Category Archives: Local Politics

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In a post-Zuma SA, sacrifice will be needed

In the wake of the Gupta leaks, polarisation in SA has increased significantly with a strange alliance of free-market (mostly DA), populist (mostly EFF) and disgruntled ANC voices (often repressed) on the one side with Zuma and Gupta defenders on the other side. The current discourse often ignores the elephant in the room, which is that with a sky high unemployment rate, faltering economic growth and poor education outcomes, serious changes are needed in SA, regardless of who is at the helm. If we do not aggressively address the inequality in our country, exacerbated by these factors, we are at risk of a populist uprising, which could set us back significantly. Sacrifice will be needed.

The Zuma and Gupta defenders faction is aggressively employing a strategy of shifting focus away from the accusations of corruption and weak delivery toward the ills of what they call White Monopoly Capital. On the other side, you find a strange union of populists, who want Zuma out of the way to deliver genuine redistribution, aided by nationalisation and seizure together with ardent supporters of the free market, many of whom are fed up with funding an often inefficient government and yearn for the days gone by.

Because of the polarised environment, these two factions often misunderstand each other and may be talking across purposes. Firstly, not everyone who is concerned about the influence and ownership of the white population on the SA economy are simply taking this stance as a way of defending Zuma (and the Guptas). Many of them have valid concerns, including the extreme inequality in our country (to a great extent along racial lines), the high unemployment and the low economic growth.

Secondly, not everyone who is calling for the ouster of Zuma and the removal of Gupta influence is a closet racist secretly yearning for the return of Apartheid. Many of this faction are genuinely concerned that the country is poorly run and recognise that for the long-term success of SA, we need better education outcomes, increased employment and higher economic growth.

What is plain to me though is that whatever happens to Zuma, whoever succeeds him and whoever wins the 2019 general election, serious issues need to be addressed in SA and it will take sacrifice from especially the wealthy in the country. Even if the DA manages to secure a victory (outright or through coalition) in 2019, they will have to continue with and implement new more aggressive redistribution policies in addition to dealing with the existing challenges of our country, including poor education outcomes, crime, healthcare, unemployment and weak economic growth. Even if the new government manages to enhance efficiency (reduce corruption) and achieves better bang for the taxpayer buck, this is unlikely to be enough. To fully address the growing challenges of our country, especially in the light of a rising debt load, pressure on exports and credit downgrades, whoever takes over will have to seriously look at the tax dispensation.

The aim of the new government should be to enhance its tax revenue through higher tax rates and possibly a wealth tax (which will put direct tax pressure on wealthy citizens and corporations), but in exchange to deliver improved services (which could reduce the indirect tax burden, including school fees, private health costs and security); to drive skills development to make the populace more employable; and to create a conducive environment for economic growth and job creation.

Any party who claims that they can create a stable and growing economy, which provides opportunities for all and reduces inequality, without raising taxes, may be fooling themselves. At the same time, any Zuma and Gupta opponent that thinks that their removal and replacement will usher in a golden age of growth and wealth creation without sacrifice, will be hugely disappointed.

We are facing some serious challenges. Our first phase of redistribution (from the mid-1990s to the late 2000s), which resulted in significantly improved service-delivery, the creation of a large and growing black middle class, the transfer of meaningful corporate ownership through BEE and the introduction of a basic (albeit insufficient) safety net through grants, occurred during a period of almost unprecedented asset appreciation, commodity price increases and economic growth.

These tailwinds are gone now. We cannot depend on rising asset prices to lead to almost all BEE transactions being successful and creating an effective transfer of wealth. We cannot depend on high commodity prices to buoy our exports and support our tax receipts. We cannot depend on low interest rates to allow us the freedom to drive lending-based growth.

We have to find a solution that will be effective in the world we live in. Part of this solution will necessitate a South African New Deal, where the haves pay more in tax, which is utilised to upskill the have-nots, to employ them through infrastructure programmes and to provide them with many more opportunities to increase their economic participation across the board.

At the same time, steps should be taken to kickstart economic growth, including liberalising labour markets, creating an attractive tax environment for selected globally competitive (or potentially competitive) industries, selective public private partnerships to explore growing industries (Eskom in the renewable energy sector stands out), less stringent immigration requirements to allow us to attract more skills and much increased government efficiency where we get much more value for the tax rands spent.

It is my view that the majority of privileged South Africans as well as the corporate sector would be more than willing to make the necessary sacrifices as long as they see the long-term benefits that could emerge and the risks that could be moderated. Those that do not, should seriously consider the alternative, which is rising populism, increasing economic disruption and growing polarisation.

Really successful companies are not scared to invest for future growth and sacrificing short-term earnings in exchange for a more certain stream of growing earnings going forward. The average well-off South African should have a similar view. Rather sacrifice income and consumption in the short-term, in exchange for a less uncertain and brighter future. What is of course vital is that whoever increases the burden on South Africans does so from a position of zero tolerance for corruption and at the same time, significantly increases the efficiency of how tax rands are spent. Those who are currently unwilling to sacrifice may soon change their minds if they see concrete delivery. That is at least my hope.

Do you think that the removal of Zuma and Gupta influence will automatically lead to a better life for you and your family? Are you prepared to sacrifice when asked by new leadership who promises improved delivery and a more secure future? Do you think you can have your cake and eat it or are you more realistic? I would love to hear your feedback.

In the mean time, keep your talking straight!

#GuptaLeaks #WhiteMonopolyCapital #NewDeal

 

Marius Strydom is the CEO of MLAX Consulting

https://www.facebook.com/straighttalkingstrydom

https://twitter.com/Marius_Man


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Time to organise, not divide

After the shock cabinet reshuffle by President Zuma early Friday morning, South Africans of all walks of life expressed outrage, called for action and started to organise. The land swell of opposition, including the usual suspects, but also members of the ANC top 6, axed ministers, struggle stalwarts and growing numbers of grassroots ANC members, reached its zenith at the memorial of fallen struggle hero, Ahmed Kathrada with an emotional and stinging speech by his widow Barbara Hogan. Since then, cracks have started to show with competing calls for marches, a serious backlash against the #BlackMonday hashtag and a perceived lack of action against Helen Zille by the DA. What should be clear to everyone is that the removal of the President Zuma cannot be achieved without significant support from ANC members and MPs either inside or outside of Parliament. For the latter, co-operation between disillusioned ANC members and the opposition is key. Unilateral and ill-conceived actions are guaranteed to dilute any such attempt. Now is the time to organise, not divide for all parties determined to reclaim the country.

Over the course of the weekend, there was no (maybe well-intentioned) campaign that has done more to dilute opposition to the unilateral actions of the President than the #BlackMonday hashtag. On Twitter, vocal opponents to the reshuffle who were earlier calling for the resignation of the President started to express outrage at the campaign, asking pertinent questions like where was black Monday after the Marikana massacre, during the #FeesMustFall campaign, in opposition to recent racist events and of course in opposition to Apartheid. The tag was poorly chosen in my opinion and not enough was done to organise a united front (e.g. SAFTU and Zwelenzima Vavi are embarking on another #OccupyTreasury march this morning).

The DA press conference on the future of Western Cape Premier Helen Zille also served to dilute the opposition to the President with many calling on it to clean its own house before speaking out against the President. However, in my opinion, there was no way that the DA press conference could have had a more severe outcome for the Western Cape Premier. She is facing a disciplinary hearing and the DA leader, Mmusi Maimane clearly stressed that it was for bringing the party into disrepute and not a freedom of speech issue. It would serve the DA well to expedite this process so that its undiluted energy could be focused on the crisis in our country.

In my opinion, the DA is making a strategic error in calling for a march to Luthuli House on Friday. There is nothing that will be more effective in encouraging the ANC to close ranks than a partisan initiative like this. This move smacks of political opportunism rather than a genuine desire to deal with the current crisis. Instead, the DA should reach out to other opposition parties, organisations and disgruntled ANC members to organise a united series of actions, including marches. They and the EFF will after all need all the support they can get to have any chance of success with a vote of no confidence in Parliament.

