CityPress - - Front Page - BY FE­RIAL HAF­FA­JEE

The seis­mic events of De­cem­ber 2015 fol­low­ing Pres­i­dent Ja­cob Zuma’s de­ci­sion to fire his fi­nance min­is­ter, Nh­lanhla Nene, are known to some as “9/12” – the date on which South Africa was pro­pelled into its mid­sum­mer mad­ness. The ap­pel­la­tion is, of course, a play on 9/11, short­hand for the al-Qaeda at­tack on the World Trade Cen­ter in New York.

Our 9/12 has been a bless­ing – a very ex­pen­sive one af­ter a loss of R177 bil­lion to the econ­omy that is still be­ing felt by you and me as, among other things, a loss in the value of our pen­sions and other in­vest­ments. The bless­ing, how­ever, has come in the form of the first clear as­sault on the crony econ­omy we have been de­scend­ing into. A crony state is one that is run for the sake of in­ter­ests other than the na­tion’s. Cronies are pals of pow­er­ful politi­cians who cap­ture state pol­icy and prac­tice.

The fi­nance min­is­ter who briefly re­placed Nene, David “Des” van Rooyen, is widely re­garded in­side govern­ment and the gov­ern­ing party as a place­holder for cronies. He was put into Trea­sury to prise it loose from the civil ser­vice man­darins who keep a tight rein on pub­lic spend­ing. His rapid re­moval and re­place­ment by re­turned in­cum­bent Pravin Gord­han sig­nalled a new era per­haps, which was ev­i­dent in the state of the na­tion ad­dress (Sona) on Thurs­day evening.

Crony states are gen­er­ally prof­li­gate ones, as they func­tion for the sake of the short term – but the lat­est Sona is strong on the idea of cut­ting the gravy. The most res­o­nant mes­sage in it is a plan to cut over­seas travel bud­gets, par­ties and other ex­trav­a­gant state costs. The other big sig­nal is the cau­tion now be­ing ex­pressed on the nu­clear power deal. Af­ter the pres­i­dent was belt­ing down the track to get the 9 600-megawatt atomic power plant deal con­cluded with Rosatom, the Rus­sian nu­clear agency, this no­table sen­tence was in­serted into the na­tional ad­dress: “Let me em­pha­sise that we will only pro­cure nu­clear on a scale and pace that our coun­try can af­ford.”

South Africa, near re­ces­sion and fac­ing an in­vest­ment rat­ings down­grade, can­not af­ford nu­clear. As much as the pres­i­dent wants or needs the deal to hap­pen, I don’t think it will if the bal­ance of forces has tilted in the ways I think 9/12 has di­rected. There are other ex­am­ples of the political shift.

Un­til we were plunged into cri­sis by the fir­ing of Nene, eco­nomic pol­icy power was awk­wardly held in a list­less bal­ance be­tween Trea­sury prag­ma­tists and the com­mu­nist dream­ers, rep­re­sented by Trade and In­dus­try Min­is­ter Rob Davies and his eco­nomic de­vel­op­ment coun­ter­part, Ebrahim Pa­tel. For six years, the com­mu­nists had held the up­per hand, at­tempt­ing state-led growth, which has not re­ally worked, ex­cept episod­i­cally and by pro­ject. This year’s Sona again places eco­nomic growth led by the pri­vate sec­tor at the cen­tre.

You can see this shift in the struc­ture of Pres­i­dent Zuma’s speech: three-quar­ters of it is an ortho­dox paean to mar­ket forces to stave off a feared rat­ings down­grade. The last quar­ter is an ac­count of a largely failed 10-point plan an­nounced in the 2015 ad­dress. So, 9/12 has re­turned us to a state of prag­ma­tism – the left won’t like it and nei­ther is it bril­liant for so­cial jus­tice, but it may be just the sta­bil­i­sa­tion a highly stressed econ­omy needs.

The speech re­veals the kind of year we are likely to have: there is no word in it about education, very lit­tle on in­equal­ity and no sense that the so­cial-grant sys­tem will be main­tained (by in­fla­tion rate in­creases). In other words, we are in sur­vival mode.

Be­yond what it sym­bol­ises, the speech was lack­lus­tre, read list­lessly by a tired and har­ried pres­i­dent un­der enor­mous political pres­sure and writ­ten by a gov­ern­ing party wor­ried about its dim­ming for­tunes and fac­ing a ro­bust young op­po­si­tion in the form of both the Eco­nomic Free­dom Fight­ers (EFF) and the DA.

The EFF has turned its young guns on the crony state as the cen­tral plank of its cam­paign against the gov­ern­ing party in 2016. Its “Zupta” cam­paign is named for the re­la­tion­ship be­tween Pres­i­dent Zuma and the Gupta fam­ily, which has built an awe­some busi­ness em­pire by lever­ag­ing off its ac­cess to high political power.

The suc­cess of Sona re­quires busi­ness’ buy-in, but the sec­tor’s ini­tial re­cep­tion has been as lack­lus­tre as the de­liv­ery of the speech it­self. Eas­ily spooked, busi­ness is sit­ting on a ru­moured R1 tril­lion in cash it might not in­vest. The speech was a brave at­tempt by a tired gov­ern­ing party to push back against the cap­ture of the demo­cratic state, to earn the buy-in of the peo­ple re­spon­si­ble for the largest chunk of our eco­nomic ac­tiv­ity.

Thurs­day night’s Sona will only suc­ceed if the peo­ple who in­sisted that Gord­han re­place Van Rooyen at Trea­sury af­ter the events of 9/12 have the up­per hand. That is no cer­tainty, with the grow­ing pri­macy of the so-called Premier League, the pow­er­ful tri­umvi­rate of the pre­miers of the Free State, Mpumalanga and North West who per­son­ify the crony state, with huge per­sonal busi­ness in­ter­ests and their hands on pow­er­ful fis­cal levers.

Can the gravy train be stopped? Let’s as­sess it in a year.


UN­EASY LIES THE HEAD Pres­i­dent Ja­cob Zuma de­liv­ers the state of the na­tion ad­dress on Thurs­day. The speech was a de­par­ture from those given in pre­vi­ous years, with more of a fo­cus on the econ­omy and the in­tro­duc­tion of greater fis­cal dis­ci­pline

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