Get set to steel ourselves for more pain
The boss of the investigations directorate at the National Prosecuting Authority, Hermione Cronje, has squeaked home by a whisker, meeting a public promise to make a major state capture arrest by the end of September. You have to appreciate her style. All the best deadlines are pushed to the limit.
She set the Hawks loose on the last day of the month to arrest people implicated in a huge fraud committed in a R255m tender to audit and assess asbestos in housing in the Free State in 2014. By midafternoon the Sunday Times Daily was also reporting the imminent arrest of a senior ANC politician.
If President Cyril Ramaphosa ever needed a break, now is the time. Barring tax cuts, nothing is better guaranteed to lift the SA mood than the arrests of corrupt officials, “businessmen ” and politicians. Wednesday saw about eight arrests. Another 100 or so still to go, and the sooner we can formulate charges against the Gupta brothers the sooner we can ask Interpol to arrest them too.
But for Ramaphosa, the break will be short. He is under ferocious pressure now as he tries to kick-start an economy he may have shut down way too hard in the face of the coronavirus. Borders will start opening today, but the damage done by the lockdown is fierce, and often hidden from view.
In the face of the pandemic, the IMF estimates that governments around the world have pumped about $12-trillion into the world economy, way more than they did after the 2008 financial crisis.
The countries spending that sort of money can, for the most part, afford it.
In SA, poor ANC policy and corruption have bled the fiscus to near death. A R500bn package Ramaphosa managed to scramble together to ease the economic and social pain of the lockdowns has only been partially spent and the state continues to collapse.
The Post Office is back in an existential crisis, along with a growing list of state-owned companies.
An inexcusable R10.5bn is to be cut from current state programmes to revive rescue of the national airline. Fortunately, that process has stalled as commercial banks finally find some spine and decline to lend it bridging finance.
Around the country, it has become clear that the dismantling — theft — of rail transport infrastructure under the cover of lockdown has been severe. One in five citizens goes to bed hungry. The state can’t cope with even the most basic challenges.
The trouble is the state doesn ’ t know that, and while the rest of the industrialised world is spending money to restore their economies, we are about to veer off at a tangent into the (relatively) unknown as part of a grand “re-imagination ” of our economy being championed by the president.
This may be something of an ideological stretch for an already bankrupt country. Common sense suggests that after what we have been through, the first thing you do is work with what you have, the bits that have survived, and do your utmost to ensure those businesses start to grow again.
Instead, an economic recovery plan hammered out among the state, business, labour and civil society proposes a dramatic shift to localisation of manufacturing (import substitution). As a way of ensuring this happens fast, the department of trade, industry & competition is taking heavy-handed action to stop the export of scrap metal and to impose stiff duties on the import of steel products.
This is dramatic stuff — SA is at its most competitive exporting raw materials — and the relevant minister, Ebrahim Patel, has managed to insert into the plan an “agreement ” to establish targets for localisation by the end of November, long before business gets to see any of its negotiated measures put in place.
They include reducing red tape, releasing digital spectrum (even then, the state has committed to deadlines it will struggle to meet) and simplifying mining regulation.
It ’ s hard to believe the business negotiators would have sold struggling smaller entrepreneurs down the river they way they have. Stiff duties will apply to almost anything the department decides can be made at home.
That could be hundreds of products — from burglar bars to silk sheets not many of which could be profitably made in a small economy such as ours. And the chosen future export market of this so-called industrialisation is Africa, already flooded with cheap imports that SA labour will not compete with for decades.
It doesn’t often make the news, but there is a real war going on out there as Patel takes on the established structures of our economy. He is in a hurry, and Ramaphosa, until it begins to cost him, has his back. The Treasury is being dragged into it as it tries to soften the ban on the export of scrap metal that has in effect been in place most of this year. It is trying to negotiate an export tax to, at least, get product moving again.
“The pandemic requires an economic response that is equal to the scale of the disruption it is causing,” Ramaphosa said back in April.
Good luck with that. As it gets going, the “new ” economy is causing a lot of new pain.
THERE IS A REAL WAR GOING ON OUT THERE AS PATEL TAKES ON THE ESTABLISHED STRUCTURES OF OUR ECONOMY