Get out while you still can.

Magnus – you are, of course right about Zuma

Where I stop reading/listening to you is when your “I TOLD YOU SO” attitude comes up. It did not take a genius to predict life under ZUMA and the ANC – so stop taking credit for this.

Strange that with all your (and other) doomsday predictions about downgrading etc – the ZAR was still at its best levels just before last week – explain that if you can.

WHat I would like to know – if you predicted this so long ago, and seeing all your money sits untouched in off shore investments – WHAT ARE YOU STILL DOING IN SA? COuld the answer be that every Zuma move, which you regard as negative, bring good income/fees for you – AND you probably realised that there is no prospect of you making a living abroad even remotely similar to SA.

Own up about your reasons please!

Nicely put Mr Heystek…. from the assaults on the Finance Minister et al and the whining from Guptaville about not having a bank, it looks like this will be the next project which the ingenious President will tackle.

Those darn white capital money dealers like FNB, Standard etc don’t deserve to handle government money!

No! We will have our own ethnic African National Bank and to hell with them!!

Magnus, I think you may be referring to Dr Roelof (not Rudolph) Botha. I wouldn’t worry too much about what he thinks, because he is so wrapped up in academia that he doesn’t really understand how the real world works.

Reminder: he’s been a SANRAL shill for e-tolling since before the rinderpest, and despite him being proved wrong and his detractors being proved right, he clung to his position with a tenacity which would make a limpet envious.

His considered economist’s opinion about the poor is that they should “shut up” about e-tolls. I mean, who cares about scientific enquiry when one can just yell “shut up” from one’s ivory tower…

That is the animal you are dealing with.

If you want to have corporate SA’s perspective on what is happening in SA – do not listen to what corporate SA tells you, look at what corporate SA is doing. When last did any SA company commit to a meaningful investment in SA? How many SA companies have been investing outside of SA?

Oom Christo and others will relentlessly beat the “Proudly SA” drum while scrambling to get as much out of the country before the inevitable clampdown.

We are pretty much back to the 1980’s post-Rubicon speech scenario.

Interesting article, so Zuma’s scorched earth tactic is trying to destabilise the majority who holds the economy in their hands, who owns the most of the JSE. Why would the poorest ppl care if big business takes a hit?

They should worry the most. When big business fail, thousands of low end paying jobs will be lost. Leaving the poor even poorer. As for the receivers of social grants, their grants are financed by tax revenue which will also be destroyed once big business fail, once the government loses access to finance due to downgrades. A very big worry for the poor should be inflation from now on. They spend a larger portion of their income on food, and hence a depreciating rand and uncertain farming sector will leave them without food. When the popo hits the fan the poorest will be the most vulnerable.The very rich will send their funds offshore. The middle class in-between.

uuuhhh because that is who puts money in their pockets and food on the table

Thank you for some honest commentary that can be trusted with financial decisions that might need to be made. Instead of reading some compromised (social pressure and ingested propaganda) clap trap.
I completely agree with Zille that colonialism was not all bad. Would love to have seen the actions of Africans colonizing Europe if they had been the ones with the technology to colonize. The usual dribble will follow comments such as these ….
I love your frank look at what is possibly on the horizon, and instead of people critting you on confirmation bias, I think it is more in conflict with their seeking affirmation it is not a train they are hearing.

I would firstly place the blame for this hole “smash” at the feet of the old NP. The Meyer and kie at Codesa, Vlokie washing the feet, the hand over interim government, trying to speed up the transformation without even thinking of the future of the country and ALL the people sharing this country. All just their for their own personal biographies and branding themselves as saviours.

Lets give a country to jailbirds, revolutionaries, communist, and an uneducated MK intelligence officer, a two year crash course in governance, and whala, a democracy and a rainbow nation, with a one way freedom charter constitution, a one way of freedom of speech, and a one way of economic development.

This is just as the other readers has commit – this is nothing new, instead it has already been predicted in 1967 by the then HV, but the populace were so happy to be playing international rugby, that anything could go, just as long as we can play rugby. How many have sold their souls for rugby?

The problem however is how do we get out from the situation we in SA is currently in. How do we get rid of the ANC administration and get this country back on track, to a where our children can have a safe and sustainable future after we have just been set back another 20 years.

End of comments.



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