Maybe foreign business curb is ANC’s sacrificial lamb

On any given day you would have to give it to the ANC. You can almost bet that whenever it has to make a decision about the economy, about the greater prosperity or otherwise of its people, the wealth of the nation it rules, it’ll stuff it up. Next month there are going to be three opportunities to prove me wrong. First, next week, public enterprises minister Pravin Gordhan has to give President Cyril Ramaphosa a shortlist of three names from which to choose a new chief executive for Eskom. The smart money will be on the name they can most easily push around.

Next, they have to agree on how to refinance Eskom before the end of October when finance minister Tito Mboweni delivers his mini-budget. There’s an easy way to do this — Eskom offers its 30 biggest customers a 50% discount on the price of all electricity they consume for the next 15 years if they pay it all upfront immediately. And there’s the ANC way — they shift Eskom debt into special purpose vehicles run by banks and “development finance” institutions. Investment bankers are paid huge fees, lawyers draw up hideously expensive agreements.

And then Mboweni has to deliver a medium-term budget policy statement (already shifted out to the last day in October to allow the first two things to happen) that begins to promise at least some of the pretty obvious reforms in the Treasury’s policy paper released recently.

The more of that paper Mboweni can pack into his budget the better because the very next day, on Friday November 1, the last ratings agency to have our sovereign debt at investment grade, Moody’s, will announce its latest rating or, more likely revise its outlook on South African debt from “stable” to “negative”.

But wait, there may be something in the air. It is possible that Ramaphosa and

Gordhan choose a tough Eskom CEO who won’t take orders from them. It is possible that the refinancing of Eskom is straightforward and does not enrich rent-seeking bankers. And it is possible that Mboweni delivers a budget with actual reforms in it. Moody’s keeps its outlook “stable”. Cue dancing in the streets.

It’s possible something is actually going on, largely because of the clues in one routine event and one really stupid one. First Ramaphosa appointed a team of economic advisers. For Gordhan, one of them is Mariana Mazzucato, a British academic who believes state-owned companies have a future. For Mboweni, who doesn’t, Harvard economist Dani Rodrick is a presidential gift on the panel.

The dumb thing? Well, try to imagine the cabinet conversation that would precede what I’m about to tell you. There are the reformers, pushing for movement, action and, well, reform. The markets this and the markets that. Mboweni, with no photographers around, pats his brow constantly with his kerchief.

The radical transformers are worried. They tell Ramaphosa this thing with foreigners taking our jobs is urgent. Something must be done. We need to protect certain sectors from them. Ramaphosa spots a gap, and in a flash it’s trade-off time.

“If you look at the retail sector,” small business minister Khumbudzo Ntshavheni is soon telling a radio station, “when we all grew up our spaza shops were run by ourselves, by our neighbours. We took over shops from our mothers. If you look now that is not the demographic of who is running our spaza shops.” Hell, Ghana does it. So does Zimbabwe!

I’ve seldom heard anything so stupid. The businesses trashed in riots a few weeks ago were substantial if unsophisticated operations at the ends of long and intricate supply chains. They can’t be simply replicated no matter how much support the government might give the local versions that replace them. And state support is almost always useless anyway. It doesn’t deliver and whatever regulations the minister comes up with, they’ll change nothing other than harden the perception that we are insular, unable to think and fundamentally xenophobic.

But hell, I don’t use spaza shops and if the people who do don’t mind kicking out the Bangladeshis and Pakistanis and Somalis and paying higher prices to buy inferior goods from the small business minister’s new spaza shop owner demographic, then that’s just fine. In return, the formal economy gets a bit of political space, perhaps, to breathe.

So will Ramaphosa, having given everybody a little something, finally pour some petrol on our economic embers?

October is going to be a blast.