And this is where the focus should lie, in my opinion. All actions taken in the coming days and weeks should be aimed at encouraging enough ANC MPs to vote their conscience if and when the vote of no confidence is tabled in Parliament. Already, Pravin Gordhan has become a focal point for opposition, calling on South Africans to organise and stating that he will be guided by his conscience and “do the right thing” when a vote of no confidence arrives. If more MPs are to follow their conscience, it is imperative not to give them a reason to close ranks, but instead to include them and all opposition parties and organisations in upcoming actions. It is time to organise, not divide.

Are you wearing black today? Do you support unilateral actions by the DA and other parties/organisations? Would you prefer a unified set of actions, including marches? Do you believe ANC MPs will break ranks? Do you think a vote of no confidence will succeed this time? I would love to hear your feedback.

In the mean time, keep your talking straight!

#BlackMonday #CabinetReshuffle #PravinGordhan

 

Marius Strydom is the CEO of MLAX Consulting

https://www.facebook.com/straighttalkingstrydom

https://twitter.com/Marius_Man


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Defend your legacy Helen Zille

Helen Zille is poised for a fight in the coming weeks, following her now infamous colonialism tweets. A snap debate in the Western Cape legislature, followed by a meeting with the EFF and a meeting of the DA Fedex could decide her ultimate fate. It is likely that she will not go down without a fight, a fight for her political life, a fight to maintain her influence in the DA, a fight for her legacy. This would be a mistake, which could do lasting damage to her legacy and hamper the growth of the DA, which is her crowning achievement. Ultimately the best way for Helen Zille to defend her legacy is to allow the DA, which she nurtured from a sapling to a thriving adult, to continue growing and to become a national force for political competition. Ironically and sad for Helen Zille, the best way to ensure the continued expansion of the DA’s canopy, encompassing a larger and more diverse cross-section of the currently undecided, is for her to step out of the way.

Helen Zille emerged on the SA political scene as a journalist in the 1970s, best known for breaking the story of Steve Biko’s death in custody. In the 1980s, she was involved in the Anti-Apartheid movement through leadership in the Black Sash and other organisations. Her leadership role within the DA started in 1999 when she became a member of the Western Cape Legislature. She became an MP in 2004, Cape Town mayor in 2006 and DA leader in 2007. She remained DA leader until 2015 and is still Premier of the Western Cape (a position she assumed in 2009).

In the last general election (2004) before Zille took over as DA leader, the party received 12% of the national vote. By 2014, before she ended her tenure, this had increased to 22%. Over the same period, DA support in the Western Cape increased from 27% to 59%. During the 2016 municipal election, the DA retained Cape Town (with 66% of the votes) and took control of Johannesburg, Tshwane and Nelson Mandela Bay municipalities. The success that the DA achieved under the leadership of Helen Zille is undeniable.

All things being equal and prior to the current ruckus surrounding Helen Zille’s tweets and possible disciplinary hearing, the DA was heading towards further electoral gains in the 2019 general election with control of Gauteng being a distinct possibility. What a wonderful feather in the cap of Helen Zille would it not be for the DA to take control of the richest province in SA and moving even closer to being a serious force at national level? Would this not be a crowning achievement cementing her legacy in post-Apartheid SA politics? Should Helen Zille not do everything in her power to make sure that this outcome comes to pass?

A fight within the DA over the future of Helen Zille could very well distract it from achieving its and her goals, whether she wins the battle or not. If she does win the battle, this will become the main talking point of those who want to paint the DA as a racist party and this would inevitably slow the party’s growth in non-traditional constituencies. The DA therefore faces the risk, like the ANC, that disagreement over leadership and the unwillingness of a divisive leader to step down, causes factionalism, distraction and electoral disappointment.

Helen Zille is faced with a difficult decision. Does she fight to maintain her position in the party or does she do what’s best for the party and her legacy? Does she take a page out of the book of Nelson Mandela or out of the book of Jacob Zuma and Margaret Thatcher? Time will tell.

Do you believe that Helen Zille will face a disciplinary hearing? Do you believe she will win? Do you think she should step down? I would love to hear your feedback.

In the mean time, keep your talking straight!

#HelenZille #DA #Colonialism


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Manyi and Gasa almost made history

I got really excited yesterday. I was taking my tea break in the morning and decided to have a look at Twitter. Two of the people that I follow were at loggerheads. The one is Nomboniso Gasa, a researcher, writer and political analyst and the other is ex-Cabinet spokesman, Mzwanele (previously known as Jimmy) Manyi who also recently launched the Decolonization Foundation. These two, who are clearly not very happy with each other, were discussing a lifestyle audit. I immediately took a keen interest.

The previous day they had a heated discussion that involved many issues and accusations. Ms Gasa floated the idea of a lifestyle audit and Mr. Manyi accepted, albeit tacitly.

cvrxefjwgaajp141

Of course, a one-sided audit was never going to fly and Ms. Gasa posted the following Twitter chain, trying to thrash out the terms of a parallel audit.

gasacomment1_v4gasacomment2

Initially, Mr. Manyi took the bait, but with the proviso that other parties, less favourable (in his opinion) to Ms. Gasa be involved. He specifically mentioned Mr. Piet Rampedi.

At this point, I was jumping up and down in my seat. Imagine this, South Africans with differing viewpoints agreeing on the need for transparency and openness and offering themselves as sacrificial lambs to lead the way. Wow, I was envisioning this as the start of improving political discourse in SA, the start of talking to each other and not at each other, the placing of openness and honesty ahead of political difference.

I proceeded to fan the flames by posting the picture below, taking the by-line “Let the #GasaManyAudit begin!” from one of Ms. Gasa’s tweets.strydomcomment

Many people liked this idea (well 61 by today) and some people started tweeting under the #GasaManyiAudit hashtag. My excitement was growing.

Unfortunately, by yesterday afternoon, the audit was off. Mr. Manyi seems to have folded after calling Ms. Gasa’s bluff. The disappointment! These two people for whom I have much respect were about to create history and then … it was to be no more.

However, I retain hope and hence this blog. Maybe with enough pressure from social media, commentators and colleagues, this process can be resurrected. What is key though is that the right parties are found to produce this audit, parties that are seen as independent and are acceptable to both candidates. The parties should also really be willing to do this pro-bono. This lifestyle audit should be seen as more that settling a personal score between two people, but rather as a public service, moving our political discourse in a positive direction.

I therefore request the following, if you are interested in a parallel lifestyle audit between Mr. Manyi and Ms. Gasa:

  1. Tweet under the #GasaManyiAudit hastag to build awareness and pressure;
  2. Contact Mr. Manyi (@KrilaGP) and Ms. Gasa (@nombonisogasa) on Twitter or directly and ask them to proceed; and
  3. If you are a reputable and independent auditing firm, please offer your services on a pro bono basis to Mr. Manyi and Ms. Gasa directly.

Do you think that lifestyle audits of politicians, political commentators, business people and others would improve our political discourse and reduce the risk of corruption? If so, please throw your voices behind #GasaManyiAudit and let’s make history.

In the mean time, keep your talking straight!

#GasaManyiAudit #LifestyleAudit @KrilaGP @nombonisogasa

 

Marius Strydom is the CEO of MLAX Consulting

https://www.facebook.com/straighttalkingstrydom

https://twitter.com/Marius_Man


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Investment boycott is perverse

Following the halting of lending to six state-owned enterprises (SOEs) by Futuregrowth, there has been increasing calls for an investment boycott or even a tax strike in SA. I believe such steps would be perverse, considering the fact that even during the worst days of Apartheid, no such steps were implemented by SA firms or taxpayers. An investment boycott or tax strike would be very damaging to the SA economy and risks fuelling the flames of division within our country even further.

