Another carrot for the ANC

THE World Bank and the International Monetary Fund have historically been objects of fear and revulsion in South Africa.

Pre-1994, the National Party government viewed them as the sinister tools of international capitalism, instruments with which to bully South Africa into making unwelcome policy changes. Post-1994, the ANC and its alliance partners, Cosatu and the SACP, have the same opinion but from a radical ideological perspective – these are evil entities engaged in economic imperialism, cunningly retarding the growth of socialist utopias by smothering them with US dollars.

Given the backstory, it was interesting to see the response this week to the announcement of a World Bank loan to the South African government of $750 million (about R11.5 billion) on extremely generous interest and repayment terms. This bonanza follows upon previous capitalist largesse of $4.3bn from the International Monetary Fund two years ago.

When the IMF loan was solicited by SA in 2020, President Cyril Ramaphosa and his finance-cluster team spent a lot of time dampening the outrage of the ANC left, trying to reassure them that despite the sellout to the IMF, the Illuminati were not about to take occupation of the Union Buildings. This time, however, it appears to be all sunshine and light on the ANC benches, with not a peep of protest. The reality of having to fill a gaping hole in the Treasury bucket has forced the governing alliance to grit its teeth and bite its tongue.

And the technocrats were positively bright-eyed and bushy-tailed. Treasury deputy director-general for asset and liability management Duncan Pieterse crowed in a statement: “Across the world, these World Bank development policy loans require governments to achieve certain policy or institutional objectives. This is a loan that acknowledges the actions the government has taken both to respond to Covid-19 and to implement its reform agenda.”

The ANC should remember that everything comes with conditions. Large infusions of World Bank and IMF bailout funds bring dependence and with dependence comes behaviour modifications.

Sometimes it’s carrot, sometimes it’s a stick.

It’s an indication of the World Bank/IMF fears of a post-Ramaphosa apocalypse that, so far, it’s all been carrot. These powerful institutions are leaning over backwards to accommodate financing requests from the SA government because they are desperate to support Ramaphosa in the face of the RET challenge.

That means applying lots of lippy to camouflage porky. Announcing the loan, the World Bank enthuses about the progress the Ramaphosa administration has made in reforming. South Africa has taken “bold steps” to mitigate the effects of the Covid-19 crisis and used it as an “opportunity to tackle structural reforms”.

Among the “major breakthroughs” have been its management of the electricity crisis, climate change and the digitalisation of social grants and health programmes. There’ve also been “promises of reform” in several other areas, including visas and water affairs.

These are desperate justifications. It’s like your bank manager offering you a massive low-interest house renovation loan based on you having raked the lawn and promising to fix a dripping tap.

It’s particularly unfortunate for the World Bank that they handed over that fat brown envelope of dosh in a particularly dismal news week. The evidence for the Ramaphosa administration’s pace-setting reform agenda was not good.

The Special Investigations Unit released an interim report into the government’s administration of Covid-relief funds. The fund comprised taxpayer money, the IMF loan and substantial donations by the country’s wealthiest families and biggest businesses.

The SIU examined less than a tenth of the R152.5bn spent on Covid-related tenders. It found that R7.8bn – more than one of every two rands spent – had been stolen. Almost twothirds (62%) of the contracts scrutinised were irregular.

By the standards of the basket-case countries that they habitually come to the financial rescue of, the IMF and the World Bank may not be overly concerned at this evidence of corruption and cronyism. It should, nevertheless, be a flashing warning light.

The scale of the looting is of Zumaesque proportions but undertaken under a “clean” Ramaphosa administration. And the scandal reaches into the highest levels of his administration, including his former health minister and his former spokesperson.

Cyril was shaken, but not stirred. Both remain high-ranking ANC office bearers. No one has been prosecuted.

And while the multilateral lending institutions may be pragmatic about this being a country governed by a criminal syndicate, they should worry about the calibre of the syndicate’s leaders. This week it was the turn of Stella Ndabeni-Abrahams, minister of small business development.

Speaking in the wake of raids by EFF, Patriotic Front and ActionSA stormtroopers on employers in the hospitality sector, to intimidate them into firing Zimbabwean and other migrant workers, she was forthright in backing the Labour Department’s “mega blitz” to ensure businesses are following employment protocols to the letter.

“As a government, we have a responsibility to enforce regulatory compliance in the SMME sector and close businesses that are trading illegally,” says Ndabeni-Abrahams.

Judging by the level of ANC economic insight displayed in this key portfolio, the World Bank and IMF may face some delays on their loan repayments. Or perhaps they’ll move from carrot to stick.