In South Africa, enter stage left: Jacob Zuma’s ‘Radical Economic Transformation’ alternative factoids
• an inherited 1993 Normative Economic Model and International Monetary Fund deal (which former Intelligence Minister Ronnie Kasrils termed Nelson Mandela’s ‘Faustian Pact’ though there were many others);
- • Thabo Mbeki’s continental (sub-imperial, neoliberal) New Partnership for Africa’s Development (NEPAD) in 2001, and five years later Asgisa (Accelerated and Shared Growth Initiative of South Africa);
- • followed by
Zuma’s 2010 NGP (New Growth Path) culminating in ‘his‘ 2012 National Development Plan (NDP).
• export 18 billion tonnes of coal from the Waterberg region of Limpopo Province through KwaZulu-Natal’s Richards Bay (damn the climate and the affected local ecologies – with Zuma not even mentioned these matters in passing in the speech) in a set of mega-projects estimated in 2012 to cost $60 billion; and
- • escalate annual container traffic in Durban (mostly carried on dangerous trucks) from 2.5 to 20 million by 2040 through port-petrochemical-pipeline expansion costing $19 billion, as reaffirmed last November by provincial Premier Willies Mchunu even though the world shipping industry had just collapsed and Transnet had requested a 16-year delay on the main component (a dig-out port where Durban’s old airport stands empty).
JZ: “Government runs effective poverty alleviation programmes such as the Expanded Public Works Programme [which] has since 2014 created more than two million work opportunities.”Even if there were actually 2.5 million such ‘opportunities’ from 2014-16, they last at most three months (thus an annual average of 208 000). The work pays just $6.30/day, about half what has just been agreed as the minimum wage of $1.50/hour (which is still below the poverty line to support a family of four). Even the NDP argued that such public works jobs should “reach 1 million by 2015 and 2 million people by 2030,” so current levels are 20% of the target rate. Moreover, there appears no prospect in coming years – what with the Fourth Industrial Revolution on the horizon – to get business to hire more workers. The capital-labour harmony model JZ: “The interaction that we started last year between government, business and labour, known as the CEO Initiative, has been most helpful.” In October, when Zuma’s chief prosecutor harassed Gordhan, the CEO Initiative politely declared war: “We stand as one for the rule of law and against the decision to prosecute the Minister of Finance on charges that are, according to the preponderance of expert legal opinion, without factual or legal foundation and not in the public interest.” JZ: “Our labour market environment is also showing signs of stability, due to cooperation by social partners.” In the World Economic Forum’s 2016-17 Global Competitiveness Survey, South Africa was ranked worst in the world in “cooperation in labor-employee relations,” for the fourth straight year. And the current 2.5 rating is way below even the 2.9 achieved in 2012-13 (the year of the Marikana massacre), with steady deterioration in between. State cooperation with big business, meanwhile, is characterized by blatant corruption. The Treasury’s procurement officer, Kenneth Brown, revealed last November that $17.5 billion per year (out of $45 billion in annual procurement) was lost to supplier overcharging, especially construction companies. What with PricewaterhouseCooper’s ranking of South African corporations as the world’s most prone to engage in ‘economic crime’ last year (at 69%, well ahead of the French and Kenyan bourgeoisies), some of Zuma’s ‘social partners’ are not playing fair. JZ: “The fight against crime is an apex priority.” Zuma’s only specific mention of crime in SONA – aside from noting that a May 2016 law “criminalizes the cartels and collusion” yet is thus far untried and untested – concerned Soshanguve Block L’s hijackings and robberies. JZ: “Unity in action was also demonstrated again this week with the conclusion of the agreement on the National Minimum Wage and on measures to stabilize labour relations.” Cosatu refused to offer its support until minimum working hours and inflation adjustments are agreed upon, and the state’s attempt to impose a strike ballot will be opposed intensely. Housing, electricity and water JZ: “Government is actively involved in the property sector, having provided more than 4 million houses since 1994… To date nearly 7 million households have been connected to the grid and now have electricity.” The watchdog group Africa Check found three (not four) million houses produced in this period. And while there were many households connected to electricity since the early 1990s, there have been a great many disconnected due to inability to pay, with no further access until they either repay huge arrears with interest or simply resort to stealing. The number of such households is not known but 34 municipalities faced total disconnection by parastatal electricity supplier Eskom last month due to $750 million of arrears. This is all too reminiscent of the 2014 SONA when Zuma declared that “95 percent of households have access to water.” The next day, the Water Department spokesperson admitted that “only 65 percent of households have reliable services.” JZ: “The successful execution of the Eskom’s build and maintenance programmes helped ensure stability and an end to load-shedding.” The primary factor was the 14% decline in electricity demand led by mining and smelting firms after the 2007-11 commodity super-cycle peak (at 23800 gigaWatt hours/month, falling to 20 400 in December 2016). The end of the load-shedding (blackout) interruptions occurred after the 2015 crash of commodity prices and the massive dumping of Chinese steel in South Africa at the same time, which last year bankrupted the second largest steel producer (Russian-owned Evraz Highveld) and now threatens the largest (Indian-owned Arcelor Mittal), in a spectacular show of BRICS’ corporates’ self-destructive competition.
