Founding vision of a democratic South Africa betrayed

Wilful ignorance is unfortunately not bliss, it will lead to harm in the economy

JUNK food is nice, very nice. But its physical effects? Oh, so difficult to reverse. Sweating it out in training or gym – that takes serious commitment. Oh, the health consequences? So dire, all so dire. Economic junk status has such dire and adverse consequences to the health status of a country. The red flags have been cast on the economic grounds of South Africa and its citizens should be worried. These are all the after effects of a recent cabinet reshuffle by President Jacob Zuma.

Two rating agencies have since expressed an opinion on the economic viability of South Africa; S&P’s downgraded to junk status our foreign currency debt and our major banks were downgraded (in line with the country) to non-investment grade; Fitch issued a junk status rating on both the foreign currency and local currency debt ratings.

If another agency were to give a junk status to the local currency debt, it would lead to serious economic ramifications. Some investors would have to sell-off on their bonds that run into billions of dollars. The South African Reserve Bank would be forced to react by increasing interest rates in an attempt to stabilise a rand that would be plummeting.

The effects on the ordinary person on the street would be adverse. Car and bond repayments would increase in alarming rates; pension funds would lose value and probably force people to work beyond their targeted years to take pension; some industrial operations would have to shed jobs or close shop; the government would need to exercise social spending cuts as the debt servicing costs would be on an upward spiral. Given that even Eskom has experienced a downgrading, we could expect higher electricity tariffs, raising the production cost of goods and subsequently their market price. With our high reliance on imported food, we could see shelves in supermarkets not filling up as usual.

Does all this sound alarmist? Of course it does to those politicians that have said “Let the rand fall, we will pick it up” and those that have said “Bring on the junk status”. Such wilful ignorance is unfortunately not bliss, it will lead to harm in the economy. Elite politicians are generally never worried about the true economic health of a country during difficult times, because they continue to enjoy all the luxuries of office; free cars, houses, allowances, etc.

Therefore, the most important response at such a time of calamity, must come from citizens themselves. This is why the people’s marches have been so important in giving a platform for citizens to express their disapproval of the ongoing political mismanagement by the current government. Politics operate on perceptions and evidence, each has a respectable place in informing the views of investors and certainly the rating agencies.

On perception there is a view that the president wants a user friendly minister of finance who will give the green light to important projects such as the nuclear deal and those involving his Gupta friends. It is in this respect Nhlanhla Nene and subsequently Pravin Gordhan were seen as stumbling blocks to a project to loot the state coffers.

On evidence, the president gave it away when he appointed a low key unknown politician, Des van Rooyen, in December 2015. It was clear that politically the president needed someone who could be easily swayed and was part and parcel of hisagenda. There is no doubt that there is some looting on a broad scale that is going on.

The state has been turned into a cobweb of corruption. Only citizens through mass mobilisation can undo this by forcing those who are architects and managers of the status quo out of government.

The role of any government is to advance its people’s interests at all times without fear, favour or compromise. This duty is governed by our constitution. Leaders who flout the constitution at will and use rhetoric like “radical economic transformation” to envelop their misdeeds are a danger to society.

There is no doubt that South Africa needs to rethink its approach on land redistribution, economic transformation and wealth redistribution – but this needs genuine and committed leaders. Before countries perish, the leaders in charge of the collapse generally sell themselves as fighting imperialism (here at home: white monopoly capital) so that they appear as relevant to the majority of citizens.

We call this psychological warfare. No injustice can be greater than betraying the founding vision of a democratic South Africa – fighting for social justice at all times.