The aim of an investment boycott or tax strike would be to force the government to take a number of steps supported by some opposition parties and some sections within big business. These steps would likely include the cessation of the actions against Pravin Gordhan, the halt of the nuclear project, increased oversight of SOEs, seriously addressing corruption and probably the resignation of President Jacob Zuma.

In my opinion, an investment boycott or tax strike would represent the nuclear option for SA, which would be very damaging to our economy and to our most vulnerable citizens. It could limit the government’s ability to deliver on its promises: including the National Development Plan; it could put pressure on infrastructural spend; and could even limit its ability to fund budget increases, which could put pressure on areas such as education, health, etc. In addition, it could damage the country’s reputation if it were to lead to a reduced ability by the country to finance its debt. If we are looking for a credit rating downgrade, an investment boycott or tax strike would go a long way to achieving it.

In addition to the damage that such actions could cause to our economy and reputation, it also is not guaranteed to succeed. Even overwhelming participation in such actions (which would be needed, but is unlikely, in my opinion), may lead to the opposite reaction from the ruling party than is desired. It is much more likely to unify the ANC and cause it to close ranks. If this were to occur, the pain experienced by our country would be extensive and long-term.

In addition to the economic and reputational damage that an investment boycott or tax strike could cause, it could also be very harmful to the social fabric and our desire for unity and equity. It would serve to flame the fires of the “white capital” narrative that is increasingly being bandied around in our country and is creating increasing divisiveness. And it would be correct to do so. The plain truth is that the same people and institutions who are calling for an investment boycott or a tax strike, were silent on these topics during Apartheid.

There is no doubt that international sanctions against the National Party played a meaningful role in leading to the demise of Apartheid. However, it was never supported by SA business or by SA opposition parties. Not even the Progressive Federal Party (PFP) who was the precursor to the DA supported these actions. No large SA corporates became involved in sanctions and none of them came even close to an investment boycott. This was despite significant human rights abuses and disenfranchisement perpetrated by the Nationalist government. There was also no real talk of a tax strike by South Africans.

We can see the lack of action by SA big business, opposition parties and white citizens in the 1980s and before as complicity. We can choose to believe that they were happy to live under Apartheid and for many, I am sure this is true. However, we must not under-estimate the impact that fear could have had on inaction. An investment boycott or tax strike by SA big business and white citizens would likely have led to a substantial crackdown by the NP government, which was too ghastly to contemplate by many. And here is the rub. We lived in a police state during the 1980s, under an almost constant state of emergency. We lived in a country that was not free, even for the beneficiaries of the system. That has changed.

Say what you will about recent actions by the ruling party, about corruption, about lack of accountability, about our President being seemingly untouchable, we still live in a free and democratic country. If you have any doubts about this, go and have a look at what newspapers write every single day about the government and the ANC, without fear or serious reprisal. Go and have a look at what people have to say on social media and how many of them are arrested for it. Gone are the days when you had to watch what you say, who you interact with, who you gather with, who you protest against. Gone are the late night knocks on your front door, the arrests, the detention without trial, the “suicides” of those in custody. If you are still not convinced, go and have a look at who governs Tshwane, Johannesburg and Nelson Mandela Bay metros. If we were not substantially free in this country, if we did not have a vibrant democracy, this would never ever have happened.

In addition, go and have a look at what ANC loyalists and previous leaders have to say about the SARS wars, about Nkandla, about the constitutional court ruling and about electoral losses. The vast majority of South Africans and leaders on both sides of the aisle can see what is going wrong with our country and are adamant to make it better. The majority of people are on the right side of history and we will see positive changes in the near term. I am confident and optimistic.

However, if you want to divide people, if you want the racism card to be played more often, if you want the “white capital” narrative to grow, if you want to devastate the economy, if you want to hurt the most vulnerable and if you want to damage the country’s reputation, then you must support an investment boycott or a tax strike. I seriously hope that this is not what you want.

I therefore call on opposition parties to speak out against these voices looking to damage our country. Refer back to your and your predecessors’ arguments against sanctions in the 1980s. I call on big business to distance themselves from these moves. Remember what side of the argument you were on during Apartheid and consider what this could do to the economy. I call on ordinary South Africans to be patient. We are moving in the right direction and forces for change are gathering momentum. Trust that the hard-won democratic process allows for your voice to be heard.

Are you a supporter of an investment boycott or tax strike and why? Are you not concerned about the negative impact this could have on the economy and ordinary South Africans? Would this risk the hard-won unity that is developing in SA? Would it not add fuel to the “white capital” narrative and racism allegations? Should you not have the same approach as when you were against sanctions in the 1980s? I would love to hear your feedback.

In the mean time, keep your talking straight!

#InvestmentBoycott #TaxStrike #Futuregrowth #SARSWars #Sanctions

 

Marius Strydom is the CEO of MLAX Consulting

https://www.facebook.com/straighttalkingstrydom

https://twitter.com/Marius_Man

Photo by twicepix


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It is time for parties to shift left

It is easy to see the results from the last week’s local government elections in SA as purely a rebuke of the ruling ANC. In addition, we should see it as a cry for help from the poor and disenfranchised, a cry for better services, more opportunities and jobs. It is a cry for a better deal in SA. All political parties should take heed of this message. They should realise that none of them will achieve meaningful growth in their support without aggressively addressing the concerns of the poor in SA, both in messaging and delivery. It is time for those parties serious about continued growth to shift left.

The ANC was the biggest loser in the local government elections, seeing countrywide support declining from 62% in 2011 to 54%. It has lost outright control in four major Metros, namely Tshwane, Johannesburg, Nelson Mandela Bay and Ekurhuleni. In addition it will lose many other municipalities to the opposition or will have to govern through coalitions.

The ANC should embark on a period of self reflection to understand why voters in the large Metros did not come out to support it in these elections. Now is not the time for in-fighting. It is time for a leadership overhaul and aggressive focus on improved governance in the Metros and municipalities they retain as well as provinces and nationally. There is nothing like political competition to focus the mind and it is my hope that the increased threat of losing further support will invigorate the ANC to improve delivery. Because it retains the strongest power base in SA, national government and 8 out of 9 provinces, it is best positioned to improve the outcomes for the poor and most vulnerable in SA. It is likely that the ANC will increase its pro-poor focus utilising its significant power. We can only hope that it achieves this at least in part by improving efficiency.

The DA was the biggest winner in the local government elections. It is likely to take control of three major Metros in the form of Tshwane, Johannesburg and Nelson Mandela Bay, while it has the outside chance to form a ruling coalition in Ekurhuleni and being part of an EFF-led coalition in Rustenburg.

It would be easy enough for the DA to fall into the trap of gloating and self congratulation after these elections, but that would be a mistake. The people in many Metros and municipalities have given the DA an opportunity, but not a blank cheque. The party now faces a huge responsibility to deliver on its promises. If the party’s track record in other municipalities is anything to go by, it should take a very technocratic approach to ruling new regions, including attracting more skills, identifying inefficiencies and aiming for clean audits.

It is hoped that the DA will be able to achieve cost savings. They key is how it will apply these cost savings and how it will deal with the existing deployment of resources. It is my view that all savings achieved should be employed to enhance the conditions and prospects of the poor and disenfranchised. Poor service delivery should be addressed with the utmost urgency, followed by developmental spending in the poorest of areas. Local infrastructural spend should be encouraged, with a focus on creating employment.

However, I would go even further than utilising savings to rebalance the budget towards the poor. There is an important case to be made for reducing spending on affluent areas in lieu of poor areas: 1) it is morally the right thing to do, considering the inequalities of the past; 2) rising unemployment, stubborn inequality and low economic growth is creating a ticking time bomb for SA that cannot be ignored; 3) the development of poor areas and creating opportunities for the disadvantaged is important not just for stability, but to encourage long-term growth; and 4) the only way for the DA to defend and grow its support is to deliver to the constituency that (at the margin) put it in power.