JZ: “Renewable energy forms an important part of our energy mix… Government is committed to the overall Independent Power Producers Programme.” Leaders in this sector are worried that in reality, Eskom’s chief executive Matshela Koko parrots his predecessor Brian Molefe’s 2016 sabotage of further renewable energy, on the grounds that “all energy sources should be pursued at a pace and scale the country can afford.” (The same reasoning does not apply nuclear energy.) JZ: “Government is working hard to ensure reliable bulk water supply in the various areas of the country to support economic growth whilst increasing access to vulnerable and rural municipalities.” For more than a year the national Department of Water and Sanitation has been working hard – but towards bankruptcy. Treasury is considering a formal administrative takeover and Public Protector Busisiwe Mkhwebane and the police Special Investigating Unit are conducting enquiries into corruption involving the $2 billion Lesotho Highlands Water Project and $380 million Giyani Emergency Project, both years behind schedule. South Africa in the world economy JZ: “Mining has always been the backbone of our economy and an important foreign exchange earner. We welcome the recovery in commodity prices which has resulted in an upswing in mining output.” Over the past year, mining again contracted with only August 2016 witnessing a tiny 5% upturn year-on-year but the rest of 2016 recording negative output. Resource rents as a share of GDP in South Africa had peaked at 13% in 2008 but are below 4% today.
JZ: “From issuing licences to visas, we should make it easy to do business in South Africa.”Because Home Affairs backed down from its minister Malusi Gigaba’s tyrannical, irrational 2015 barriers to children’s travel, Zuma could claim “a 13% growth in tourist arrivals” to nine million, the only significant success story of 2016. However, not only did the currency crash in late 2015 help enormously in attracting bookings from wealthier countries, so did the earlier Gigaba-induced crash of tourists, to just 8 million in 2015. According to Africa Check, “arrivals in 2015 were much lower than the corresponding periods in 2014 and 2013, when more than 8.5 million tourists arrived.”
JZ: “We will continue to partner with the United States and work together on issues of mutual interest such as the full renewal of the African Growth and Opportunity Act.”The two-word corrective to this fantasy is Donald Trump. JZ: “During 2016, South Africa also signed a co-operation agreement with the People’s Republic of China to build the Moloto Rail Development Corridor.” The Moloto line would, experts say, need 100 000 commuters a day yet only 40 000 have been identified on this route to Pretoria. (Even the up-market Gautrain also loses $110 million per annum because it runs at only half its 100 000 capacity.) These deals with China are proving quite controversial across the region, what with Zimbabwe’s Marange diamonds looted (Robert Mugabe complained the government received less than $2 billion of $15 billion he had anticipated); a failed $1 billion electricity power station in Botswana; and a tragic conflict with Cosatu over immigrant construction workers in a North West plant who cost PPC Cement 25% less to hire than local workers. JZ: “We successfully avoided credit ratings downgrades.” There were indeed several ratings downgrades over the past year, and more generally after Zuma took office in mid-2009, especially coinciding with the end of the commodity super-cycle in 2011. True, last December, Standard & Poor’s did not downgrade the sovereign rating in international markets all the way to ‘junk’ status. But it came very close, “lowering our long-term local currency rating on South Africa to ‘BBB’.” JZ: “We welcome the Goa BRICS Heads of State and Government decision to establish the BRICS Rating Agency.” The BRICS’ October 2016 Goa commitment was to “explore the possibility of setting up an independent BRICS Rating Agency based on market-oriented principles,” and may not occur as it might simply replicate a half-dozen prior such attempts which failed, according to University of Cape Town finance scholars Misheck Mutize and Sean Gossel. Media reports suggest that the Chinese government is not really interested in this initiative. JZ: “We will continue to pursue the reform of the international system because the current configuration undermines the ability of developing countries to contribute and benefit meaningfully.” In late 2015 the only such ‘success’ to date was recorded: the BRICS reform of International Monetary Fund voting, which gave China 37% more power, Brazil 23%, India 11% and Russia 8% – while at the same time South Africa’s voting share fell 21% (and Nigeria’s 41%) as a result of BRIC countries standing on African heads to get their seat at the table. Alternative facts now face fiscal austerity These are just some of Zuma’s alternative interpretations of an economic reality for which he now definitely should seek a genuinely ‘radical’ antidote, not more talk-left SONA babble, in order to walk-right further and faster. A different narrative will enter the public discourse, stage right, on February 22: Gordhan’s 2017 Budget Speech. Given the adverse balance of forces – he is fending off Zuptas on one side, Standard & Poor’s Konrad Reuss on another and diverse leftist pressures (such as #FeesMustFall, unions and service delivery protests) on a third side – Treasury staff are hardly likely to help make South Africa “free from poverty, inequality and unemployment” (but when have they ever?). That means Zuma’s most sobering thought last Thursday should perhaps be the last word, for it is a sentiment that sounds dangerously ultra-leftist – but at least not alternative-facty, unlike so much else of SONA 2017. JZ: “Oliver Tambo said, ‘It is inconceivable for liberation to have meaning without a return of the wealth of the country to the people as a whole. To allow the existing economic forces to retain their interests intact is to feed the roots of racial supremacy and exploitation, and does not represent even the shadow of liberation’.”