ANC faces tough fiscal decisions

It is not exaggerating the current political and economic situation in South Africa to say that the ANC stands at one of the most critical crossroads in its history. An organisation which is steeped in the principles of socialism and workers’ rights must now confront the reality that, financially, this country is in deep trouble … the sort of trouble which requires harsh fiscal medicine of the type the organisation has resisted for most of its existence.

State-owned enterprises (SOEs) are in a mess and sucking up billions of rands a day in their struggle to keep afloat. With declining real tax revenues and no real prospect of any increase on the horizon, the ANC has hard decisions to make.

Those difficult choices have been starkly outlined by Finance Minister Tito Mboweni, who says the only way back from bankruptcy is to run the SOE sector properly. And, clearly, to Mboweni’s mind (and those of his top advisors in the Treasury), that would include either selling off some of these parastatal companies to private buyers, or bringing in the private sector on a partnership basis.

His views make him seem, to the ANC’s leftist allies in the tripartite alliance – the Congress of SA Trade Unions (Cosatu) and the SA Communist Party (SACP) – to be a latter-day black Margaret Thatcher. When British prime minister in the ’80s, she applied similar bitter pills to a country ruled by the trade unions … and, many believe, put it back on the path to prosperity.

South Africa’s unions are, by comparison, more powerful than even their British counterparts were then and the ANC is still beholden to them for bringing in the workers’ vote.

So, expect a battle royal ahead: Cosatu and organised labour will not allow this capitalist cure to be shoved down their throats without an all-out fight.