If the DA does not shift left and illustrate a clear pro-poor focus, its gains during the recent elections could easily be reversed. The next election could see a much higher turn-out in poor areas with these votes going to the ANC or the EFF. To cement its gains, this constituency has to see the benefits of DA rule.

The EFF garnered less support in the recent elections than many analysts, including myself, expected. It received 8% of the national vote and did not obtain an outright majority in any municipality. However, it has created a very strong base from which to grow, it is in a position to determine who will rule in major Metros and it has the opportunity to be involved in the governing process, promoting its own policies.

The EFF is already a left-leaning party with a pro-poor focus. Its challenge now is to turn its policies into concrete delivery in the municipalities where it is part of the coalition. It has to choose its partners wisely and it has to be realistic in its demands. It has not garnered enough support to drive revolutionary changes in the way budgets are allocated, but it is in a strong position to ensure that a strong and sustained shift left starts occurring where it is involved.

In my opinion, the EFF can have a bigger impact in coalitions with the DA than with the ANC. In such coalitions, the EFF would be a clear and unambiguous voice for the poor and if successes are achieved, it may see its support growing over time. In coalitions with the ANC, it may face a number of problems: 1) the elimination of inefficiencies and delivery may not be as strong (if ANC track record is anything to go by); 2) it would not stand out as clearly as a pro-poor left-leaning voice of the poor as in a DA coalition; and 3) it faces more risk of being co-opted by the ANC and that some of its support is reabsorbed by the ANC.

SA is facing numerous challenges, including rampant unemployment, stubborn inequality, low economic growth, poor education outcomes and inefficiency (including corruption). The ANC, especially under its current leadership has not effectively addressed these concerns and it has lost support as a result. The uncertainty caused by lack of delivery has led to the rise of opposition parties, but it has occurred in a very negative political environment and a bruising election campaign. It is my hope that the era of coalition politics in SA will offer the opportunity for more constructive engagement between political parties. It is time to unite and address our challenges or face a populist uprising over time.

I continue to promote a New Deal in SA, with an aggressive focus on unemployment and education. Even if it leads to economic pain in the short-term, we should make a definitive decision to refocus our budget on these areas. We absolutely have to create an inclusive economy and improved education outcomes so that we can look back a decade from now at today being the turning point in the SA story.

In addition, I stand by my view that we need a Minister of Employment who has the necessary power and the ultimate responsibility for increasing employment. This minister must stand or fall based on progress here, this is where the buck should stop. In our current cabinet as well as in a DA shadow cabinet, the responsibility for dealing with unemployment is decentralised. This has not worked and is unlikely to work in the future. The role must be centralised, we need a champion and we need delivery.

 

How do you feel following the local government elections? Are you encouraged or disappointed? How do you feel about political competition and the rise of coalition politics? Do you believe that we should and will have an increased pro-poor agenda going forward? Do you think that our parties will shift left after the election? I would love to hear your feedback.

In the mean time, keep your talking straight!

#LGE2016 #NewDeal #MinisterOfEmployment #TshwaneCoalition #JHBCoalition

 

Marius Strydom is the CEO of MLAX Consulting

https://www.facebook.com/straighttalkingstrydom

https://twitter.com/Marius_Man


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When will we cross the Rubicon?

On the evening of 15 August 1985, PW Botha took the stage in Durban to open the National Party Natal Congress. Countrywide this was a much anticipated speech and for weeks there had been speculation that it could change the direction of SA. There was cautious optimism that the ANC could be unbanned, that Nelson Mandela could be released and that SA would cross its own Rubicon. In the end, Botha completely deviated from his original speech and delivered what became known as the Rubicon Speech, which was more of the same fear-mongering that South Africans had gotten used to.

In response to the speech, the rand collapsed by 35%, foreign exchange markets and the stockmarket was closed for a week to try and reschedule international debt and SA entered its darkest hour, which lasted until 1990. From shortly before the Rubicon Speech until 1990, SA existed under an almost constant State of Emergency and the country was engulfed in violence. It was only after the Rubicon Speech that international sanctions and disinvestment programmes started reaching critical mass, leading to huge outflows of foreign capital, a depreciating currency and weak economic growth.

By 1990 the Rubicon was finally crossed, but not by PW Botha. He missed his opportunity and it took almost 5 years of violence, death, disruption to education, economic strife and national polarisation before the Nationalists took the inevitable step.

On 31 March 2016, Jacob Zuma had a Rubicon moment of his own. Pressure against President Zuma had been building for years, starting even before his appointment when he was embroiled in legal battles. However, he managed to consolidate his position of power despite concerns surrounding the Guptas, Nkandla and strategic deployments. Everything changed, in my opinion, on 14 December 2015 when he backtracked on his appointment on David van Rooyen as Minister of Finance. From that moment on, the forces against the President gained momentum with Guptagate and the Constitutional Court judgement last week adding fuel to the fire. By the end of last week it had become clear to all but a few (including maybe himself) that the tide had turned convincingly against his presidency and that his sustained tenure had become untenable.

During his speech in reaction to the Constitutional Court judgement, the president had the opportunity to act in the interest of the ANC and the country and to fall on his sword. Instead of crossing the Rubicon, the President opted to leave the country in limbo and to delay the ultimate outcome. He has now forced the ANC to embark on a long and painful process that is likely to result in his ultimate removal, whether at the 2017 Elective Conference or at an earlier convened conference (the latter being more likely, in my opinion). We can only hope that unlike the decision by PW Botha in 1985 not to cross the Rubicon, that Zuma’s decision will result in less extreme and less prolonged damage to the ANC politically and to the country’s economy and societal fabric.

It is clear to me from the ANC Secretary General’s speech on 31 March 2016 that the rallying behind the President is a temporary measure to promote unity in the ANC in the run-up to the municipal elections. At the same time, the ANC is likely to continue with its own internal processes, including the Gupta investigation and consultation with its branches, which may result in penal steps against the President. These processes are likely to be concluded only after the municipal elections, the results of which may add even further to pressure to remove him.

Opposition parties in SA are gaining substantial political capital from the scandals surrounding the President and this is likely to result in meaningful gains at the polls. The ANC is at risk of losing the major metros of Johannesburg, Nelson Mandela Bay Metropole and Tshwane. It is my opinion that such losses will remove any doubt within the ruling party that a realignment is required to avoid substantial losses in the 2019 general election. An early elective conference, resulting in the replacement of the President will provide the ANC with a two-year period to arrest the decline in its support and successfully defend its majority in the general election.

It is my opinion that the ANC’s room for manoeuvre will be severely restricted over coming months through opposition gains at the polls and opposition actions in Parliament, the courts and in the streets. I believe that we will cross the Rubicon later in 2016 or early-2017 at the latest. It is simply a matter of time.

What happens after the President is replaced will be key to the long-term success of the country. In my opinion, it is imperative that the new president leads the charge in SA for a New Deal, with buy-in from all the major political parties. We should make a definitive decision to refocus our budget to deal with the challenges of unemployment and education, even if this leads to economic pain in the short-term. In response to such a New Deal and the announcement of concrete steps to deliver it, opposition parties and ordinary South Africans should give government the support and the time to deliver by calling for a cessation to extra-Parliamentary actions. We need more South Africans in the workplace and fewer protesting on the streets and campuses. We absolutely have to create an inclusive economy and improved education outcomes so that we can look back a decade from now at today being the turning point in the SA story.

 

Do you think that President Zuma should resign or be removed from office? Do you believe that the ANC will lose meaningful support in the municipal elections? Do you expect that ANC internal processes will result in the President’s removal? Do you think President Zuma will survive in his position until the 2017 ANC Elective Conference? When do you think we will cross the Rubicon? I would love to hear your opinions.

In the mean time, keep your talking straight!

