A worse life for all -- that’s the Jacob Zuma promise
Business group’s deputy head says president has betrayed his oath of office -- and South Africa will pay
PRESIDENT Jacob Zuma has sabotaged the economy and broken his oath of office to act in the best interests of the country, says Bonang Mohale, deputy chairman of Business Leadership South Africa (BLSA).
“It may be the president’s prerogative to change his cabinet, but the first duty of any president is to always act in the best interests of the country,” says Mohale. His oath of office prescribes this. “How can what we’ve seen be remotely related to acting in the best interests of the country?”
He believes Zuma knew exactly how important the London meetings of Pravin Gordhan and business leaders with ratings agencies and investors were to stave off a downgrade.
They were part of a 16-month campaign that had begun to bear fruit, says Mohale.
“South Africans working together had made sufficient progress on economic growth, structural reforms and fiscal consolidation to maintain our investment-grade rating and engender confidence, as reflected in the gradual strengthening of the rand.”
Zuma undermined all of this when he ordered the finance minister to cancel the meetings and come home, says Mohale.
He says Zuma must have known that his subsequent firing of Gordhan and his deputy, Mcebisi Jonas, would precipitate a downgrade to junk.
“The really painful thing is that it’s not like this came out of left field. It was highly expected. The likely consequences were clearly articulated by us and, we thought, well understood.
“To then still go and do the very thing that will bring maximum hardship to South Africans is inconceivable.”
He says it raises questions about state capture.
His organisation has requested an urgent meeting with the executive of the ANC about this.
“Our job is to implore the ANC to take appropriate steps to ensure that they save South Africa, protect its sovereignty and ensure that we are not a captured state.”
Mohale says he can’t think of any reason for Zuma’s behaviour other than to facilitate the capture of the National Treasury.
“There is no other reason whatsoever which would have made the president act in such an irrational manner.
“Why else would he remove the one minster working so hard to ensure that we protect our sovereignty? And retain ministers the courts themselves have said the president needs to look at?
“What else can you conclude than that there is another agenda here?”
He says that until the public protector’s State of Capture report has been challenged in court and disproved, “we need to be circumspect and cautious about the intent of people who do not have the best interests of the country at heart”.
He finds Zuma’s lack of consultation before announcing his cabinet changes both suspicious and unconstitutional.
“We have chosen to be a constitutional democracy premised on the notion of consultation. It is codified in law. And yet one of the most important, far-reaching cabinet reshuffles ever happens with no consultation.
“No consultation with the top six of the ANC, no consultation with the tripartite alliance. This confirms that the ANC is no longer the centre of power, and that the cabinet list was pre-prepared somewhere else. That is most concerning.”
Mohale says BLSA, which represents 185 of the largest, most powerful listed companies in the country, holds Zuma “directly responsible” for South Africa’s junk rating and believes “he should be held to account by all South Africans”.
Mohale, a former president of the Black Management Forum, has consistently championed the need for more and quicker economic transformation. He says Zuma’s actions have made a mockery of his call for radical economic transformation.
“This is nothing short of radical economic transformation sabotage.”
He says S&P Global Ratings’ downgrade of South Africa to junk and a likely further downgrade later this year signalled by its retention of the negative ratings outlook will be “catastrophic and will probably lead to recession. We now join a club of countries where we did not want to be, like Russia, Brazil, Venezuela and Colombia.
“Who, willingly and with his eyes wide open, takes his country into a recession, knowing the rand will deteriorate, inflation will increase, your cost of doing business will be higher, including government’s own debt refinancing?
“He has put us on a slippery slope towards a self-perpetuating, vicious cycle of abject poverty.”
Government employees’ pension funds will take a hammering as well, says Mohale.
“They won’t realise their anticipated, forecasted returns. The price of bread, milk and mealie meal will go up, bond repayments will go up. Ordinary people are going to be paying more for everything. Social grant recipients will find the value of their grants is going to be much less than it was. That’s the real tragedy.”
He says new Finance Minister Malusi Gigaba needs to demonstrate that he has learnt from his disastrous spell as minister of public enterprises.
“On his watch some of the most dramatic corporate failures happened at SAA and Eskom. If he has learnt anything, we hope he is going to demonstrate it by how he maintains the line at National Treasury, which will require cost containment, prudence and good fiscal discipline.
“Under him there was no accountability. State-owned enterprises did exactly the opposite of what the ratings agencies wanted.”
He says Gigaba’s statements since becoming minister have not inspired much confidence either.
He is particularly scathing about Gigaba’s statement that the Treasury can no longer belong to orthodox economists, big business and international investors.
“No government anywhere in the world has chosen to be pro-growth but anti-international investment. Without growth and investment there is no way we will address the things that keep us awake at night.”
Ratings agencies will be looking for credible proof that South Africa is creating an investment-friendly climate, he says. Gigaba’s remarks send precisely the opposite message.
Another Gigaba statement that disturbs Mohale is his assertion that scrutiny by the ratings agencies will not stop the government from pursuing “progressive policies”.
If he doesn’t want scrutiny by ratings agencies then he must never put himself in a position where he wants money from the banks or foreign investment, says Mohale.
“Banks and ratings agencies have rules. If you don’t like their rules then don’t borrow their money.
“Under this administration we are at our most borrowed in the history of our 23-year democracy. We’ve moved from borrowing 20% of GDP to 50% of GDP.
“So the reality on the ground is that we are borrowing more and more, and Gigaba says we want to be monitored and policed less and less. The world does not work that way.”
Mohale, 55, who is also chairman of Shell South Africa, has been closely involved in the CEO Initiative to save the country from junk. He says the trust built up so painstakingly over 16 months (since Zuma’s firing of Nhlanhla Nene as finance minister) between business, labour and the
He has put us on a slippery slope towards a self-perpetuating, vicious cycle of abject poverty This is nothing short of radical economic transformation sabotage
government has been “broken” in a week. How can it be rebuilt? “With great difficulty,” he says. Gigaba said last week that he intended inviting business leaders to join him on a visit to ratings agencies and investors.
Says Mohale: “Any conversation with rating agencies and investors will be much, much more difficult after what has happened.”
He says that before agreeing to join Gigaba, business will want assurances from him about the concerns raised by the ratings agencies around growth, political stability, policy continuity, fiscal consolidation, regulatory reforms and state-owned enterprises.
“Without such assurances a visit to the ratings agencies and investors would just be a jolly ride. They’ll judge us by our actions, not by what we say.”
Another issue flagged by the ratings agencies has been South Africa’s ballooning public service wage bill.
Mohale says he has no confidence that new Minister of Public Service and Administration Faith Muthambi will do anything to contain it — and finds the prospect of her having anything to do with the public sector wage bill “extremely frightening”.