THE REWARDS OF REAL ACTION
Money is attracted to concrete reality, not good intentions and promises
From 1990 to 1993 the ANC came under immense pressure from the National Party government and business leaders to renounce its policy that sanctions against SA should be maintained until apartheid was totally dismantled. Wherever Nelson Mandela went on tour, he would be asked when the ANC was going to review its stance on sanctions.
That moment finally came on September 23 1993 when the still whites-only parliament approved the formation of a multiparty transitional executive council that would oversee the final months of governance until elections on April 27 1994. The next day the ANC announced that sanctions should be lifted.
Bill Clinton, the US president, was ecstatic: “I welcome the call today by ANC president Nelson Mandela for the lifting of economic sanctions against SA. This call from this courageous man, who has been one of the principal victims of apartheid, means that the leading groups in SA now oppose the maintenance of economic sanctions on their country.”
It was a great moment, but the general elation in SA showed our poor understanding of how the world really works. Announcements and promises of change are not enough. It is what leaders do that can open the floodgates of investment.
No investment was likely to come into SA in 1993 because the country was racked by political violence. In just over three years to September 1993, the Human Rights Commission said, there were 9,878 incidents of political violence that claimed a total of 9,325 lives — an average of 259 deaths a month or more than eight deaths a day.
There were an astonishing 61 massacres, largely in the economically important Gauteng and KwaZulu-Natal, in that period. As the respected liberal opposition leader and businessman Frederik Van Zyl Slabbert said at the time, “The most dangerous illusion created by the sanctions debate is that when De Klerk and Mandela agree to end the call for sanctions, untold millions of investment capital will pour into SA.”
He was right. This is important, because it is not what we and our political leaders say that matters so much when it comes to investment. It is, crucially, what we do that really counts. The violence did not stop. The millions of dollars did not come.
In August 1994, almost a year after Mandela and Clinton told the world to pour investment into SA, The New York Times reported: “Ten months after Nelson Mandela formally invited foreign business to come back, and three months after the elections that secured this reborn capitalist the presidency, SA has yet to see the surge of investment needed to fuel growth and jobs.”
It was only when the violence stopped, and the Mandela government began reforming the economy, that the investment started flowing in.
It was therefore interesting to hear what ratings agency Moody’s had to say at the weekend when it changed the outlook on SA’s debt from negative to stable. It said the government’s dogged implementation of its debt consolidation plans — and the fillip from higher commodity prices — were the reason for its improved outlook.
“Over the past two fiscal years, the government has shown it was able to reprioritise its spending while staying committed to fiscal consolidation, which Moody’s expects will remain the case,” the ratings agency said.
It is what the government actually did, not what it said it would do, that led to the very welcome decision by Moody’s.
President Cyril Ramaphosa has enunciated his plans on numerous occasions. He said he would clean up institutions of accountability.
It’s good to see many of them — from the SA Revenue Service to the National Prosecuting Authority and the police — receiving the attention they need. It’s good to see changes of leadership at some state-owned enterprises, albeit too little. It’s good to see high-profile politicians appearing in court.
This is what really matters. If potential investors — domestic and international — see actions, then they will offer rewards accordingly, as Moody’s did last weekend.