 

#Rubicon #ZumaRubicon #NewDeal

 

Marius Strydom is the CEO of MLAX Consulting

https://www.facebook.com/straighttalkingstrydom

https://twitter.com/Marius_Man

Photo by GovernmentZA


  • 2

We need a Minister of Employment

Unemployment is the most important issue facing SA at the moment. If we do not grow employment numbers aggressively and quickly, we face an increase in poverty and inequality that could result in a populist uprising. Past attempts at dealing with this issue have failed and we now need a new approach. We need a Minister of Employment who will stand or fall based on employment levels. This needs to be a very senior appointment, which has the mandate and power to co-ordinate efforts across all ministerial portfolios, unions, NGOs and the private sector.

For much of the past 15 years, more than one third of South Africans have been unemployed (using the expanded definition). The most recent expanded unemployment rate (October 2015) was 34.4% (whilst on the narrow definition, the rate was 25.5%). For the youth, the situation is much worse with almost half of people between 15 and 34 being unemployed on the expanded definition (and more than 60% of those between 15 and 24). We are sitting on an unemployment powder keg in SA.

Whilst numerous reasons can be put forward for our low employment numbers in SA, including low cash deployment and increasing automation by the private sector, inflexibility of labour, low economic growth and weak commodity prices, the main responsibility should lie with our government. Globally, governments stand or fall based on their ability to reduce unemployment levels. SA should be no different.

It is time that our Government identifies unemployment as the top priority for our country and throws all that it can at dealing with the problem. Despite having a large cabinet with 35 ministers, there is not one department (or minister) that has as its primary responsibility the increase of employment in SA. The Department of Labour comes the closest, but in its stated vision, “employment creation” is only mentioned after “investment” and “economic growth” as priorities. The Department of Labour and the Minister of Labour also do not appear to rank amongst the most senior portfolios and ministers in cabinet, with the departments such as Treasury, Basic Education, Health, International Relations, etc., attracting much more attention. It is difficult to see Minister Mildred Oliphant dictating to Minister Pravin Gordhan on appropriate tax rates for promoting job creation; demanding from Minister Malusi Gigaba that visa regulations need to be relaxed to boost tourism; or setting targets for Minister Angie Motshekga and Minister Blade Nzimande on the number of science and engineering graduates required to boost the SA economy.

What we need in this country is a new Ministry that has as its sole responsibility the creation of employment. We need a Minister of Employment. This needs to be a very senior appointment in the league of a Nhlanhla Nene or a Trevor Manuel. The Minister of Employment should be empowered to co-ordinate all the resources within the cabinet to address the issue of unemployment. As such, this minister should be the chair of an inter-ministerial committee, including Treasury, Labour, Education, Public Enterprises, Tourism, Trade and Industry and other relevant portfolios. This minister should report directly to the president and provide at least quarterly feedback to Parliament. This minister should stand or fall by trends in employment numbers.

The Minister of Employment should be involved at a high level with all areas in SA that are needed to promote employment growth. As the ultimate champion of employment, this minister must ensure that all areas are working in concert, that duplication is avoided and that all the required energy is focused on the problem of unemployment.

The Minister should have insight and influence over all legislation and regulations in SA to ensure that they are aligned (or at least not contrary) to increasing employment. With such a minister in place, we would not have experienced the own goal of stringent visa regulations impacting tourist numbers and hence tourism employment growth.

A task team should be formed with industry, Treasury, the DTI and other parties to identify specific job-creating industries to promote through regulations, tax incentives and protection, if needed. Similarly, a task team should be established with organised labour and the private sector, possibly using the Nedlac infrastructure, but chaired and driven by the Minister of Employment. This task team must ensure that the labour environment becomes more flexible (even if only in selected job-creating industries) to boost employment growth.

The Minister of Employment should involve organisations such as Brand SA, Proudly SA, SA Tourism, Homecoming Revolution and others in a co-ordinated campaign to promote SA as an investment destination and the consumption of SA-produced products over imported ones.

On the skills front, the Minister should co-ordinate a strategy to ensure that the country produces the right graduates, provides the right vocational training and imports the right skills to support the industries identified to be major job creators. To achieve this, the Departments of Basic and Higher Education need to be involved as well as the Department of Home Affairs and the private sector.

There are numerous other areas where the Minister of Employment could become involved, including trade deals with other countries, infrastructure development, agriculture, science and technology, public enterprises, etc.

The role of Minister of Employment will be very challenging and will require hard work and commitment. However, we need large plans to address large problems. This role will need support from a wide range of role players, regardless of political affiliation. There should be large-scale buy-in from all South Africans. It is difficult to see how the vast majority of South Africans would not benefit from growing employment. Solving this problem will go a long way to addressing other problems facing SA. I therefore call upon the ANC, opposition parties, the Government, private sector, NGOs and ordinary citizens to speak out and demand action on unemployment. I call for your support in appointing a Minister of Employment (together with the power and support that such a role requires) immediately. We cannot afford to wait any longer.

 

Do you agree that unemployment is the most serious challenge facing SA? Do you think more can be done with centralised planning and coordination? Would you support the appointment of a Minister of Employment? What suggestions do you have to improve my description of this new role? I would love to hear your feedback.

 

In the mean time, keep your talking straight!

 

#MinisterOfEmployment #Unemployment

 

Marius Strydom is the CEO of MLAX Consulting

https://www.facebook.com/straighttalkingstrydom

https://twitter.com/Marius_Man


  • 0

EFF the main winner from the Racism debate

Racism is unacceptable and needs to be addressed in our country to promote healing. For me, this goes without saying. Instead of focusing on the racism debate itself, this piece considers the potential winners and losers to emerge from the renewed focus on racism in SA. The main losers will be people who are stupid enough to continue with racist comments – they will be shut down, lose their jobs, lose their clients. In the short-term, the poor and unemployed could be unintended losers as attention is diverted from addressing their plight through better policies, improved delivery and reduced inefficiency (including corruption). In my view, the main winners from the debate are likely to be the EFF who are the only party that can aggressively address the shortcomings of Government with regard to poverty and unemployment without being labelled racists.

Since a real estate agent in Durban named Penny Sparrow ignited the racism debate in SA with a vile Facebook posting about people enjoying beaches on New Year’s Day, a number of heads have rolled. Her former employee, Jawitz Properties, took action against her, the DA distanced themselves from her and criminal charges were laid against her. Another beach commenter, Justin van Vuuren, lost a sponsorship for his gym. An internal process has been started against Velaphi Khumalo after calling for black South Africans to do to white people what “Hitler did to the Jews”. Most recently, Nicole de Klerk lost her job after alleged racist comments at the Queen’s Plate Horseracing event. What is surprising and heartening to me is that despite this issue being top of mind in SA over the past week, the instances of blatant racism identified have been fairly limited (despite exhaustive searches by the Twitter Mob, I am sure) .

What has been more interesting and disturbing to many is how this debate has tainted pronouncements by high profile South Africans, which are far removed from racism, but have been considered insensitive in the current environment. Jo-Ann Strauss had her life threatened after tweeting that ““It’s not what you call me, but what I answer to that counts.” an African Proverb #PennySparrow”; Chris Hart was suspended as Standard Bank economist after tweeting ”More than 25 years after Apartheid ended, the victims are increasing along with a sense of entitlement and hatred towards minorities….”; and Gareth Cliff was fired as judge of SA Idols after defending free speech in the context of the Penny Sparrow saga.

It is clear that the main losers from the racism debate will be racists, especially those that choose not to put a guard in front of their mouths. Whether or not racist speech is banned (hate speech is already banned in SA), such racists will be shut down by the people of SA. They will lose their jobs, they will lose their clients and they will become public pariahs.

A more interesting consequence of the racism debate is that it may be used to label critics of Government as racists, possibly reducing the effectiveness of their criticism. Already, the DA has been called racist for a billboard commenting on joblessness under President Jacob Zuma’s ANC government. It is likely that such name calling of critics will continue. Some of the name calling will likely be warranted, but some of it may be used as a diversionary tactic to distract from poor delivery and other issues. As a result, it may become more difficult for an opposition party such as the DA to continue gaining support (in especially black communities) ahead of the municipal elections this year.

