State capture It will take more than a decade to recover, warns Trevor Manuel
SA’s investment dreams lie with four envoys appointed by President Cyril Ramaphosa. One is former finance minister Trevor Manuel, who tells Ferial Haffajee about the need to develop a common narrative to sell the country’s prospects Since being appointed investment envoy, what have you been doing?
As a group, we’ve had to try to develop a common narrative. It’s interesting because we all have different experiences. [Former deputy finance minister] Mcebisi [Jonas] and I have ANC and government experience. Liberty chairman Jacko [Maree] has banking experience and business networks. Afropulse chair Phumzile [Langeni] has big business experience and while she may say “I don’t have a political background”, she has been an adviser to former deputy president Phumzile Mlambo-Ngcuka. We’ve got to develop a common narrative.
The work is about how we are able to leverage our independent networks. One of the hard things is the unsolicited contacts I’ve had [since being appointed] have tended to be an endeavour to try and secure lobbying. I can’t see myself asking for favours from ministers. It’s not comfortable for any of us.
Frequently issues are ones that must be resolved: if a company wants to establish an African headquarters in South Africa, there will be investment flows from that. But often they say they can’t get work permits or visas for Africans they need to populate the office with. One needs to take that issue up. They present as policy gaps.
And then there are other kinds of requests, for example by companies which get caught out by the Competition Commission.
I have been able to tap into some networks. Soon after our appointment, I went to Zurich to the chairpersons of the World Economic Forum meeting and to Rwanda where [Sudanese billionaire and philanthropist] Mo Ibrahim convened his annual summit. Big investors attend both.
In the next few weeks, I will get out and speak to more investors. I try and attach a day or two to other things I am doing. The issues require repeat contact.
How are investors receiving the message of the New Dawn?
We’ve got a reasonably strong narrative. Investors who are serious or who look after serious money are not going to be put out by short-term issues: exchange rates or the second-quarter growth numbers. They look for something more substantive. One needs to continue talking to people. The president has given us a short timeline. We must talk to people as much as we can. So much will hinge on the election results next year.
The election of President Cyril Ramaphosa is perceived to be the beginning of a new dawn. There was his state of the nation address in February and its commitments which largely re-energised the National Development Plan.
And 10 days later, there was a cabinet reshuffle. Many of the ministers are known. It’s notable that 10 ministers were dropped and 16 moved in the first reshuffle and that is seen to be significant. But people still want to know, can he push it further?
The second thing is the invigoration of the Zondo commission of inquiry into state capture. People want to know that action will be taken against corrupt individuals.
The third thing is the changes to stateowned company boards. And then, the investment conference and jobs summit later this year are seen as important.
There’s also a new sense of collegiality at SADC and the AU, and the presence of the president at G7 [last weekend], which we haven’t attended for a long time, is important.
And there is the hosting of the Brics summit in July and the two state visits of Chinese President Xi Jinping and Russian President Vladimir Putin, which are important. All this says “we are back in business”. All that bodes well for setting the basis going forward.
What do last week’s poor quarterly growth numbers do to the message?
There will be a fair amount of volatility in the numbers for some time. The pickups come through the quarter on quarter when there’s a good agricultural quarter following a bad one.
Even though there is a seasonal adjustment on expenditure, it never quite leaves the system. Some things linger.
Since April there has been a VAT increase, the first of what may be a few fuel price increases and the knock-on effect of that. In big sectors, you are likely to see lower wage settlements — the public sector is one.
When negotiators do settle, it is likely to be in low single digits. That’s important in what it signals. It’s going to be a tough year. You are likely to see expenditure levels drop.
Your co-investment envoy, Jacko Maree, says investors have many questions about land expropriation without compensation. Is this your experience? And what do you tell them?
Questions do come through. My own sense of it is that we need to find a more refined way of dealing with the issue.
Nobody’s ever been deluded about how difficult land issues would be. And the fact that we don’t have and that we haven’t created an instrument for expropriation in law as allowed by section 25 of the constitution means we’ve been somewhat negligent in dealing with the issue.
Whereas in the first decade of democracy, there were a number of instances of restitution and redistribution, a fair amount of it was unsuccessful because we looked at land as separate from agricultural support.
PLAAS [the Institute for Poverty, Land and Agrarian Studies] and [author, advocate and land intellectual] Tembeka Ngcukaitobi are in the same place on these issues. You don’t need a constitutional amendment [to allow land expropriation without compensation], you need a legislative mechanism that section 25 works through.
Expropriation is a right vested in the constitution. You may need an overarching piece of legislation that deals with greater equity in society and provides a reference point. But, we must remember land without improvements does not provide quality of life. [Since 1994] land that was restituted just fell from productive use; the quality of the land deteriorated.
The second aspect is the land reform system didn’t deal very well with growing corruption. Land prices were inflated by the use of evaluators who seemed to be on the take, and the state paid over too much money in that way. The beneficiaries of land reform have been white farmers in many instances. We need a discussion about these things.
The Freedom Charter says land shall be shared among those who work it. In a different clause, it says there should be houses, security and comfort for all. Our constitution’s section 25 is about all property (from land to your car and home) and section 26 is about the right to adequate housing.
A lot of what we are seeing [protests about land in Soweto, Lenasia and Eldorado Park in Johannesburg and Mitchells Plain and Parkwood in Cape Town] is about housing. I think we’ve conflated issues.
To see all of these as land issues may limit the ability of government to deal with the reordering of spatial development. We have to be sure that we don’t damn the current generation of poor South Africans and their children to a life of inadequate shelter in shacks. We have to engage on what is decent housing because what we’re seeing more often is housing hunger, not land hunger. It’s accommodation hunger.