If the racism debate is effective at muzzling critics of government policy and if government does not take concrete steps to improve delivery, especially on the employment front, the poor and unemployed could be unintended losers of the racism debate. This would be especially true if the racism debate becomes an important vote garnering narrative ahead of the elections, instead of service delivery, job creation, education, crime and electricity supply.

The weak rand that SA is experiencing post the most recent credit downgrade, the Nene debacle and in the context of low commodity prices and rising US interest rates, could potentially be an opportunity for our country. This weakness could be used to bolster industrial production in our country, boost exports and create much needed jobs. It would be a shame if Government does not make job creation the number one priority in our country immediately (and the number one priority in the President’s State of the Nation Address). What we really need is a Minister of Employment who will stand and fall based on changes in our unemployment numbers and is given the power to co-ordinate across all spheres of government and the private sector. It would be a shame if the racism debate is used to distract from this meaningful opportunity.

Such a distraction would play right into the hands of the main likely winners from the racism debate, the EFF. The poor, the unemployed and the youth offer the greatest opportunity for the EFF to grow its constituency. The EFF is the only party that can aggressively criticise Government and promise delivery on employment, poverty alleviation, land redistribution and nationalisation, whilst at the same time supporting a strong anti racism stance. Whilst Government may use the racism debate to build support ahead of the elections and the DA tries to use criticism of Government, but being labelled racist, the EFF can use both narratives effectively to build support aggressively.

Although an EFF government could do a great deal to alleviate poverty and unemployment in the short-term in SA, there are doubts about their ability to sustain such an improvement in the long-term. There are meaningful risks of spiralling government debt, capital flight and huge reductions in sustainable tax revenues following the implementation of the EFF’s stated populist policies. The best outcome from my point of view is that the growth in the EFF support places increasing pressure on Government to address the elephant in the room, unemployment. If the ANC government (with or without coalitions with the DA in selected areas) are unable to effectively deal with unacceptable unemployment in SA (and soon), we are heading towards a populist future in SA, with all of the associated risks.

I reject racism and I will not tolerate it in my spheres of influence. That is a given. I am a proud and patriotic South African and I want to see the best for its future. I believe we are heading in the wrong direction, especially when it comes to unemployment, but also in areas such as education, electricity supply, crime and healthcare. I urge all concerned South Africans to speak out about problems in our country, but please do this in a sensitive and non-racial way. Do not fuel the flames of racism.

We need to focus our attention aggressively on alleviating unemployment and poverty, unless we want to face a future of expropriations, skyrocketing tax rates, low economic growth, collapsing currency and racial strife. The time is now.

 

What is your take on the racism debate? Are you worried that it may distract from other pressing issues in SA, including unemployment? Do you agree that the EFF will be the main winner from the racism debate? Are you worried about the EFF? I would love to hear your feedback.

In the mean time, keep your talking straight!

 

#RacismMustFall #EFF #Unemployment

 

Marius Strydom is the CEO of MLAX Consulting

https://www.facebook.com/straighttalkingstrydom

https://twitter.com/Marius_Man

Photo by GovernmentZA


  • 2

ANC NGC – the good, the bad and the ugly

The ANC National General Council (NGC) of the past weekend offered a mixed bag to South Africans looking for an improved outlook for the country. There was the good, including correctly identifying problems and taking steps to correct them. There was the bad, a lack of taking responsibility for failures and taking steps that may deflect. And there was the ugly, refusing to address serious concerns surrounding visa regulations and proposing a withdrawal from the International Criminal Court (ICC). On balance, the good prevailed though, in my opinion.

The Good

The ANC deserves credit for doing much needed soul-searching at the NGC and identifying many of the problems it and the country faces. The sharp decline in ANC membership and the electoral gains by the DA and the EFF were key discussion points at the NGC. It is clear that the ANC realises that it needs to take concrete steps to address this trend. As I have mentioned in previous blogs, I believe that political competition is needed to galvanise the ruling party to perform better. It appears as if the increased pressure is starting to shift thinking within the ANC, but delivery will be key.

President Zuma hopefully put an end to uncertainty about whether he will step down in 2019 by stating that he will “never ever” stand for a third term as ANC leader. Unfortunately, much uncertainty remains on succession with Nkosazana Dlamini-Zuma and Deputy President Cyril Ramaphosa remaining frontrunners and other players not ruled out. To ensure stability and continuity, I really hope that we have a much more ordered transition of leadership than in 2009 and that the successful candidate garners wide support.

Cadre deployment and the negative impact this had on delivery was addressed. Although it is unlikely that the strategy of deploying cadres will change anytime soon, there is a recognition that the party must make sure that cadres put in government positions are qualified. I see this as a step in the right direction, but still believe that to fully address delivery issues in our country, the government must look wider than cadres. There are many skilled individuals outside the tripartite alliance that could make a big difference and they are being discounted for positions at our peril.

Another positive development is the decision to allow the ANC integrity committee to deal with members who bring the party into disrepute by making binding recommendations about actions against them. The committee is made up of a group of struggle veterans with strong credentials. As mentioned in a previous blog, one of the drivers of corruption (in general) is a lack of accountability. I hope that the additional weight thrown behind the integrity committee will help to increase accountability within the ruling party.

The way that the police deals conflict and protest was a topic of conversation and a decision was made to train the police in crowd control. This is a positive, in my opinion, especially in the light of a likely increase in protests in the run-up to the municipal elections of next year. It is important that people are given the opportunity to raise their concerns peacefully without being harassed by the police.

On the education front, there was discussion about poor maths and science marks, underperforming teachers and the weakness of rural schools. There was also agreement that the Annual National Assessments (ANA) should not be scrapped. However, what I missed was discussions surrounding raising standards, doing more to empower principals and specifics on how to effectively deal with underperforming teachers. This really needs to be a national priority.

Power generation was mentioned at the NGC, with the focus on increasing generation capacity and maintenance. This is good news in the sense that the ANC has reiterated its concerns with regards to our power generation concerns. However, as stated in an earlier blog, I believe that more aggressive solutions are needed to deal with our power needs long-term, with increased private sector participation and deregulation with regards to the selling of generated electricity needed. These issues were not sufficiently addressed, in my opinion.

What was positive though is the call for the national budget to focus more on investment and less on consumption. To deliver this outcome, the government will have to fast track the implementation of the National Development Plan, whilst at the same time exhibiting better fiscal discipline.

The ANC has decided that e-tolls must be implemented, but at the agreed lower rate. This could fit into the bad category, but in my opinion, considering the meaningful outgo to set up the system and the need to maintain Gauteng roads, there is very little option but to proceed. I hope though that the controversy surrounding this process will lead to valuable lessons learnt when it comes to future toll roads in SA.

The Bad

There were a number of resolutions taken at the NGC that fall in the bad category, in my opinion. As mentioned before, some may feel that e-tolls should fit in here as well. The decision to investigate the feasibility of a media appeals tribunal by Parliament is negative in my opinion. We have a vibrant and independent media in SA and I am not supportive of steps to censor. Instead, in my view, the ANC and government should improve is public relations programme to build and foster a more constructive relationship with the media.

The ANC has launched a study into the feasibility of a wealth tax for rich South Africans. Although the majority of South Africans, many of whom are living in poverty and are unemployed, would file this under the good, I consider this as part of the bad. I am not saying that steps are not needed to address the huge inequality in SA and improve the lives of the poor. I am saying that discussions around a wealth tax are premature, considering the current inefficiencies with government spending and the lack of job-creation within the country. I would like government to get more bang for its current tax revenue buck before looking for further sources of revenue.

I am somewhat cynical when reading about the possible reduction in the number of municipalities in SA as well as a presidential commission to assess a possible reduction in the number of provinces. This may create an opportunity for gerrymandering (a world-wide practice of manipulating electoral borders to favour a particular political party). I hence classify this under the bad until proven otherwise.

Finally, considering the admission at the NGC of the various areas where things have gone wrong, including the reduction in membership, electoral losses, corruption and other, it was unfortunate that no-one was explicitly held responsible. It is good and well to come up with new plans and committees, but in most mature democracies, if political leadership fails to deliver, heads tend to roll. In my opinion, the decision not to even question the current management structure of the ANC has to fall in the bad category.

The Ugly

For me, there were two resolutions from the NGC that were ugly and are likely to be negative for our country. The first is the decision to stick with the new onerous visa regulations, especially for minors. There is little disagreement that these regulations are having a very detrimental impact on our tourism industry, exactly at a time when the weak rand should be supporting it. At the same time, there is wide disagreement on the extent of the child trafficking problem within SA and whether the new regulations will have the desired effect. We can only hope that the inter-ministerial committee on migration, chaired by Deputy President Ramaphosa, will come up with proposals to mitigate the negative impact of these regulations.

The second is the decision by the NGC for SA to exit the ICC. Although it is correct that there are many respected countries in the world that are not signatories to the Rome Statute (including three of the five permanent members of the UN Security Council), I consider the withdrawal as a setback for global human rights and SA’s standing in the world. With this move, our country has chosen self interest and pragmatism over the idealism of the post-Apartheid period.

Conclusion

In my opinion, the good outweighed the bad and the ugly from the ANC NGC. A number of key decisions have been made that, if implemented correctly, could improve the outlook for our country and for the ANC at the polls. However, implementation is key and sustained pressure on the ruling party is needed. Next year’s municipal elections will be important and as I have stated in a previous blog, it is likely to usher in a period of coalition politics in SA. Hopefully this will help to sustain pressure and improve outcomes.

 

Did you follow the NGC over the weekend? Do you agree with me that there were a large number of positive developments? Or do you think that the bad and the ugly outweighed the positive? Do you think the ANC is feeling the political pressure and that this will improve delivery? Will we see coalition politics as an important feature from next year onwards? I would love to hear your feedback.

In the mean time, keep your talking straight!

#ANCNGC #2015MunicipalElections

 

Marius Strydom is the CEO of MLAX Consulting

https://www.facebook.com/straighttalkingstrydom

https://twitter.com/Marius_Man

 

Main Sources: Mail and Guardian; Daily Maverick; SABC


  • 0

BEE a temporary hedge against populism

Black economic empowerment (BEE) and affirmative action (AA) have been successful in creating a new generation of South Africans entering the middle class and becoming wealthy. This new grouping has much to lose from policies like land redistribution and nationalisation and can offer a temporary hedge against populism. However, to offer long-term protection, we need to meaningfully increase opportunities to the disadvantaged, create a massive increase in employment and generate sustainable economic growth at above recent trend levels.

When SA entered its new dispensation, it was faced with the challenge of dealing with a long history of legal and legislative discrimination that left in its wake a very unequal society, largely defined by race. The new government made a very important choice at that time, not to force increased equality through the direct disenfranchisement of the previously advantaged. They chose not to adopt populist policies such as land redistribution and nationalisation. Instead they chose a more gradual and sustainable approach to dealing with past inequalities.

At the time, it was a priority to protect the strong economy and the associated tax base of our country. It was important to maintain our mining, agricultural, manufacturing and financial industries. The hope at this stage was to utilise these industries to grow the economy and create sustainable jobs and in the process reduce poverty and inequality over time. Unfortunately, this policy has failed dismally on the job-creation front.

The direct approach used to achieve quick wins in the inequality battle was the public sector and it was a two pronged attack. Firstly, public funds were used to drive the roll-out of services and the provision of grants to the poor and secondly, the public sector became the vehicle for employing previously disadvantaged individuals. However, government needed to find a way of encouraging increased representation and redistribution of wealth in the private sector. This is where AA en BEE became the most important strategies.

The private sector in SA was not unhappy to comply as far as AA and BEE went. Most companies were very happy to increase the representation within their employee corps and to involve successful black businessmen in their business, having come from a history where their ability to do this was seriously limited. They were also happy to foster strong relationships with the new government, who provided them with a surprisingly business-friendly environment in the new dispensation and who were now holding many of the purse strings.

AA over the next 20 years was very effective at increasing representation within the private sector and together with the transformation in the public sector helped to create a large black middle class in our country. BEE was very successful in creating black wealth, although it has been skewed towards creating wealthy individuals and could certainly have been more broad-based in nature.

After a difficult start to BEE transactions in the 1990s where many deals collapsed due to high interest rates and underperforming share prices, the 2000s offered an ideal environment for BEE to flourish without undue disruption to the economy and without the previously advantaged having to suffer too much. Most BEE transactions did contain an element of value transfer (offering shares for purchase at a discount to the ruling level), but the vast majority of BEE value creation resulted from the favourable environment in the 2000s. Consortiums were able to borrow cheaply (in a falling interest rate environment), to purchase shares at low levels and to see a spectacular rise in share prices over the following years.

Any South African, regardless of race would have benefited from this environment and many did. Everyone who borrowed money to purchase a property benefited from the low interest rates and rising property market and have become much wealthier as a result. Many employee empowerment schemes created wealth for all their employees, regardless of race.

We were extremely fortunate in SA that BEE was implemented at the time that it was. It would be almost impossible to recreate if it were to be implemented for the first time today. Asset prices are simply too high and interest rates are rising. If the large BEE transactions of the 2000s, including in the telecoms and financial sector, had to be constituted today, they would most likely have led to unmitigated failures.

For broad-based BEE to progress from where we are today, sacrifices would be required and only gradual success could be wished for. An important area of sacrifice would have to come from the beneficiaries of BEE over the past 15 years. It would be unfortunate for individuals and consortiums to simply take the meaningful wealth created, sell out and leave companies with reduced empowerment. BEE beneficiaries should be encouraged to reinvest a healthy proportion of their proceeds in broad-based BEE schemes or in new businesses with a focus on job creation. They should be discouraged from simply selling out by implementing vehicles like a BEE tax.

It is true that broad-based BEE offers challenges for us today and it is also true that AA disadvantages certain parts of our society (those not classified as previously disadvantaged). These issues can become less painful if we can reinvigorate our economy and aggressively create jobs. What is very important though, is that the successes of BEE and AA have created a temporary hedge against populism in our country. It has bought us some time to deliver a better outcome to the masses.

The black middle class and the wealth created through AA and BEE has left us with a large and influential group of South Africans that have much to lose if populism were to rise and result in policies such as land redistribution and nationalisation. This is a group that has much to lose if the current government does not improve its delivery. It is this group of South Africans that may help us to resist the pressure of populist parties such as the EFF. It is the group that needs to put pressure on the current government to resist corruption and deliver better outcomes. It is the group that is most at risk of defecting to alternative business-friendly parties like the DA, driving the political competition that we so desperately need.

I am therefore thankful for AA and BEE and so should you be. I am not happy with the state of SA, with the lack of delivery on education and electricity provision, with rising corruption, with cadre deployment at the expense of delivery, etc. However, we are in a much better place than countries such as Zimbabwe where populist pressures led to the decimation of the economy and I am very hopeful. We have a strong and large economy, an abundance of natural resources and beauty, great infrastructure and standards, a youthful population, freedom of speech and expression and healthy political discourse. And we have a middle class that is much more representative than before, have much to lose and have much to gain if we are successful as a country.

 

Do you believe that our large middle class is an important asset in our strive to become a better country? Do you believe that our large middle class can help to influence our government to achieve better delivery? Do you believe that they can help us to avoid damaging populist policies? Are you hopeful? I would love to hear your feedback.

In the mean time, keep your talking straight!

#SpeakingOutSA

 

Marius Strydom is the CEO of MLAX Consulting

https://www.facebook.com/straighttalkingstrydom

https://twitter.com/Marius_Man


  • 0

Why we should be worried about the EFF

Many South Africans may be discounting the EFF as noisy, disruptive and undisciplined, but that could be a mistake. With the right strategy, the EFF could successfully tap into the aspirations of the poor, young and unemployed in SA and become a political force to be reckoned with. With policies such as the expropriation of land without compensation and the nationalisation of mines, banks and other strategic sectors, implementation could wreak havoc on our economy.

The EFF recently celebrated its second anniversary in front of thousands of supporters at the Olympia Stadium in Rustenburg. It has exhibited good growth in support since its formation and is not currently showing any signs of going the same way as the UDM and Cope. There have been in-fighting, accusations of corruption and defections, but under the strong leadership of Julius Malema, many of these issues have successfully been dealt with or at least quashed.

The EFF has been in the news constantly since its formation, with much of the focus being on two topics, namely its calls for President Zuma to “Pay back the money” for Nkandla upgrades and its calls for prosecutions following for the Marikana massacre. The party has successfully taken the fight to Parliament, where it has caused numerous disruptions. As a result of these developments, the party has often been seen as disruptive and spoilers within the SA political landscape. Not enough attention is being focused on where to next for the EFF.

There are three areas that the EFF could focus on to cement itself as the home for populism in SA, namely remaining front of mind for potential voters, building its election machine and promoting a positive populist message. The first of these has been the easiest to achieve and an area where the EFF has delivered wins. The party has no problem getting meaningful attention in the press through its pronouncements and activities in Parliament. It has also been successful on the social media front with Julius Malema having c.830 000 twitter followers, almost 5 times as much as Mmusi Maimane and more than any ANC leader.

The building of the election machine has been more mixed. The EFF claims to have branches in more than 65% of the c.4300 election wards in SA. However, there have been reports of in-fighting and weak control of branches. There have also been defections from the EFF to other parties. For the EFF to progress to the next level, it is important that they establish strong branches in a greater proportion of wards and that they appoint strong leaders in those branches that bring with them a constituency and can help to expand support. The strength of Julius Malema as a leader has been important for the EFF to gain the support as it has to date. However, to increase support meaningfully from here, it is important that strong leaders need to emerge across the country to add to the strength of the brand, to garner votes and to promote delivery.

To really tap into the potential support base, the EFF needs to change its dialogue to present a hopeful and positive message to the many poor, young and unemployed South Africans. If the party were to present a strong message of job creation, minimum wages and redistribution, it could accelerate the growth in support from disgruntled ANC supporters. In addition to focusing on the lack of delivery by the ANC, the EFF should also focus the delivery that they intend to achieve. In addition to focusing on the “low” level of wages earned in certain industries, they should also focus on the level of wages that they would demand if in power. In addition to focusing on the high unemployment rate in the country, they should also clearly state what they would do to address the situation if they were to come into power. Instead of the “Pay back the money” slogan, if the EFF were to use new slogans like “We will give you jobs, not grants”, “We will nationalise the mines, boost production and employ more people”, “We will nationalise the banks and redistribute the money” and “We will give you land”, it could really start to mobilise the masses.

If the EFF starts gaining control of municipalities in SA, it would be vital for them to prove that they can govern successfully. They would have to focus on delivery and the implementation of their policies where possible. This will be an important test to see if this is a party of more than rhetoric. If successful, this could accelerate their rise in the polls. The EFF had a modest showing in the 2014 elections, less than a year after its formation. The only municipalities where they managed to garner more than 15% of the votes were Rustenburg (21%), Polokwane, Moses Kotane and Mafikeng. These would be the municipalities to watch for a potential shift of control to the EFF.

In my opinion, the continued rise of the EFF is likely and this presents a meaningful risk to our country. The EFF has a number of very controversial and aggressive policies. When looking at EFF policies, there is a key focus on the redistribution of the wealth in SA to all of its inhabitants. Specific policies include: 1) Land expropriation without compensation; 2) Nationalisation of the mines; 3) Nationalisation of the banks; 4) Free education; 5) Aggressive protectionism; and 6) Higher minimum wages.

Although EFF policies could be very attractive to the disenfranchised, a rise of the EFF could be a scary prospect for SA, its economy and a large portion of the population. If the EFF ever gets into a position to start implementing its policies, it could lead to a meaningful flight of capital, skills and companies. The expropriation of land without compensation, especially farmland, could decimate our agricultural production, which could have a serious impact on our ability to feed our people. The nationalisation of mines could put serious pressure on mines that are already operating under the pressure of weak commodity prices and could result in very detrimental developments insofar as our balance of payments and currency. The nationalisation of banks could lead to a flight of capital and a run on the banks. It could also have unintended knock-on effects impacting all sectors of our economy and our capital markets. One of the reasons that foreign investors find SA attractive is due to its highly developed banking system and high auditing standards. The nationalisation of banks could destroy the confidence that investors have in the SA financial system. In addition, if SA were to start implementing EFF policies, we are likely to see a rapid downgrade of our government debt, which could lead to meaningful increases in yields, making it very difficult to issue new debt.

The impact on the fiscus of EFF policy implementation could be damaging on both the income and outgo side. The result of capital, skills and company flight would be to put meaningful pressure on our tax revenues, while the implementation of much higher minimum wages could aggressively increase outgo. In addition, it would be increasingly difficult to fund any budget deficits on a sustainable basis due to the expected increase in the cost of debt.

However, it is not all doom and gloom in my opinion. I believe that the EFF could add an important voice to the disenfranchised in SA and help to push their agenda more than is currently the case. A rise of the EFF could benefit SA in two ways: 1) It could result in ANC support reducing and in the process put pressure on the ANC tripartite alliance to improve delivery; and 2) It could result in a better outcome for the disenfranchised, especially if those in power implement more employment-friendly policies under pressure from the EFF.

What we must be extremely wary of is to open Pandora’s box. In my opinion, it is perfectly fine for the EFF to rise in support if it means more political competition in SA and better delivery to the masses. However, an EFF that gains control could be very scary. As a result, our government should take note of the risks that the EFF present and pre-empt this. First prize for the tripartite alliance would be to lure the EFF back into the fold or encourage it to wane like the UDM and Cope. I, however, do not see this as a likely outcome and would urge attentions to be focused differently. Instead, the government should focus on improved delivery and job creation. Issues such as load-shedding and education should be addressed with immediate effect. The National Development Plan should be fast-tracked. More (non-cadre) skills should be introduced into government.

In addition, the ruling party and the DA should be open to co-operation. The time will come (as soon as after the 2016 municipal elections) where coalitions will have to be discussed in order to govern key municipalities and provinces. The ANC and the DA should look towards each other as partners to deliver a better outcome to South Africans, ensure that populist pressure does not rise and potential EFF policies are not implemented. The DA should use such an opportunity to become involved in government without abandoning its ideals and demanding better delivery in areas where it becomes involved. The tripartite alliance should use this opportunity to foster more debate and to co-opt non-alliance skills to improve delivery.

I maintain my view that there is very little to choose between ANC and DA policies. Both parties are centrist and business-friendly. A combination of these groupings (whether temporarily through coalitions or via an eventual merger) may be the only way to counter the rise of populism in SA, to effectively deliver a better outcome to the masses, to grow the SA economy and to create jobs. However, for such a combination to be successful, there has to be a meaningful anti-corruption focus and aggressive push towards improved delivery, using all the skills that are available in this country, including non-aligned individuals and the private sector.

 

Do you see the meaningful risk that the EFF and populism presents to SA? Do you enjoy the growth of the EFF just because it counters the strength of the tripartite alliance? Would you support co-operation between the ANC and the DA if it leads to improved delivery? Do you think it will become necessary to join forces to keep the EFF out? Do you think SA would be better with the EFF at the helm? I would love to hear your feedback.

In the mean time, keep your talking straight!

#SpeakingOutSA #2016MunicipalElections

 

Marius Strydom is the CEO of MLAX Consulting

https://www.facebook.com/straighttalkingstrydom

https://twitter.com/Marius_Man


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